Crypto traders avoid risk and shelter in stablecoins as the market reaches a turning point

Crypto traders avoid risk and shelter in stablecoins as the market reaches a turning point

On-chain analytics agency Glassnode printed a report hinting that buyers are rotating capital towards risk-off belongings like stablecoins and Bitcoin. Technicals present that altcoins are at a essential turning point between a constructive and a damaging breakout.

Glassnode’s evaluation of Uniswap and futures buying and selling volumes reveals that the uptrend that started in the first quarter of 2023 started cooling off in April, with regulatory issues and a lack of liquidity selling risk-off tendencies amongst traders.

The report acknowledged that whereas it would seem that memecoins triggered a surge in Uniswap’s buying and selling quantity, a nearer have a look at Uniswap’s swimming pools reveals that the majority of quantity was for high cryptocurrencies in Wrapped BTC, Ether (ETH) and stablecoins.

Moreover, sandwich assaults and bot buying and selling accounted for a important quantity of this buying and selling exercise. The report learn:


“If we take into account that many bots engage in arbitrage or sandwich attacks, the degree of ‘organic’ trading volume on Uniswap may well account for over two-thirds of all DEX activity.”

The futures buying and selling volumes for Ether on centralized exchanges contracted in May, with 30-day common buying and selling volumes dropping to $12 billion per day towards a yearly common of $21.5 billion.

Glassnode analysts urged that the decline in futures buying and selling volumes is a signal that “institutional trading interest and liquidity remains quite weak.”

Similarly, the market share for Bitcoin (BTC) perpetuals versus their Ether counterparts exhibits a enormous discrepancy, with 65.5% dominance for Bitcoin. In 2022, the two belongings had equal shares in the perpetual swap area. However, the pattern has shifted considerably in the final 12 months.

BTC vs ETH perpetual quantity dominance. Source: Glassnode

Tether (USDT) has absorbed a important proportion of outflows from Binance USD (BUSD) and Circle’s USD Coin (USDC), pushing USDT to a new all-time excessive provide of $83.1 billion.

In the crypto market, capital normally flows from the majors, like Bitcoin and Ether, into altcoins. However, the above developments present that, currently, the capital rotation is going on away from high-risk altcoins towards low-risk belongings like stablecoins and Bitcoin.

Bitcoin’s relative energy versus altcoin value momentum

Technically, Bitcoin’s dominance proportion over the crypto market, which measures the share of Bitcoin’s market capitalization in the complete crypto valuation, skilled an uptrend in 2023 earlier than encountering resistance at the 48.35% stage.

If Bitcoin consumers are unable to interrupt out above this resistance, the market can count on an altcoin rally relative to Bitcoin.

Bitcoin dominance over the crypto market. Source: TradingView

On the different hand, the TOTAL2 chart, which measures the market capitalization of the cryptocurrency market excluding Bitcoin, had its constructive breakout from the triangle sample reversed, pushing the index again into a bearish triangle sample that began forming in October 2022.

Related: Ethereum fuel charges calm down after May memecoin frenzy

Currently, the complete market capitalization of altcoins is sure by a bearish descending triangle sample with decrease highs and a parallel help stage of $433.39 billion. The promoting would possible speed up under this stage.

The market capitalization of cryptocurrencies excluding Bitcoin. Source: TradingView

If consumers push larger by constructing help above the parallel resistance at $616.35 billion by weekly closing, altcoins might proceed to go larger over the subsequent few weeks.

This article is for basic data functions and isn’t supposed to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed below are the writer’s alone and don’t essentially mirror or characterize the views and opinions of Cointelegraph.

This article doesn’t include funding recommendation or suggestions. Every funding and buying and selling transfer entails risk, and readers ought to conduct their very own analysis when making a determination.

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