Market Wrap: Bitcoin Unable to Hold $30K, Altcoins Mixed

Bitcoin (BTC) failed to stay above $30,000 on Monday as some buyers remained on the sidelines. The cryptocurrency tumbled later in the New York trading day, indicating a loss of short-term momentum.

Alternative cryptos (altcoins) were mixed on Monday. For example, Fantom’s FTM token rose by as much as 16% over the past 24 hours, while Decentraland’s MANA token declined by 3% over the same period. Choppy trading conditions suggests some caution among crypto traders, especially over the past week.

For now, bitcoin is stuck in a tight trading range and is at risk of a breakdown. “From a trading standpoint, [a] breach higher may offer an opportunity to fade, targeting a break to fresh yearly lows,” Michael Boutros, an analyst at DailyFX wrote in an email to CoinDesk. If a breakdown occurs, Boutros has a downside target of $19,666 for BTC.

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Still, some analysts have noticed signs of capitulation, which could support a relief bounce in price. Sean Farrell, vice president of digital assets at FundStrat, stated that recent selling pressure was driven by spot market traders rather than futures traders. That suggests a large unwind of leveraged positions is unlikely, similar to what occurred in previous sell-offs.

Instead, BTC’s downtrend could be gradual, especially if macroeconomic headwinds continue to linger. “Despite the evidence of capitulation and waning investor sentiment, the current macro backdrop still poses significant headwinds for cryptoasset prices, Farrell wrote in a research note.

Latest prices

Relief from US dollar?

The U.S. Dollar Index (DXY) is roughly 3% below its recent high reached on May 13, which could offer support for BTC because of its negative correlation to the greenback.

Previous peaks in the DXY have coincided with price troughs in BTC. And last year’s acceleration in the U.S. dollar occurred alongside a failed breakout in BTC around $69,000, leading to a 60% drop in the cryptocurrency’s price.

The index’s performance is not a perfect signal for BTC, however, especially because of macroeconomic uncertainty.

The chart below shows the 90-day correlation between BTC and the U.S. dollar, which is mostly negative. Still, the correlation could rise during market turbulence, similar to what occurred in 2018 and 2020.

Altcoin roundup

• Goblintown is having its moment: The “Goblintown” non-fungible tokens (NFT) did over $7 million in sales volume this weekend, fueled by rumors about a larger team that could be behind the scenes. The goblin-themed digital arts riff on a popular joke in crypto circles, saying “down to Goblin Town” for the market downturn. The project’s success could reflect the NFT market still having some juice left in it, despite overall sales volumes trending down. Read more here.
• Terra’s systemic risks in DeFi: Investment banking giant Goldman Sachs (GS) said in a report the systemic risk grows as decentralized finance (DeFi) applications are getting increasingly interconnected. A case in point is the collapse of the UST stablecoin spreading to Lido, one of the largest liquid staking pools, and its staked ether holdings. The staked ether (stETH) traded at a 4.5% discount compared to ETH on the spot market, as users could convert stETH with Lido to bonded ether (bETH) on the Terra blockchain and earn a yield on Anchor, Terra’s largest yield farming protocol. Read more here.
• Filecoin flies to space: Defense contractor Lockheed Martin (LMT) and the Filecoin Foundation could soon make an open-source blockchain network accessible in space and run a data storage node on a satellite. Filecoin is a decentralized network for data storage and distribution platform. Now, satellites interact mainly with servers on Earth. A node in space may help send instruction quicker to faraway objects orbiting the moon or Mars. Filecoin’s native token, FIL, is up almost 8% in the last 24 hours. Read more here.

Relevant insight

• Listen ????: What’s next for the crypto market? Plus, the CoinDesk Markets Daily podcast takes a look at a recent explosion at a crypto mining farm in New York.
• Korean Police Move to Freeze Luna Foundation Guard Assets: Seoul police are seeking to ban the entity from withdrawing suspected embezzled funds.
• Fed Survey: 12% of US Adults Held Crypto in 2021: It marks crypto’s first appearance in the central bank’s “Economic Well-Being of U.S. Households” survey.
• GameStop Unveils Crypto and NFT Wallet, Shares Jump 3%: A beta version of the self-custodial Ethereum wallet is available to download now from GameStop’s (GME) website.
• ICO-Funded Project Sparkster Converts $22M in Ether to USDC After 3 Years, No Product: Sparkster promised investors a “no-code” software-creation platform using $30 million in funds raised from investors in 2018.
• Japanese Bank Sumitomo Mitsui Trust to Establish Digital Asset Custodian: The bank’s pivot to digital assets comes alongside a global banking shift toward cryptocurrencies.
• BNP Paribas Joins JPM’s Blockchain Network Onyx for Fixed Income Trading: The French bank will use the Onyx network for short-term fixed income trading.
• Regulators Are Paying Attention to UST: The collapse of terraUSD (UST) is algorithmic stablecoins’ Libra moment.

Other markets

Most digital assets in the CoinDesk 20 ended the day lower.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.