Home Markets Crypto Market Review, August 18

Crypto Market Review, August 18

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Crypto Market Review, August 18

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Arman Shirinyan

Bitcoin’s value lags adoption, while meme currencies outperform “serious projects”

With record inflation figures in Europe and the strengthening of the US dollar, Bitcoin and other cryptocurrencies came under pressure again, with both currencies gaining a few percent in value.

The DXY growth cycle begins

Since August 16, DXY has gained around 1.5% of its value after successfully bouncing off the 50-day moving average support level, which has been tested four times during this rally. The technical situation on the chart also correlates with market fundamentals.

DXY data
Source: TradingView

Despite positive CPI data, market euphoria disappeared while the Fed still has a long way to go before bringing inflation back to its target, which means that the economy will see another round of rate hikes, with a soft landing around 2023.

As for the European currency, the dollar still prevails over the euro, causing a further decline of 1.1% in recent days, which makes parity between the two assets possible for the foreseeable future. On July 28, the value of the euro officially fell below the $1 threshold for the first time in 20 years.

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Bitcoin is not catching up with its adoption

According to data provided by a Fidelity analyst, as we have seen previously, Bitcoin’s adoption rate far exceeds its market value, making it technically “cheap” according to many price models.

Bitcoin price pattern
Source: Jurien Timmer

With BTC’s most recent price performance, the asset has fallen well below its desired pace of growth, making it technically oversold relative to adoption value. The analyst used various price models, mainly based on the adoption of technologies such as mobile networks and the Internet.

But despite the shifting issues with different price patterns, Bitcoin continues to grow exponentially from where it was just a few years ago. Crypto influencers like Vitalik Buterin have criticized the price models for being subjectivity and rigidity. Considering the difference between technologies, the eras in which they were created, and a general evolution of technologies, it is difficult to predict a certain rate of adoption and growth of an asset or technology.

Altcoins move sideways

The majority of alternative L1s in the market are always moving sideways or showing a slight uptrend in the market. XRP has shown record low volatility in the market, moving within the 2% range over the past 20 days in the market.

Meme currencies like Shiba Inu and Dogecoin were the most notable assets in the market, as these two gained about 20% in value, standing out against an anemic XRP. Unfortunately, the lack of fundamental support behind the rally in DOGE and SHIB caused a quick reversal, which now rules out the possibility of an accelerated rally in the two currencies themselves.

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