crypto market analysis

BTC’s price is range-bound, giving other assets room to gain a foothold in an otherwise down market.

This week, Bitcoin’s (BTC) price took a tumble as a hotter-than-expected consumer price index (CPI) report showed high inflation remains a persistent challenge despite a wave of interest rate hikes from the United States Federal Reserve. Interestingly, the market’s negative reaction to a high CPI print seemed priced in by investors, and BTC’s and Ether’s (ETH) prices reclaimed all of their intraday losses to close the day in the black. 

A quick look at Bitcoin’s market structure shows that even with the post-CPI print drop, the price continues to trade in the same price range it has been in for the past 122 days. Adding to this dynamic, Cointelegraph market analyst Ray Salmond reported on a unique situation where Bitcoin’s futures open interest is at a record high, while its volatility is also near record lows.

These factors, along with other indicators, have historically preceded explosive price movements, but history will also show that predicting the direction of these moves is nearly impossible.

So, aside from multiple metrics hinting that a decisive price move is brewing, Bitcoin is still doing more of the same thing it’s done for the past 4.5 months. With that being the case, it is perhaps time to start looking elsewhere for emerging trends and possible opportunities.

Here are a few data points that I’ve continued to be intrigued by.

New rotations will emerge

ETH’s price has lost its luster in the now post-Merge era, and the asset now reflects the bearish trend that dominates the rest of the market. Since the Merge, ETH’s price is down 30% from its $2,000 high, and it’s likely that a good deal of the speculative capital that backed the bullish Merge narrative is now in stablecoins looking for the next investment opportunity.

Aside from ETH being an asymmetrical performer in the last four months, Cosmos (ATOM) also defied the market downtrend by posting a monster rally from $5.40 to $16.85. As covered thoroughly by Cointelegraph, oversold conditions, along with the hype of Cosmos 2.0, backed the bullish price action seen in the altcoin, but this chart continues to capture my imagination.

According to the revised Cosmos white paper, the current supply of ATOM will dynamically adjust based on the supply and demand of its staking. As shown in the chart above, when Cosmos 2.0 “kicks in” for the first 10 months, issuance of new ATOM tokens is high, but after the 36th month, the asset becomes deflationary.

From the vantage point of technical analysis, ATOM’s price appears to have hit a local top as the months leading up to Cosmos 2.0 were a “buy the rumor, sell the news” type of event, but it will be interesting to see what transpires with ATOM’s price as the market approaches month 20 in the diagram above.

Related: Price analysis 10/14: SPX, DXY, BTC, ETH, BNB, XRP, ADA, SOL, DOGE, MATIC

Keep an eye on Ethereum Network activity

Since the Ethereum Merge, Ether emissions have dropped by 97%, and while the price has pulled back significantly, over the coming months, investors might keep an eye on Ethereum network activity, developments with ETH staking across decentralized finance (DeFi) and institutional products, along with any spikes in gas (connected to network activity).

While the price could succumb to bearish pressure in the short term, if the market begins to turn around if new trends trigger increased use of DeFi products, it’s possible that ETH’s price could react positively to those developments.

Post-Merge, BTC price action will likely remain king

While new trends across various altcoins may emerge, it’s important to remember the wider context in which crypto assets exist. Global economies are on the rocks, and persistently high inflation remains an issue in the United States and many other countries. Bond prices are whipsawing, and a looming debt crisis makes its presence known on a daily basis. Risk-on assets like cryptocurrencies are incredibly volatile, and even the strongest price trends in crypto (whether backed by fundamentals or not) are subject to the whimsy of macro factors such as equities markets, geopolitics and other market events that impact investors’ sentiment.

Keeping this in mind, Bitcoin remains the largest asset by market capitalization within the crypto sector, and any sharp moves from BTC’s price are bound to support or suppress the micro trends that might be gaining traction in the market. There is still the possibility of a sharp downside in Bitcoin’s price, so traders are encouraged to calculate investment size according to their own appetite for risk, and while multiple metrics might support opening long positions in various crypto assets, it still seems too early to fully ape in.

This newsletter was written by Big Smokey, the author of The Humble Pontificator Substack and resident newsletter author at Cointelegraph. Each Friday, Big Smokey will write market insights, trending how-tos, analyses and early-bird research on potential emerging trends within the crypto market.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.