The passing week seems to have brought relief to those with exposures to the rising prices of popular cryptocurrencies. This comes after two weeks of rapid and strong correction in this market.
Bitcoin at one point lost nearly 30 percent of its value, and the market capitalization fell below $1 billion. The ETH/USD exchange rate fell nearly 25 percent in the two-week correction, while litecoin retreated nearly 40 percent.
However, the last week of April brings a strong rebound in the market of popular cryptocurrencies. The BTC/USD exchange rate rose by 20 percent, and on April 26, bitcoin's gains in dollar terms seemed to be the largest in history. Litecoin seems to have risen nearly 30 percent this week, and ETH/USD set a new all-time high. Ethereum had to be paid for around $2,800 already. Thus, the exchange rate of this cryptocurrency in relation to the USD jumped by 21 percent. In dollar terms, in a week, this is the biggest increase in history.
Looking at the cryptocurrency market data, we could see that along with the correction, there was no major outflow of funds from ETFs or Grayscale. There was not a large influx of cryptocurrencies into exchanges for further selling to occur. This could mean that the correction was mainly triggered by leveraged long positions that investors may have opened, hoping for further market growth after Coinbase's IPO, and individual investors may have contributed to the correction. Such a mix, for which the catalyst was the decline in bitcoin's computing power along with power outages at cryptocurrency mines in China, may have cleared the market of both high leverage and short-term speculators.
Thus, it seems that institutional demand has not materially weakened and is still active in the market. Investors were also not spooked by the news that Tesla has sold some of its bitcoin. Currently, however, some market observers are wondering how long bitcoin will still be able to stay at the forefront of possible increases due to the ETH/BTC or LTC/BTC relationship. Both Ether and Litecoin seem to be gaining ground against BTC and could prove stronger than the world's largest cryptocurrency in the coming months. It is also worth mentioning that more than 4 million ETHs with a market value of over $11 billion have already been deposited under the launch of the ETH 2.0 network. This may show how much the market believes in the entire project and the entire Ethereum network. Hence, ETH may come to the forefront in the statistics of both returns and market growth rates.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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