Bitcoin (BTC) has fallen this week: the latest Consumer Price Index (CPI) report showed that high inflation remains a major issue, despite the US Federal Reserve’s massive hike in interest rates. Interestingly, the market was somewhat anticipating a particularly higher CPI, as both Bitcoin and Ethereum (ETH) partially recovered their daily losses.
A quick look at the Bitcoin market structure shows that despite the price drop, the asset has been trading within the same price range for the past four months now. Adding to this dynamic was mentioned by market analyst Ray Salmond Bitcoin futures open interest is at record highs, though it fluctuates near all-time lows.
These factors have historically preceded explosive price movements, but predicting their direction is nearly impossible.
So, aside from the many metrics that indicate that an asset is preparing for a decisive price move, Bitcoin is behaving exactly as it was 4.5 months ago. In that case, perhaps it’s time to start looking elsewhere for emerging trends and possible opportunities.
Funds move from ETH to other altcoins
The price of ETH has lost its luster in the post-consolidation era, and now the asset is reflecting a bearish trend that is dominating the rest of the market. After the merger, the price of ETH fell by 30% from its peak at around $2,000: it seems that a lot of speculative capital, which has passed the wave of consolidation, has abandoned the market in search of the next investment opportunity.
It could be one of them Cosmos (ATOM), which bucked the trend thanks to a huge rally from $5.40 to $16.85. The asset’s oversold conditions, along with interest in Cosmos 2.0, caused the altcoin to surge in value.
According to the updated Cosmos white paper, The new ATOM generation will dynamically adjust based on demand and supply support. As shown in the above chart, there will be a high issuance of ATOM tokens in the first ten months after the introduction of Cosmos 2.0; However, After 36 months, the asset will become deflationary.
From a technical analysis perspective, the ATOM price seems to have reached a local high. But it will be interesting to see how the value of the asset will evolve 20 months after the introduction of Cosmos 2.0.
Monitor activity on the Ethereum network
New ETH issuance is down 97% since the Ethereum merge; However, the price of the asset also decreased. In the coming months, investors should monitor activity on the network — particularly developments in ETH stakes in decentralized finance and institutional products — and any increase in gas fees, which are typically related to activity on the network.
While the price may decline in the near term due to downward pressures, any market reversal could lead to increased use of DeFi products, and the value of ETH will react very positively to such developments.
Bitcoin is still king
While various new trends may emerge in altcoins, it is important to remember the broader context in which digital currencies operate. World economies are in crisis and persistently high inflation remains a problem in the United States and many other countries. Bond prices are falling and the looming debt crisis is constantly making its presence felt. Risk assets like cryptocurrencies are incredibly volatile, as well as subject to macroeconomic pressures from stock markets, geopolitical events, and news that affect investor sentiment.
With this in mind, Bitcoin remains the largest asset by market cap: Any sharp movement in Bitcoin, whether it is up or down, will have a huge impact on the entire market. There is still the possibility of a sharp decline in the price of Bitcoin, so investors are advised to broaden their exposure to cryptocurrencies according to their risk appetite. But there are also criteria for taking long positions: The future of the market looks uncertain, at least in the short term.