Bitcoin

Crypto: Is Ethereum Recovering?

Published

8 months ago

27 May, 2024

7:41 am ▪ 7 min read ▪ by Laetitia B.

Each bull run in the past has gone through different phases spurred by a rotation of capital. In general, bitcoin tends to be the leader of the bull run and the favorite in the early stages. Following Ethereum’s weaker performance compared to bitcoin, we will analyze the factors favorable to a rotation of capital towards Ethereum.

The Principle of Asset Rotation

In traditional finance, there are several types of asset rotation. This may involve a sector rotation (technology, industrial, financial, healthcare…) or a rotation of asset types (bonds, shares, commodities, forex…). Capital moves according to the context and economy. Rotation can come from taking profits after significant performance to move to another less valued sector or type of asset, following the economic context. This is often the case between cyclical and defensive sectors, for example.

Let’s also take an example over a very long-term horizon, that is, over several decades, we can see this cyclical rotation between commodities and the S&P500 index in the chart below:

This type of chart highlights that in the coming years the performance of commodities should be more advantageous than that of the S&P500.

The different phases of encryption

When we look at the cryptocurrency market, there are several phases in terms of rotation, whether between bitcoin, Ethereum, large caps and altcoins. And usually this comes from a progressive rotation.

Phase 1: Bitcoin is the leader, the store of value in the crypto market. It is the oldest and most democratized in the cryptocurrency sphere. It is in bitcoin that the first capital flows arrive at the beginning of a bull market. Since 2024, bitcoin has been available in the form of a spot ETF, which is an advantage to stimulate demand. And at the same time, when demand is stimulated, capital inflows increase. During phase 1, bitcoin tends to outperform Ethereum. And it is only when Ethereum starts to approach Bitcoin’s performance that phase 2 is near. We can possibly see this rotation with the example below that highlights the ETC/BTC relationship:

Phase 2: Ethereum, which is the number 2 cryptocurrency in the cryptosphere, surpasses bitcoin. This can be seen in the chart below with the 2021 bull run.

Phase 3: It is the turn of large capitalizations (Doge, LTC, XRP…) to surpass bitcoin.

Phase 4: The altcoin season begins when there is a large rotation of capital. That is, the money invested in bitcoin at the beginning of the bull run moves to other cryptocurrencies, small and mid-caps, or even memes. During altcoin season, we see a reduction in bitcoin dominance. Here is a chart that highlights this:

To better illustrate this in general terms, here is the chronology below:

The economic environment and different phases of cryptocurrency markets

The evolution of cryptocurrency is quite cyclical, just like the economy. In other words, we find cycles of growth and cycles of decline. Like any higher risk asset class, it evolves according to a favorable and accommodating context. A favorable context can be defined in several ways. For example, when growth recovers, we see an acceleration in growth, which is a favorable environment for cryptocurrencies. Consumer sentiment is positive and this encourages capital inflows. On the other hand, when we face an economic downturn, it is often represented by a bear market in cryptocurrencies. Each cycle usually lasts an average of one and a half to two years, just like economic cycles. Therefore, if we add a bull market and a bear market, that represents 4 years, as well as the halving process:

Another positive element for performance is also liquidity. When liquidity is abundant, cryptocurrencies thrive. For example, injections of liquidity during COVID led to more capital flowing into the markets. Financial conditions were highly relaxed. Therefore, more money in circulation to buy the same good implies an increase in price.

Regarding liquidity in the current situation, we can observe the graph below highlighting the evolution of liquidity and bitcoin:

performance, liquidity, bitcoin, ethereum Source: Trading view

Staying in the same context, that is, liquidity, we can also observe favorable times (summer and autumn being the best):

ethereum, bitcoin, cryptography, performance, cycle, liquidity, rotation Source: Twitter

Ethereum’s delay explained by several factors

As mentioned earlier, Ethereum often lags behind Bitcoin during the first few months of a bull run. This is mainly because capital first flows into bitcoin, the store of value. As for Ethereum, it is no longer the only one well positioned, as it is closely followed by Solana. This also implies competition. That said, like bitcoin, Ethereum should benefit from more inflows since the approval of ETFs is official. Such products imply greater potential to attract new investors, whether for tax reasons (introduction of the product into tax-advantaged accounts) or simply because an ETF is an easily accessible product (no need to open multiple brokerage accounts) and is cheap. This is why the approval would be a good catalyst to catch up with bitcoin. Therefore, there are several arguments that line up in favor of Ethereum’s superior performance, such as a favorable context, new products available, and the timing of the phase (as indicated above).

Bitcoin or Ethereum, which one to choose?

Bitcoin and Ethereum have different strengths that can help diversify a crypto portfolio. One of the peculiarities of bitcoin is that it has a limited supply of 21 million and its production is halved every 4 years. This can be seen as a safe haven, especially in countries suffering from hyperinflation. Ethereum also has certain peculiarities, such as the fact that it can be used to host other cryptocurrencies and decentralized applications.

The more adoption and democratization continue with the same dynamics, the more we will face new products, as approvals will become easier and easier. For example, we could have an ETF that combines bitcoin and Ethereum to simplify the choice. This opens up many possibilities in terms of capital.

