Synopsis
- The failure of yet another US bank temporarily boosted the crypto market. Within a very short span of the collapse of the First Republic Bank, Bitcoin gained $30 Billion in market capitalization, and Ether gained $3 Billion. That rally turned out to be short-lived.
- $PEPE, the memecoin, touched $500 million in market cap on May 01, 2023. We covered it in our report last week when it was at a market cap of $100 million.
- Circle goes live with USDC cross-chain transfer protocol (CCTP). It allows the permissionless transfer of USDC across supported blockchains. Circle’s stablecoin, USDC, is the most bridged asset out of Ethereum, amounting to nearly $2.5 Billion.
- During the weekend, BTC futures traded around 6% higher than the spot price, indicating a positive perception toward Bitcoin.
- The total crypto market cap gained around $50 Billion over the past week and stood 4.2% higher than the previous week.
Key observations
The rapid rally of the crypto market over the past week was short-lived. From the technical charts, it appears to be a bull trap, liquidating many positions. On April 26 and 27, more than $300 million was liquidated in long and short positions.
Analysis
On April 25, First Republic Bank’s market capitalization decreased by over 50%, which triggered a rise in Bitcoin’s value. However, Bitcoin’s progress slowed down when the U.S. gross domestic product (GDP) growth fell short of predictions, causing Bitcoin to stall at $29,000.
Afterwards, Bitcoin experienced a sudden drop due to false notifications that Mt. Gox and the U.S. government were selling their Bitcoin holdings. Some key factors that are likely to shape the overall market in the coming weeks include:
- Recession risks increased after the US economy grew at a modest annual rate of 1.1% in the first quarter, well below the 2% expected.
- The Federal Reserve signaled that it could likely raise interest rates and might take it above the 5%.
USDC has emerged as the most widely bridged asset from Ethereum, representing almost one-third of the bridged asset distribution. By implementing the Cross-Chain Transfer Protocol (CCTP), a safe and interoperable foundation, USDC could become an even more popular bridging asset among infrastructure partners.
Many wallets and infrastructure providers are already integrating with CCTP, including Celer, Hyperlane, LayerZero, LI.FI, MetaMask, Multichain, Rarimo, Router, Socket, Wanchain, and Wormhole.
The banking crisis pushed the price of the BTC futures to the upside during the previous week, where short-term futures traded almost 8% higher from the end of the previous week before. It is an indicator of the positive perception of the market in the medium term.
Now that the market has corrected, the futures price is trading at a 3% premium over the spot price of Bitcoin.
It has been an eventful week for the entire crypto market. The influx of information, both true (First Republic Bank stock crash)and false (alerts of Mt. Gox and the US government), created a rollercoaster of the price action. And that has brought the attention of big players to take cover with Bitcoin. The same is reflected as the market dominance of BTC jumped higher by more than 1%, while those of the rest dropped.
Deep dive into the top gainer and loser
We closely analyze the performance of top 50 coins by market capitalization, and take a closer look at the best and the worst performers of the week.
MultiversX (EGLD) up by 7.6% ⬆️
MultiversX recently listed its EGLD coin on Upbit. It represents a notable development for the project, enhancing its exposure and availability.
Opinion: The technicals indicate that the only major bump to the price of EGLD came from the announcement of the exchange listing of the token. The volumes have dipped following that, and three subsequent bearish red candles indicate a selloff. It’s prudent not to ape in on EGLD at the moment, as the price action suggests the possibility of a bearish move ahead.
Toncoin (TON) down by 7.52% ⬇️
TON was developed by the messaging platform Telegram, and is currently governed by the TON Foundation. There has been no noticeable developments from the TON team. And that has contributed to the loss of interest in the token. The consistently higher volumes signal that the cryptocurrency has been facing significant sell-off.
Opinion: The consistently higher volumes signal that the cryptocurrency has been facing significant sell-off. The price action highlights the continuous downtrend. Moreover, it has broken the trend line indicated by the purple line. The next local support zone for TON is another 7% lower than the current price.
Conclusion
The recent rally in the cryptocurrency market has been short-lived, with a bull trap resulting in the liquidation of many positions. Various factors, such as the U.S. GDP growth falling short of predictions and the potential for increased recession risks and interest rates, may continue to shape the market in the coming weeks.
