Bitcoin Catalyzed the Market Recovery but Underperformed Most Large-Caps

February 7, 2022

Cryptocurrencies: Weekly Update

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This week the total cryptocurrency market capitalization bounced by over 10%, now sitting around $1.7 trillion. Bitcoin maximalists were happy to see that Bitcoin’s breakout was the catalyst for the market’s recovery with a +15% over the past 7-days. Friday also marked the best single day performance for BTC since February 2, 2021, jumping +11.5%.

We were actually keyed into Bitcoin’s reversal over 2 weeks ago, with BTC showing oversold levels on both price and momentum according to our Real Motion indicator. Once this signal was generated, it was a waiting game as to whether Bitcoin would take another sharp drop, or finally bounce from lows, and the breakout from the 3-month downtrend on Friday was the emphatic catalyst that BTC needed.

Thanks to mean reversion from oversold levels, BTC has already regained support above both the psychological $40,000 level, as well as its 50-day moving average. Bitcoin’s next major level to beat is the $45,500 December 2021 range low, which looks to be very realistic this week given the crypto market's current pace.

Bitcoin is up nearly 34% from lows at a current price around $44,300, but that is nothing compared to the recoveries we’ve seen in some of the top altcoins over the past 7 days. In fact, 15 of the top 25 cryptocurrencies by market cap are currently outperforming BTC on a rolling 7-day basis.

If you’ve been taking note of our recent commentary, you may have heard us mentioning Solana (SOL) and Near Protocol (NEAR) as some of our favorite symbols to watch to lead a potential market recovery.

We were delighted to see that SOL +23.7% and NEAR +22.7% were the two strongest performing Defi cryptos over the past 7-days, and are both sitting very nicely at the current moment.

Solana is very close to retesting its next price resistance level at $124, the Q4 2021 range low, while NEAR looks poised to regain a bullish phase above its 50-day moving average with $17.40 as the next resistance level to beat before exploring all-time highs once again.

Both NEAR and SOL are relatively new coins to the industry, but they are respectively known for highly-efficient blockchains, smart contract framework, and NFT compatibility. As these are many of the aspects of a cryptocurrency/blockchain that would most affect an end user or consumer, it is understandable as to why the mainstream is loving both SOL and NEAR.

NEAR is rumored to be considered for listing on the Coinbase Pro exchange in the near future, which would inevitably bring the coin to the mainstream like never before.

The last notable thing that we were able to observe towards the very end of this past week was the resurgence of Shiba Inu (SHIB) +58.9% and Ripple (XRP) +30.6%, the two top performing large caps the list 7-days.

A ton of traders choose to avoid trading SHIB because of its memecoin status, but the effect of volatility and mainstream demand on this coin have once again proven to be quite the potent combo when it comes to price action. We haven’t seen a move anywhere near this velocity in the similar DOGE coin in the past several months, so it looks safe to say that SHIB is the new top meme coin in the peoples hearts (despite still lagging Dogecoin’s market cap by about $4 billion).

Ripple has been mentioned less and is a relative underperformer since the last leg of 2021, but that may be changing. XRP has been labeled as a security and banned for trading in the US by the SEC since 2018, however, tons of early crypto adopters and international traders are still very much interested in the crypto.

A combination of pro-Ripple sentiment emerging from the ongoing SEC v. Ripple Labs' case, as well as more clarity from the US government in general regarding cryptos and taxes has seen interest in XRP surge once again.

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