Market Update - Week 16: An extraordinarily stable crypto market

25 Apr 2022

Market Update - Week 16: An extraordinarily stable crypto market

The bitcoin price is down 1% over the past seven days after being exposed to remarkably little volatility. The crypto market seems to be indecisive as the bitcoin price has been hovering around $40k for several weeks now.

Source: Tradingview (Coinbase, Binance)

Correlations in the crypto market continue to stay elevated, with ETH and BNB closely following bitcoin over the past seven days, declining 2% and 4%.

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Source: CoinMetrics

Dogecoin climbed 17% over the past seven days after seeing a 30% price pump following Elon Musk’s takeover of Twitter on Monday, as some traders speculate that Musk will integrate his favorite cryptocurrency into the social media platform.

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Source: CoinGecko, messari.io

Small Caps are struggling

April has been another tough month in the crypto market, with small caps struggling the most. The Small Caps index is down almost down 30% this month.Approaching the end of April, the Mid Cap Index is the leader with a 10% loss. In second place follows bitcoin with 13% being shaved off its price, while the Large Cap Index is number three with a 16% decline.

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Source: Bletchley Indexes

As you can see in the chart, the three largest indexes followed each other extremely tightly in April. However, as we normally see during tough market conditions, the Small Caps Index is struggling.The Small Cap Index performed excellently in March, gaining more than 40% in a great month for the overall crypto market. On the other hand, April has been a weak month, and the Small Caps’ underperformance aligns with the smaller coins' historical tendencies of carrying a higher beta to the general market direction.

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Source: CoinMarketCap

A prolonged state of fearfulness in the crypto market

The market has remained in the same fearful state for three weeks now, as the Fear and Greed Index sits just above the “extreme fear” level. We see low spot volumes and low volatility, indicating undetermined and anxious market participants waiting for bitcoin to make a move before taking action.

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Source: Alternative.me

Bitcoin’s dull spot market action continues

The bitcoin trading activity stays at unusually muted levels, as the 7-day average spot volume sits below $4 billion. It’s a slight increase from last week but still among the lowest trading volumes observed during the past year. Such a prolonged period of low spot volumes is unusual for bitcoin.

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Source: Skew, Tradingview (Binance, Binance US, Bitfinex)

Bitcoin’s 7-day volatility reaches lowest level since February

The bitcoin price shows minimal movements, as the 7-day volatility just reached its lowest level since February. Last week the 30-day volatility dropped to levels not seen since November 2020, and it just keeps dropping. Such prolonged low volatility periods are unusual, especially in a fearful market.

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Source: Tradingview (Coinbase)

Bitcoin saw two daily closes below trend line over the weekend

Bitcoin found strong support at $40k and traded close to this price for the past week.With the further decline in bitcoin’s volatility over the last week, bitcoin sits at similar levels as noted last week while trading in a narrow range.Bitcoin has tested the $38,000 support twice over the last week, and a strong bounce has followed both visits, making this a key support area in the coming days.

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Source: Tradingview, Coinbase

Towards the upside, BTC has met resistance at $42,000. This has been a key technical area previously throughout this long-lasting trading range.Bitcoin closed below its upward sloping trend line at the end of last week after seeing a lower low. Bitcoin regained its trendline on Monday but is trading very close to the trend.