Mon, 11/07/2022 - 15:03
It's hard to characterise 2022 as anything but a total disaster for the crypto market at large. This time last year, Bitcoin was at all-time highs above $65,000 as fanboys and analysts alike were calling for prices above $100k in the months ahead. As we all now know, that couldn't have been any further from the truth. Since November 2021, Bitcoin has lost over 70% of its value and, as of 1 November 2022, sits at $20,418, paltry by comparison. For much of the year to date, the majority of other major coins and tokens had followed the same disappointing pattern, but then something totally unexpected occurred.
Crypto pack has a new top DOGE
While the original cryptocurrency was stuck trading sideways in a narrow range around its key support of $20,000, the Scrappy Doo of digital assets, Dogecoin, made an independent move against the Alpha Dog. Starting just a week ago, in late October, DOGE has managed to nearly triple in value, rising from a lowly $0.059 to a six-month high of $0.15. This huge upside momentum was also accompanied by a sizable increase in the coin's daily trading volume. According to Santiment, the exciting price action also coincided with a spike in the number of DOGE transactions exceeding $100,000. Taken together, these two indicators would suggest growing demand for Dogecoin tokens among whales. Even the Dogecoin spin-off Shiba Inu rose by 60% in a week amid the release of a gaming guide for Shiba Inu's Collectible Card Game. But what is behind this seemingly illogical moonshot by what have been derogatorily dubbed 'meme coins'?
The unmistakable musk of Elon
The established orthodoxy of the cryptocurrency market (if such a thing even exists) would tend to dictate that the Top 10 coins by market cap move more or less in lockstep with Bitcoin. At the very least, they are not expected to make 150+ percentage gains against BTC itself. It's no secret, however, that Dogecoin is a pet project of Tesla CEO Elon Musk, a man who is definitely capable of moving any market with a simple tweet. And that appears to have been precisely what sparked this latest DOGE/SHIBA rally. Following the long-awaited completion of his landmark Twitter takeover, the South African visionary pledged to introduce DOGE as a payment option for his controversial paid blue tick service. Thus, when Musk tweeted a titillating image of a Shiba Inu dog wearing a Twitter shirt beside a pumpkin with a Twitter logo carved into it, the message to the Dogecoin community was clear: Elon may soon make good on his promise.
In the Ether
This divergence in the crypto market's general trajectory isn't just limited to the unexpected rise of the two big canine coins. Ethereum is another major project that has been going against the grain to make solid gains against Bitcoin. Indeed, the market's second-largest project, Ethereum (ETH), has shocked investors' by climbing as high as $1,600 in last week's 20% rally. This outshines BTC's paltry 7% rise by nearly 300%. At its current level of $1587.27, Ether is now up around 40% from its July lows.
Meanwhile, Bitcoin has barely appreciated by 5% over this same period. Many analysts have attributed this bump in ETH to the project's migration over to a PoS model in the summer. Since making the switch, Ethereum's official net issuance has fallen from 3.6% to nearly 0%. However, data from IntoTheBlock suggest this indicator has actually dropped below zero, which would make Ethereum a deflationary coin. The cumulative reduction in the ETH supply could, therefore, drive the ETH price even higher in the future.
Release the bulls!
The question most crypto traders and investors are asking is: do these recent rallies mean that the end of the dreaded crypto winter is in sight? And while one swallow does not make a summer, the gains we've seen in several major coins of late would seem to tentatively suggest that a reversal could indeed be in the making. The missing piece of the puzzle right now does appear to be the original cryptocurrency. Whatever the community might say about utility and deflationary mechanisms, Bitcoin is still the number one digital asset and represents almost 40% of the $1.06 trillion market.
This being the case, we cannot talk about an official end to the bear market until we see some more convincing upward movement on the BTC chart. Nevertheless, it is encouraging to see other correlated projects moving independently on their own fundamentals, a defining feature of more mature asset classes. In any case, the fact remains that many digital currencies are available at relatively bargain prices, and any long-term HODLERs would do well to pick some quality coins up while they can.
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