A Bullish Bitcoin Reawakens These 2 Crypto Narratives
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| By Marija Matic |
Bitcoin’s (BTC, “A”) bullishness has been reawakened by forces both within and outside the crypto market.
Let’s start with the external forces first.
Last week saw the latest Federal Reserve Open Market Committee Meeting. And while no changes were made to interest rates, the Fed’s decision to ease and slow its efforts to shrink the U.S. debt balance acted as a signal to loosen up the economy.
Add in the strong labor market report from last week, and you have the push BTC needed to start a significant rally.
Hence, Bitcoin started rallying — reaching the $65,500 mark today — before the cool off.
This rebound has been mirrored by the soaring performance of crypto AI and memecoins — the two leading sectors in crypto right now — reflecting a broader sentiment of bullishness across the cryptocurrency landscape.
Some AI coins like Render Network (RNDR, “B”) and memecoins like dogwifhat (WIF, “E+”) even rallied over 20% in a week.
Technical analysis reveals that Bitcoin initially broke down from a descending pattern before the Fed meeting, experiencing a fake-out to $57,000. But BTC quickly rebounded, successfully retesting the trendline at $62,800 and forming three consecutive daily green candles — an optimistic signal for bullish momentum.
Following its recent lows, Bitcoin surged, reaching $65,500 today. As the day progressed, Bitcoin started cooling off, a healthy sign after a six-day rally during which it gained 15.8% in value:
Now, the key support level for Bitcoin is around $62,500, while resistance stands at $65,800.
Meanwhile, indicators within the market, such as the moving average convergence/divergence, or MACD — a technical indicator to help investors identify market entry points for buying or selling — have formed a bullish divergence on BTC.
And that’s not all!
This bullishness has been further bolstered by returning inflows into the spot BTC ETFs after eight days of outflows.
This includes a noteworthy first ever inflow into Grayscale since it’s Bitcoin trust converted into a spot ETF — a significant event reflecting new investor interest:
The market isn’t only sunshine and roses today, though. Decreasing trading volume over the weekend and an overheated relative strength index, or RSI — a momentum indicator — for a few coins caused a cooling as the day progressed.
Still, this is a temporary thing. Just those few hours of correction were enough to cool the RSI of many coins that were in overheated territory.
(This is why the RSI indicator might not hold significant weight during a bullish market phase, except for brief corrections.)
And in all this, as investors tried to keep up with Bitcoin's ever-changing price movements and sentiment swings, a notable achievement went almost unnoticed: The Bitcoin network processing over 1 billion transactions, according to Clark Moody's Bitcoin dashboard!
This significant milestone, achieved 15 years and four months since Bitcoin's creation, underscores the network's resilience and demonstrates its enduring utility and widespread adoption.
Beyond Bitcoin, the standout sectors continue to be memecoins and AI coins, as they continue to maintain their dominance as they have throughout much of this year.
AI coins may continue to rally as NVIDIA (NVDA) — a leading TradFi AI play — will release its Q1 2024 earnings later this month.
Memecoins continue to rally as the narrative my colleague Dr. Bruce Ng pointed out last week is indeed persisting: Memecoins are increasingly seen as a revolution against bloated VC coins that dump on clueless retail investors.
And since memecoins’ fair launches and anonymous founders contribute to their non-security status, their appeal as a true people’s currency increases.
Coming in at a close third in terms of dominant narratives in Q1 was real-world assets, or RWAs. While it hasn't rallied much in the past seven days, the RWA narrative will likely continue to show strength going forward.
A large part of that may be fueled by the success of Blackrock's USD Institutional Digital Liquidity Fund (BUIDL) and the record growth of stablecoins.
BUIDL, a tokenized fund backed by the U.S. Treasury notes, has already eclipsed all other offerings in this category and reached a value of $381.76 million. Furthermore, projects that are tokenizing dollars — i.e., stablecoin projects — have hit a record supply of over $150 billion.
In short, adoption in this sector is growing. RWA is not just a fad.
In the first three months of 2024, these three narratives were the most profitable, with remarkable gains:
- Memecoins soared by 1,313%.
- RWA’s grew by 286%.
- And AI saw an increase of 222%.
With the strong rebound in two of the three sectors — and reason to be cautiously optimistic about the third — it's evident that not much has changed in the market.
These three are likely to maintain their strength and longevity in the market, and savvy investors would do well to watch them and the top projects in each closely.
Notable News, Notes & Xeets
- Heir to the Cartier empire has been arrested in Miami for an attempt to import 100kg of cocaine from a Colombian drug cartel and launder money using the stablecoin Tether (USDT).
- Although the size of Hong Kong’s spot crypto ETF market is not as significant compared to the U.S. market, it is still “big to their local market” at $310M million, and is “equivalent to $50 billion in the U.S. market”.
- A comparison of Coinbase’s (COIN) trading volumes shows that retail has not returned yet. Retail volumes in Q1 of this year were at 31.6% of the all-time high volumes of 2021, when institutional volumes were at 69%.
What’s Next
The recent correction in the crypto market appears to have served a positive purpose, as my colleague Juan Villaverde posed it would.
Excess leverage on futures contracts has been reduced, coinciding with an improvement in the macroeconomic climate. These factors combined could lead to a healthier demand for Bitcoin.
The upcoming Bitcoin Asia Conference in Hong Kong this week may further fuel interest in local ETFs, especially considering the positive post-halving indicators like healthy hash rate, transaction fees, and lower mining equipment prices.
All are signs of a robust Bitcoin market, as noted by Bernstein analysts, perfect for appealing to new investors.
However, the true test of market volatility may come later in May. Not only does Juan foresee a cycle low sometime in May. But the next response from the Securities and Exchange Commission regarding a spot Ethereum (ETH, “A”) ETF application is due by May 23.
Bitcoin maximalists, such as Michael Saylor, think that an Ethereum ETF won’t launch in the U.S. at all, while some fund issuers think it’s unlikely this year.
Meanwhile, other countries, including Hong Kong, are gaining a first-mover advantage, with their ETH ETFs already launched.
Considering the long and arduous journey Bitcoin faced in securing ETF approval, it's safe to assume the path for a spot Ethereum ETF in the U.S. will be equally challenging, if not harder.
While the path for Ethereum ETFs in the U.S. might be bumpy, the overall outlook for the cryptocurrency market is positive. A healthy post-halving Bitcoin market and the strength of select altcoins suggest continued innovation and potentially significant growth across the entire cryptocurrency ecosystem.
In short, the crypto market is looking ahead and getting ready for the next leg up.
Savvy investors are following the market and doing the same … starting with the top three crypto narratives I mentioned above.
Best,
Marija Matić
P.S. — My colleagues over on the TradFi side of Weiss Ratings are also looking ahead … and have been for a while. And years of hard work and forward thinking are about to pay off.
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Dr. Weiss will unveil this system in a special presentation, How New AI Beats S&P by 51-to-1, tomorrow at 2 p.m. Eastern. And he’ll even reveal ten picks this AI system has rated as a “buy.”
The best part is it’s completely free to attend. But registration ends tonight, so I urge you to save your seat here if you want to learn how this technological breakthrough can help you.
