The Weekly Recap: The Show Musk Go On

KEY TAKEAWAYS: 

  • Bitcoin spikes 20% after Elon Musk added #Bitcoin to his Twitter bio 
  • DeFi summer has arrived early as TVL and token valuation see staggering growth
  • Wild volatility ensues after a week full of underdog comebacks in the stock markets

Bitcoin 

The past two weeks have been extremely volatile for Bitcoin. The side effect of Bitcoin’s parabolic rise has triggered a renewed round of fear, uncertainty, and doubt. Rumors about a Bitcoin double-spend spread fast, causing panic selloffs that brought the BTC price down to below $30k. Despite several attempts, Bitcoin could not hold at the $35k level. It dipped and rebounded near the $30k mark, with increased intraday volatility. However, on Jan. 29, Tesla CEO Elon Musk, after changing his Twitter bio to #Bitcoin, has managed to single-handedly boost Bitcoin by over 20%. The market dominance of Bitcoin, which once dropped to 63.4%, has returned to 65.44% within an hour.  

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Source: Bybit

Here is a market dominance breakdown of major cryptocurrencies. 

BTCETHBCHLTCXRPLINK
Market Share65.47%15.74%0.77%0.92%1.31%0.94%
Weekly Change+0.16%+0.73%-0.09%-0.05%-0.01%+0.02%

Ether 

Ether has continued to outperform Bitcoin for the most part of the week. Notwithstanding the massive selloff on Jan. 22, the price of ETH quickly climbed back to nearly $1,500 but failed to find strong support there before retreating to the $12k-13.5k range. Since then, there have been several attempts to break out of the $1,380 ceiling. One finally succeeded on Jan. 29, as Bitcoin’s bull momentum spilled over to other cryptocurrencies. 

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Source: Bybit

Altcoins & DeFi 

Bitcoin’s sideways price action gave room for altcoins to thrive. DeFi tokens have been on fire, which prompts one to wonder if the DeFi summer has arrived early this year. The total value locked in DeFi is now sitting at $27.1 billion, up 80% from Jan. 1. 

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Source: DeFi Pulse

On-Chain Activities 

Bitcoin’s mining difficulty has reached yet another all-time high as more mining activities are taking place at a larger scale, thanks to Bitcoin’s parabolic price rally and its promise of more. 

Source: Glassnode

Despite the escalating mining difficulty, there has been a staggering amount of bitcoin outflow from miners’ wallets, indicating growing demand, especially from institutional investors, as active addresses holding more than 1,000 bitcoins have increased by 8% since Jan. 1. 

Source: CryptoQuant
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Source: Glassnode

The Spent Output Profit Ratio (SOPR) has reset to the baseline at 1 on Jan. 22, ending an upward trend that lasted several months. This indicates that the price of Bitcoin has returned to a neutral state, which means that coins moving between investors were no longer being sold at a profit. As we mentioned in our previous recap, a reset back to 1 could pave the way for the next bull run, which has indeed arrived. 

Source: Glassnode

There has been a sudden drop in market sentiment as the index momentarily dipped under 40, plunging headlong into the “fear” region. After the misinformation on double-spending was dispelled, the sentiment returned to the level of October last year. 

Source: Alternative.me

News Headlines 

Unsurprisingly, large firms have taken advantage of the spooked markets. MicroStrategy, for instance, had bought the dip, adding $10 million to its Bitcoin treasury, demonstrating once again the unwavering faith in Bitcoin’s potential to grow. On the other hand, disillusion with financial establishments has galvanized an online community consisting mostly of millennials, many of whom had been severely affected by the Global Financial Crisis of 2008, to wage war against Wall Street and what it stands for. 

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The community of online traders has propelled shares of the U.S. video game retailer, GameStop, up 2,200% this month. The hype of anti-establishment has cascaded into the crypto space, as one single tweet from the self-proclaimed WSB Chairman has already sent Dogecoin soaring 200%. 

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Still, we are left wondering if a similar short squeeze could happen in the crypto markets, as evidence has shown that hedge funds have been shorting Bitcoin for months.