Conclusion

We can conclude that the capital rotation system is cyclical and that Ethereum has several reasons to take the lead and outperform bitcoin for the rest of the cycle. One of the main catalysts for this would be, like bitcoin, the approval of the ETF. This will improve liquidity in the coming months.

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Laetitia B. avatar

Leticia B.

After working for 7 years in a Canadian bank and 5 years in a portfolio management team as an analyst, I gave up my duties to become a financial advisor. Mon, but here, it is to democratize information on financial markets among the public. Co-contribute on different aspects, notably macro analysis, technical analysis, inter-market analysis…

DISCLAIMER

The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.

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Bitcoin

RIOT, MARA and CLSK shares at risk

Published

7 months ago

3 July, 2024

TokenTrends Staff

Bitcoin price nears key support: RIOT, MARA, and CLSK stocks at risk

Bitcoin (BTC) Mining stocks like Riot Platforms (RIOT), Marathon Digital (MARA) and CleanSpark (CLSK) retreated in pre-market trading as BTC retreated.

RIOT, MARA and CLSK all fell more than 2%, while other crypto-related stocks such as MicroStrategy (MSTR) and Coinbase (COIN) fell 1.5%.

Bitcoin sell-off continues

Crypto-linked stocks retreated as Bitcoin resumed its downtrend on Wednesday. After rising to $63,750 on Monday, BTC is hovering at $60,0000 and it is unclear whether it will recover.

More importantly, Bitcoin is dangerously close to the crucial support at $58,273, which is the 200-day Exponential Moving Average (EMA). The next support level for Bitcoin is $56,426, representing its lowest level in May.

Bitcoin Price Chart

If Bitcoin drops below this price, it will be a sign that the bears have prevailed, which could take it to the $50,000 level, if not below.

This decline happened after a whale deposited nearly 2,000 Bitcoins to Binance in two separate transactions. While this isn’t always the case, deposits to exchanges often happen when holders are exiting their positions.

The whales’ action coincided with a period in which the German government continues to sell off its Bitcoin holdings. It transferred $52 million worth of coins to exchanges on Tuesday.

As a result, data from CoinGlass shows that the volume of Bitcoin balances on exchanges has started to increase. The volume rose to 2.49 million on Tuesday, from last month’s low of 2.47 million.

Bitcoin Balances

Bitcoin balances on exchanges

Bitcoin Mining Companies at Risk

If the Bitcoin sell-off continues, it will put Bitcoin mining companies like Marathon, CleanSpark, and Riot Platforms at risk. These companies have tended to have a close correlation with Bitcoin in the past.

This drop is happening a few months after the halving event, reducing the amount of Bitcoins that miners receive.

To compensate for this drop, most of these companies have added their mining equipment. CleanSpark has reached a hash rate of 20 EH/swhich helped her mine 445 coins in June after mining 417 coins the previous month. She did this after purchasing 5 mining sites in Georgia.

Digital Marathon mined 590 coins in June, down 40% from the same month in 2023 and flat from May.

Riot Platforms, on the other hand, focused on acquiring Bitfarms, a company that mined 189 coins in June.

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Bitcoin

Michael Saylor Issues Statement on Bitcoin Amid Crypto Market Sell-Off by U.Today

Published

7 months ago

3 July, 2024

TokenTrends Staff

Michael Saylor issues statement on Bitcoin amid crypto market sell-off

U.Today – Amid an ongoing sell-off in the cryptocurrency market, Michael Saylor, a prominent advocate and president of MicroStrategy, made a statement on X (Twitter) that reverberated across the crypto space: “Just Bitcoin.”

This two-word tweet comes as the cryptocurrency market faces significant sell-offs as the price of Bitcoin plummets.

Bitcoin, the largest cryptocurrency by market value, began its decline in Tuesday’s trading session, hitting $63,223 at one point before falling further.

Losses deepened on Wednesday as investors considered remarks from Fed Chair Jerome Powell, with Bitcoin hitting intraday lows of $59,509. At the time of writing, BTC is down 2.85% over the past 24 hours to $60,274.

According to data from CoinGlass, the sell-off has resulted in a significant amount of cryptocurrencies being liquidated in the past 24 hours, totaling over $166 million. However, this has not deterred Saylor’s confidence in Bitcoin, as he reiterates his longing for the crypto asset in his tweet.

Cryptocurrency market crashes

Cryptocurrencies fell on Tuesday after Fed Chairman Jerome Powell said the central bank needs to see more progress on inflation before cutting interest rates, which are now at 5.25%-5.50%. Powell revealed at a monetary symposium in Sintra, Portugal, that the United States is moving closer to a disinflationary path.

“We want to be more confident that inflation is moving sustainably downward toward 2% before we begin the process of tapering or easing policy,” Powell said.

Market losses deepened after Wednesday’s economic releases that indicated the labor market is cooling. Recent data showed weaker-than-expected private payroll growth in June, but weekly jobless claims were higher than economists had forecast. The latest figures come ahead of the highly anticipated June nonfarm payrolls report on Friday.

