According to a report by Glassnode, investors are shifting their capital towards safer assets such as stablecoins and Bitcoin, as technical indicators suggest that altcoins are at a critical juncture between a bullish and a bearish breakout. Glassnode’s analysis of Uniswap and futures trading volumes indicates that the uptrend that commenced in Q1 of 2023 has slowed down since April, with concerns over regulations and insufficient liquidity contributing to a preference for lower-risk assets among traders.
The report indicated that although it may seem that meme-based cryptocurrencies were responsible for the increase in Uniswap’s trading volume, a more detailed analysis of the platform’s pools revealed that the majority of the volume was for leading cryptocurrencies such as Wrapped BTC, Ether ETH $1,878, and stablecoins. Additionally, a substantial portion of this trading activity was attributed to sandwich attacks and bot trading. The report further stated that if we consider that many bots are involved in arbitrage or sandwich attacks, the actual level of “organic” trading volume on Uniswap may account for more than two-thirds of all decentralized exchange (DEX) activity.
Glassnode analysts have reported that the futures trading volumes for Ether on centralized exchanges decreased in May, with a 30-day average trading volume of $12 billion per day, which is lower than the yearly average of $21.5 billion, indicating weak institutional trading interest and liquidity. The market share for Bitcoin perpetual also shows a substantial difference compared to Ether counterparts, with Bitcoin holding a 65.5% dominance, whereas, in 2022, both assets had an equal share in the perpetual swap space, marking a significant shift in trend within the past year.
The recent trends in the crypto market reveal that Tether (USDT $1.00) has experienced a considerable influx of outflows from Binance USD (BUSD $1.00) and Circle’s USD Coin (USDC $1.00), resulting in USDT’s supply reaching an all-time high of $83.1 billion. Typically, capital flows from major cryptocurrencies such as Bitcoin and Ether into altcoins, but the current trends indicate that capital rotation is moving away from high-risk altcoins towards low-risk assets such as stablecoins and Bitcoin.
The strength of Bitcoin in comparison to the momentum of altcoin prices.
From a technical standpoint, Bitcoin’s dominance percentage in the crypto market, which reflects the proportion of Bitcoin’s market capitalization in the overall crypto valuation, demonstrated an upward trend in 2023 before encountering resistance at the 48.35% level. In the event that Bitcoin buyers are unable to surpass this resistance level, it is anticipated that there will be an altcoin rally in relation to Bitcoin.
At present, the collective market capitalization of altcoins is constrained by a bearish descending triangle pattern characterized by diminishing highs and a parallel support level of $433.39 billion. If this level is breached, it is expected that the selling pressure will intensify.
In the event that buyers establish a support level above the parallel resistance at $616.35 billion by the end of the week, altcoins may experience a continued upward trend in the upcoming weeks.
