On-chain analytics firm Glassnode published a report in which he hints that investors are rotating capital towards low-risk assets such as stablecoin and Bitcoin (BTC). Technical data shows that altcoins are at a crucial inflection point between a positive and a negative breakout.
Glassnode’s analysis of Uniswap and futures trading volumes reveals that the uptrend started in Q1 2023 began to cool in April, with regulatory concerns and illiquidity promoting risk-averse trends among speculators.
The report showed that while it might appear that memecoins caused Uniswap volume to spike, a closer look at the DEX pool revealed that most of the volume was from major cryptocurrencies such as WBTC, ETH and stablecoins.
Furthermore, sandwich attacks and trading bots accounted for a significant part of this trading activity. According to the report:
“Considering that many bots are engaged in arbitrage or sandwich attacks, the degree of ‘organic’ trading volume on Uniswap could well account for more than two-thirds of all DEX activity.”
Trading volumes for Ethereum futures on centralized exchanges contracted in May, with the 30-day average of trading falling to $12 billion a day, from a yearly average of $21.5 billion.
Glassnode’s team of analysts suggested that the decline in futures volumes is a sign that “institutional trading interest and liquidity remain quite weak.”
Similarly, the market share of Bitcoin perpetuals versus its counterpart, Ethereum, shows a huge discrepancy, with Bitcoin dominating 65.5%. In 2022, the two assets had the same quota in the perpetual swap space. However, the trend has changed significantly in the last year.
He USDT Tether has absorbed a significant proportion of withdrawals from USDC of Circle and BUSD from Binance, pushing a new ATH offering of $83.1 billion.
In the cryptocurrency market, capital often moves from tokens like Bitcoin and Ether to altcoins. However, the above trends show that capital rotation of late is taking place away from high-risk altcoins towards low-risk assets like stablecoin and Bitcoin.
Bitcoin Relative Strength Against Altcoin Momentum
Technically, Bitcoin’s percentage dominance of the cryptocurrency market, which measures the share of Bitcoin’s market capitalization in total cryptocurrency valuation, experienced an uptrend in 2023 before finding resistance at the 48.35% level.
If Bitcoin buyers are unable to overcome this resistance, the market can expect a rally in altcoins relative to Bitcoin.
On the other hand, the TOTAL2 chart, which measures the market capitalization of the cryptocurrency market excluding Bitcoin, saw its positive breakout of the triangle pattern reversed, pushing the index back into a bearish triangle pattern that had formed since October 2022. .
Currently, the total altcoin market capitalization is capped by a bearish descending triangle pattern with lower highs and a parallel support level at $433.390 million. Sales are likely to accelerate below this level.
If the buyers push higher and support on the parallel resistance of $616.350 million at the weekly close, the altcoins could continue to rise in the coming weeks.
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