Theme, Trade, TA: CoinJar explores NFT mania, BTC non-dominance and Ethereum’s big breakout
Welcome to CoinJar’s Theme, Trade, TA. Each fortnight CoinJar joins Stockhead to explore a big crypto Theme, an interesting Trade and some good, old-fashioned TA (courtesy of Tom from trading gurus FX Evolution).
In retrospect, the NFT (non-fungible token) frenzy in March-April was a perfect top indicator for the crypto market at large. People paying millions of dollars for poorly rendered JPEGs? What could possibly go wrong!
However if you looked past the dodgy artwork and ludicrous valuations, it was easy to see something powerful in the NFT concept. Unforgeable, instantly verifiable proof of ownership is an idea with obvious applications in any number of fields, from art collecting through to international trade and real estate.
Well, after a three-month hiatus, it appears the NFT market is back on track. New market leader OpenSea recently announced a $100 million funding round (valuing it at US$1.5 billion), while processing tens of millions of dollars a day in NFT sales. Meanwhile, the prices being fetched by some 2017 NFTs are officially in jaw-dropping territory – the floor price for a Mooncat is now around 100 ETH i.e. US$300,000.
0/ In today’s Delphi Daily, we went deep on this weekend’s NFT mania.
The sales and price floors of Bored Apes, Art Blocks, and Crypto Punks surged to new highs. Meanwhile, OpenSea pulled away with record volume and market share.
See the report below 👇https://t.co/32SxI6OuKK
— Delphi Digital (@Delphi_Digital) August 2, 2021
OpenSea doesn’t have a token, but the crypto markets do have a habit of moving in clusters, so if the NFT segment is having its moment it might be time to look at some of the other players. And if the DeFi surge at the start of this year was anything to go by, the ride could be spectacular.
If Ethereum becomes the settlement layer for value, it also becomes the settlement layer for culture
— DavidHoffman.eth Ξ🦇🔊💰 (@TrustlessState) August 1, 2021
As a general rule, the crypto markets can be split into two unequal halves: Bitcoin and everything else (AKA altcoins). In this setup, Bitcoin is the undisputed king, the power asset whose smallest move can send the rest of the markets soaring or tumbling. The general logic is when Bitcoin’s moving up, stay away from alts. When Bitcoin stalls, it’s s..tcoin-a-palooza.
For this reason, many market analysts like to keep an eye on Bitcoin dominance (BTC.D) as a gauge of whether it’s time to maximise your exposure to Bitcoin or alts. While BTC.D has been surging ever since the May collapse – a product of Bitcoin crashing by 50% but alts crashing much, much harder – it’s currently approaching a decision point.
$BTC dominance looks ready to drop. Best case scenario would be flat action and alts have a big month August. When alts get exhausted then hopefully a double bottom forms, ride up $BTC again, and repeat. pic.twitter.com/7UDfC8uyK0
— IncomeSharks (@IncomeSharks) August 4, 2021
So, is this a rising wedge about to break down? Or is it an ascending triangle that keeps tapping on resistance? The answer could tell us a lot about what the crypto markets will look like over the next few weeks.
Dominance is making a strong bottom formation. It adds strength to its power by making a higher high and higher low. If the triangle breaks up, don’t be in a hurry to buy long-term altcoins. bitcoin seems to show its strength with sudden movements. https://t.co/yO0TYqUgdA pic.twitter.com/S61ZQXUmUI
— CRYPTO HARDROCK 🐴 (@CryptoHardRock) August 7, 2021
If BTC dominance does break down, a prime beneficiary will be crypto’s second-in-command, Ethereum.
According to Tom from FX Evolution, yesterday saw Ethereum post its third-highest weekly close in history, eclipsing June’s post-meltdown dead cat bounce and breaking the last point of weekly resistance until US$4000.
Needless to say, this bodes well for continuation to the upside. However, nothing goes up in a straight line and if you were looking for spots to place a bid, it’s worth paying attention to the 20 and 50 EMAs on the 8-hour chart.
As you can see, the 20 EMA has acted as support throughout this recovery, while historically the 50 has offered fallback support in case of a deeper trend reversion. The 20 is also currently facing up to a previously established resistance level, which suggests there could be some sideways consolidation before ETH makes any moves back towards its all-time highs.
On the other hand, if it loses these two trends, well, it could be time to start polishing up the CV again.