The Weekly Recap: Week 3

KEY TAKEAWAYS 

  • Ether reached a new all-time high on Jan. 20
  • The altcoin season may have arrived, with large and small caps outperforming Bitcoin by miles 
  • Market participants should brace themselves for increased volatility

Bitcoin 

Last week has been rather slow for Bitcoin. Despite huge intraweek swings in opposite directions, Bitcoin managed to close at around $35.7k, after opening the week with a strong start at $38.3k. In the aftermath of the Monday sell-off, the price of Bitcoin plunged to as low as $30.5k, but soon bounced back to touch the $40k ceiling. It is currently trading in the wide range of $34k to $38k, with market dominance dropping to 65.76%.

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Source: Bybit

Here is a market dominance breakdown of major cryptocurrencies. 

BTCETHBCHLTCXRPLINK
Market Share65.76%15.65%0.92%0.99%1.34%0.83%
Weekly Change-3.89%+2.51%-0.02%+0.02%-0.04%+0.21%

Ether 

The price of Ether has outperformed Bitcoin by posting a 35% growth in the past 7-days. It has set a new all-time high of $1,440 on Jan. 19, with its dominance climbing to a record high of 15.65%. However, the price of Ether soon retracted to the upper region of $1,350. 

As of Jan. 19, the daily trading volume on the Ethereum network is 28% higher than that of Bitcoin. The Ethereum network also boasts a massive $5-billion worth of ETH being locked in the ETH staking contract, just a month after launching the Beacon Network. 

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Source: Bybit

The upcoming ETH futures listing on CME could also have buoyed the price, as its imminent launch will connect the crypto space to a broader base of institutional investors. 

On-Chain Activities 

Spent Output Profit Ratio (SOPR) is a proxy for price sold divided by price paid. It gauges whether holders are selling at a profit or a loss. Historically, a high SOPR signals that the price of Bitcoin has reached a local maximum, where a pullback may be necessary to stabilize the price. The point of inflection from gaining a profit to posting a loss is set at 1. While SOPR for Bitcoin has consistently been hovering above 1 since the beginning of this year, it has experienced a significant drop, indicating that the profit for selling has been dwindling. However, further pullbacks in the mid-term are not completely out of the picture. Though generally perceived as a bearish signal, a reset back to 1 could pave the way for the next bull run. 

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Source: Coin Metrics

Although the possibility of further corrections is lurking around, on-chain fundamentals are strengthening. The number of active addresses on the Bitcoin network has surpassed the ATH in 2017, proving that there are more robust activities on chain. 

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Source: Glassnode
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Source: Glassnode

For the first time this year, the Fear and Greed Index dropped below 90. Similarly, the funding rates gradually calmed over the weekend, but suddenly spiked on Monday, indicating that leveraged positions were perhaps building up again. 

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Source: Skew

Altcoins 

Like it or not, the altseason is coming to town. It is a magical season where market participants suddenly inquire about obscure coins that had gone gently into the good night during the ICO bubble burst in 2017. As the tide began to ebb, it washed away scams and busts, while letting truly innovative projects shine, through the test of time.  

In general, altcoins have outperformed Bitcoin by miles. Just take a look at the returns since December last year. 

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Source: Coin Metrics

Derivatives

The open interest in the Bitcoin futures market has reached $13 billion on Jan. 14, posting a staggering 203% jump in the last three months. 

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Source: Skew

The surge in open interest suggests that there is a growing speculative interest in Bitcoin’s next direction — as we predicted in our previous article that the market would probably face a turbulent year ahead.