Crypto markets were less volatile on Tuesday as some traders bought off price losses.
The bitcoin (BTC) price stabilized at around $30,000, which is the low point of a one-year trading range. The cryptocurrency appears to be oversold, similar to a brief relief rally in late January. Still, some analysts are cautious, citing risks in the stablecoin market.
On Tuesday, U.S. Treasury Secretary Janet Yellen spoke about the ongoing plight of stablecoin UST during her testimony before a U.S. Senate committee. Yellen's comments came just hours after the token, which is supposedly pegged to the dollar, fell to a low of $0.61 in the last 24 hours and at least one platform stopped trading it.
"I think it just goes to show that this is a fast-growing product that poses risks to financial stability, and we need an appropriate framework," Yellen said.
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Most alternative cryptocurrencies (altcoins) outperformed bitcoin on Tuesday, suggesting greater risk appetite among short-term traders. For example, Polygon's MATIC token rose 19% in the last 24 hours, while SHIB rose 15% and BTC rose 4% in the same period.
Typically, BTC falls less than altcoins during market rallies because it has a lower risk profile compared to smaller tokens.
Latest prices
●Bitcoin (BTC): $31,345, -0.12%.
●Ether (ETH): $2,356, +2.28%
●S&P 500 daily close: $4,001, +0.25%
●Gold: $1,837 per troy ounce, -1.11%
●Ten-year Treasury yield daily closing price: 2.99%.
Bitcoin, ether, and gold prices are determined at approximately 4 p.m. New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information on CoinDesk indices can be found at coindesk.com/indices.
The graph
below shows the recent increase in the transfer volume of BTC on exchanges. The recent increase is the highest since March 2020, when BTC fell 50% during the sell-off triggered by the coronavirus pandemic.
In theory, exchange inflows indicate that traders want to sell their cryptocurrencies, while outflows occur when traders move tokens into storage (digital wallets), incurring transaction costs.
The recent surge in BTC exchange inflows could be a sign of capitulation, similar to previous price lows. Moreover, bitcoin trading volume has surpassed the recent peak in January, and sentiment indicators show extreme bearishness among traders. This usually leads to a relief rally.
Bitcoin's Extended
DrawdownBitcoin
'sdrawdown
, which is the percentage decline from the high to the low, indicates a short-term price low, similar to January. However, in bear markets, the drawdown can be 60-80%, compared to the current 53% drop from peak to trough.
Bitcoin has experienced lower drawdowns since the 2018 crypto bear market, consistent with its long-term uptrend defined by a series of higher price lows.
Nevertheless, unlike previous conditions, Bitcoin's current correlation with the S&P 500 is as high as it has ever been. This means that the cryptocurrency is more sensitive to traditional market influences such as interest rates and current events.
Altcoin Overview
- (Un)stablecoin and UST turbulence: The battle over TerraUSD (UST), a $16 billion algorithmic stablecoin, continues as it changes hands far below its $1 value. Luna Foundation Guard, the organization created to deal with crises like this one, appears to have loaned its entire $3 billion bitcoin holdings to market makers, but claims to have spent none of it. Read more here.
- ETH and BTC move in lockstep: the correlation of returns between bitcoin (BTC) and ether (ETH) has increased in recent months, reaching its highest level since early summer 2020, according to Tuesday's Coin Metrics report. As volatility increases in crypto markets, the various tokens within the digital asset class are trading closer together. Read more here.
- Boba lowers gas fees: Boba Network announced that it has implemented single-token gas payments on its blockchain, allowing users to pay 25% less in gas fees when using Boba tokens (BOBA) instead of Ether (ETH). Boba is an Ethereum scaling system that is said to have fast transactions and fees that are up to 60 times lower than on Ethereum. The expensive transaction costs, known as gas fees, are caused by congestion, which is a constant problem for users since most decentralized financial and non-fungible token (NFT) transactions take place on the Ethereum network. Read more here.
Relevant Insights
- Listen 🎧: The CoinDesk Markets Daily podcast team explains what you're really paying for with Ethereum gas fees.
- Can you really build a "crypto empire" in the Empire State? Mayor Eric Adams wants to make New York City the largest crypto hub in America, but there are a number of obstacles in his path.
- The FCA holds its first CryptoSprint: what the digital asset community expects from it: The U.K. regulator will meet with crypto experts to discuss how to handle disclosures related to crypto asset issuance, regulatory obligations and custody requirements.
- Chilean digital peso would have to operate offline, central bank governor says: Draft principles are expected to be released later this week, although no final decision on the digital peso has been made.
- Janet Yellen Hearing Before Senate on Financial Risks: U.S. Troubles Take Center Stage: Treasury Secretary Janet Yellen highlighted recent news about the loss of the dollar peg of the algorithmic stablecoin UST at a Senate Banking Committee hearing.
- Michael Saylor suggests MicroStrategy will never sell its bitcoin: The falling bitcoin price raised questions about whether the company could soon receive a margin call from its lenders.
- Argentina cracks down on crypto miners suffering from power shortages: Some registered companies saw their electricity bills rise 400% in March, while unregistered miners want to continue using subsidized residential tariffs.
Other marketsMostdigital
assets in the CoinDesk 20 ended the day higher
.Biggest Gains
| Asset | Ticker | Earnings | DACS Sector |
|---|---|---|---|
| Polygon | MATIC | +9.0% | Smart contracts platform |
| XRP | XRP | +4.4% | Currency |
| Ethereum | ETH | +2.5% | Smart contracts platform |
losers
| Asset | Ticker | Yield | DACS Sector |
|---|---|---|---|
| Algorand | ALGO | -4.1% | Smart contracts platform |
| EOS | EOS | -2.6% | Platform for smart contracts |
| Filecoin | FIL | -1.9% | Data Processing |
using the Digital Asset Classification Standard (DACS), which was developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.