A glass-half-full look at the market
The memecoin token frenzy suggests mid-cycle speculation, aligning with 2020-2021 patterns: 21Shares exec
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Bitcoin sits more than 20% off the all-time high it hit last month. And yes, US bitcoin ETFs saw a record outflow day yesterday.
There’s been plenty of red elsewhere too, as Casey pointed out in recent stock market coverage.
But that doesn’t mean a rebound isn’t coming, right? Though BTC had dropped further Wednesday ($84,200 at 2 pm ET), the S&P 500 and Nasdaq Composite indexes were each basically flat.
“Bull markets peak amid excessive leverage, retail euphoria and falling BTC
dominance — not compressed funding rates,” 21Shares crypto research strategist Matt Mena said in a report.
“Liquidations reset overleveraged positions, creating healthier uptrends as traders
re-enter post-shakeout,” he added.
The memecoin token frenzy (i.e. $TRUMP) suggests mid-cycle speculation, aligning with 2020-2021 patterns, Mena noted. Blockworks’ Katherine Ross wrote this morning that recent token launches have indeed “contributed to the larger exhaustion.”
Bitwise research head Ryan Rasmussen countered with this:
The M2 money supply has been growing since mid-January and quantitative tightening could soon reach “a natural end,” Mena wrote in his report.
One more thing the 21Shares exec points out: The Pi Cycle Top Indicator — tracking bitcoin’s 111-day simple moving average against a 2x multiple of the 350-day SMA — hasn’t yet signaled a market peak.
LMAX Group’s Joel Kruger called out traditional markets, where risk appetite has cooled off given global trade tension and a more hawkish outlook from the Fed.
“We believe correlations between bitcoin and traditional risk assets can be misleading, with bitcoin easily capable of generating sizable demand as an attractive portfolio diversification asset given properties that align more with that of a store of value,” he argued.
There’s “formidable support” for BTC in the $70,000-$75,000 zone. That, Kruger believes, “should serve as an attractive higher low ahead of the next major upside extension and bullish continuation to a fresh record high beyond $110,000.”
Beyond price, YouHodler markets chief Ruslan Lienkha spoke to how last week’s Bybit hack could affect institutional confidence in centralized exchanges.
It won’t have a major impact, he thinks, as security breaches more significantly affect retail traders who rely heavily on CEXs for trading and asset storage.
“Institutions typically adhere to strict treasury management rules and allocate only the necessary liquidity to CEXs for routine transactions,” he said in an email. “Large-scale institutional trades are often conducted through OTC markets, while long-term holdings are kept in secure, self-custodied solutions.”
And in case you missed it, the SEC closed its multi-year investigation into Uniswap Labs. It won’t pursue any enforcement action, the company said.
That follows the securities regulator telling Coinbase last week it would drop its case against the crypto exchange (still to be finalized). Robinhood and OpenSea also revealed this week the SEC was ending probes into the companies.
So not all things are on the up and up. But there are places to hang your hat.
We’ll see what we’re saying after today’s Nvidia earnings, tomorrow’s initial jobless claims and the Friday PCE data drop.
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