As the cryptocurrency market goes through a period of uncertainty, the coming days and weeks will be crucial in determining the direction of BTC’s price.

This article was originally published on U.Today

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Bitcoin

Bitcoin and Ethereum in GTA 6? Still rumors — for now

Published

7 months ago

3 July, 2024

TokenTrends Staff

Bitcoin and Ethereum in GTA 6? Still rumors — for now

Rumors that the long-awaited Grand Theft Auto 6 will use cryptocurrency that has been circulating for more than a year now—and they’re spinning again.

On Wednesday, a pseudonymous Crypto Twitter influencer named Gordon — apparently named after Gordon Gekko from the iconic 1987 film “Wall Street” —shared to his nearly 500,000 followers that “GTA 6 will allow cryptocurrency payments” and that “so far only Bitcoin, EthereumIt is USDT [are] confirmed.”

But in reality, no cryptocurrency has been confirmed for Grand Theft Auto 6, despite ongoing chatter about the rumors. Rockstar Games and parent company Take-Two have made no such announcements this week on the subject, nor have they made any prior announcements, and official trailers and announcements have made no mention of cryptocurrency being included.

However, the tweet — which also included a fake trailer for the game — quickly went viral, with over 500,000 views as of this writing in a matter of hours. When Twitter users asked Gordon for his sources, he would jokingly respond that his “uncle works there” or say that previous reports on the matter were “old” at this point.

But really, nothing has changed since then. DecipherGG’s reported in previous rumors in May 2023, not even since the first official trailer — which initially leaked with “BUY BTC” stamped on itApparently by the leaker in question—premiered last December.

DecipherGG reached out to Rockstar Games for comment but did not receive an immediate response.

Could Grand Theft Auto 6 implement a crypto element when it releases in 2025? It’s certainly possible, and if so, it would be a transformative moment for cryptocurrency adoption by the traditional gaming industry.

Take-Two Interactive has explored the space before, acquiring casual gaming giant Zynga in early 2022, when Take-Two founder and CEO Strauss Zelnick suggested there were “Web3 opportunities” that they could explore better as a team. Zynga has launched its first blockchain game on Ethereum, called Sugartownbut Take-Two has yet to get involved with other brands.

Rockstar Games, on the other hand, prohibited the use of cryptocurrency or NFTs on player-run Grand Theft Auto 5 servers in late 2022, following a rise in the use of NFTs to represent unique player-owned assets on modded game servers.

And given Grand Theft Auto’s satirical tone, the game may be more likely to criticize cryptocurrency and poke fun at caricatures of crypto fans and NFTs, for example, rather than trying to launch its own on-chain currency. But that’s all speculation at this point, as there are relatively few official details about GTA 6.

For now, at least, don’t believe the hype. While Rockstar Games hasn’t officially closed the door on cryptocurrency usage in Grand Theft Auto 6, it hasn’t confirmed anything about it either. However, it’s sure to remain a hot topic in the long run leading up to release, which is currently scheduled for fall 2025.

Edited by Ryan Ozawa.

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Bitcoin

Crypto President Trump’s ‘Lesser’ Regulation Will Bless Coinbase’s Bitcoin Leverage, Expert Says – Coinbase Glb (NASDAQ:COIN)

Published

7 months ago

3 July, 2024

TokenTrends Staff

Crypto President Trump's 'Lesser' Regulation Will Bless Coinbase's Bitcoin Leverage, Expert Says - Coinbase Glb (NASDAQ:COIN)

Chris SenyekChief Investment Strategist at Wolfe Researchrecently expressed his opinion on the potential impact of a Donald Trump win the 2024 elections in the cryptocurrency market.

What happened: Senyek suggested that a Trump presidency could ease cryptocurrency regulations, benefiting companies like Coinbase Global Inc. COIN due to its importance Bitcoin BTC/USD Leverage.

“Trump would be less harsh on crypto regulation, and Coinbase would be a big beneficiary of that given its influence on bitcoin,” Senyek said during CNBC’s “Last Call” on Tuesday.

See too: Enhance Your Retirement Portfolio: The Benefits of Adding Cryptocurrency

Why does this matter?:Senyek’s comments come in the context of the former president Donald Trump‘s reported plans to participate at the Bitcoin 2024 convention, which could reinforce his image as a “Crypto President”.

Trump’s potential participation in the Bitcoin 2024 convention, a major event on the cryptocurrency calendar, could have significant implications for the industry.

Pratik KalaHead of Research in DigitalX Limitedhe has predicted a Trump victory in the upcoming elections, but warns that immediate cryptocurrency-friendly regulations may not be a priority.

A recent report by 10x Search explore the recent rise in Bitcoin price and its potential connection to Trump’s strong position in the 2024 election race. The report, titled “Is the Bitcoin Trump Pump Sustainable?”, highlights a 4% spike in Bitcoin’s price following the news that the president Joe Biden will remain in the race despite a poor performance in the presidential debate.

Price Action: At the time of writing, Bitcoin was trading 2.10% lower at $60,860.66, according to Benzinga Pro.

Read next:

Image created using photos from Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari

News and market data brought to you by Benzinga’s APIs

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