Weekly Forecast: Bitcoin’s Dominance Falls to Six-Week Low as Altcoins Lead Retracement
After a series of false rallies, technical selloffs and downright manipulation, the cryptocurrency market appears to have made a convincing breakthrough. Over the past five days, cryptoassets have added more than $25 billion in value with coins other than bitcoin doing the heavy lifting. For the first time in months, bitcoin’s dominance rate is declining rather than increasing.
XRP has been the market’s biggest x-factor over the past week as investors rallied behind three major developments: the anticipated launch of the Ripple-backed MoneyTap, forthcoming commercialization of xRapid and a newly announced partnership with PNC. Positive sentiment is now spreading throughout the market, with altcoins like Stellar XLM and Cardano ADA emerging as the weekend’s biggest winners.
While the bulls clearly aren’t out of the woods yet, cryptoassets have recovered more than $40 billion in lost market cap since the most recent trough. Time will tell whether crypto psycho is taking up fundamentals again. If the answer is yes, the tide may be slowly turning.
Altcoins Leading the Way
XRP has gained a staggering 104% over the last seven days, offering convincing evidence that the worst of the downtrend is over. While a similar rally this week appears almost inconceivable, altcoins like XLM and ADA are picking up the slack.
Stellar’s native XLM gained 36% last week and on Sunday briefly overtook EOS as the world’s fifth-largest blockchain. Stellar’s recovery began after the company announced it had acquired Chain, a highly-touted blockchain firm that is championing enterprise adoption of distributed ledger technology. A few days later, UNICEF announced it is accepting XLM for donations and Circle, a Goldman Sachs-funded venture, said XLM will be added to its class of investable assets.
Continued growth in the altcoin and token classes is indicative of a turning tide in the cryptocurrency market. As investors recall, the height of the bull market in January was accompanied by a large-scale decoupling of bitcoin and the rest of the market. .
Bitcoin Regains Poise
Despite being outshone by its altcoin peers, bitcoin has also made tangible progress over the past three days. The leading digital currency crossed the 50-day moving average on Friday en route to multi-week highs. A bullish crossover of the 200-day MA is still a ways off, though the momentum charts indicate that a sustained rally is likely.
Bitcoin shot up on Friday after the U.S. Securities and Exchange Commission (SEC) announced it would seek further comment on the closely watched VanEck SolidX Bitcoin Trust. This essentially means that a decision on the ETF could drag on for several months.
The SEC so far has reviewed more than 1,400 comments related to the application but has raised 18 key issues that must be addressed before a decision is reached. Many leading analysts, including Hacked’s own James Waggoner, believe that a decision is unlikely before February.
The Week Ahead
Below is a rundown of this week’s major events from the worlds of crypto and traditional markets.
The economic calendar features a few potentially market moving events on Monday. The CESifo Group will release its monthly report on German business expectations. In the United States, the Chicago Federal Reserve will release the National Activity Index for August and the Dallas Fed will report on regional manufacturing conditions for the month of September.
In crypto news, High Performance Blockchain (HPB) – the “EOS of China” – will launch its mainnet on Monday.
The Connected World Summit in London will kick off on Tuesday with 2,500 attendees, 200 speakers and 60 exhibitions. The event, which is sponsored by Microsoft, Bosch, Huawei and others, explores themes related to the “smart economy,” of which blockchain technology plays an important role.
In traditional markets, the Bank of Japan (BOJ) will release the minutes of its most recent policy meeting on Tuesday. From a data perspective, reports on U.S. housing costs will make headlines in North American trading.
The Federal Reserve will deliver a policy verdict on Wednesday following its two-day meeting in Washington. Fed officials are widely expected to raise interest rates for the third time this year and could possibly signal for an additional hike in December. The official rate statement will be released at 2:00 p.m. ET. It will be accompanied by a quarterly summary of economic projections covering GDP, unemployment and inflation.
The Fed isn’t the only central bank scheduled to deliver a rate verdict this week. The Reserve Bank of New Zealand (RBNZ) is also expected to deliver a monetary policy decision on Thursday.
In economic data, the European Commission’s statistical agency will release a bevy of sentiment indicators on Thursday, including: services, consumer confidence, industrial confidence and economic sentiment. Germany will also release final inflation numbers for the month of September.
The U.S. government is scheduled to deliver final GDP figures for the second quarter. Reports on durable goods orders and the goods trade balance are also on deck.
The economic calendar features several market-moving events on Friday. Action begins in Asia with the Caixin China manufacturing PMI. From there, investors will react to final Eurozone CPI data as well as revised second-quarter GDP estimates from the United Kingdom.
Meanwhile, the U.S. government will release the closely watched personal incomes and outlays report, which contains the most up-to-date reading of core personal consumption expenditures (PCE). The core PCE index is the Fed’s preferred measure of inflation.
Friday is also the final trading day of the month, which means expiration of CME’s bitcoin futures contract. Trading of the September contract terminates at 4:00 p.m. GMT.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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