Time to Invest in Crypto?

Just above, a little below and back again: For months, the total crypto market capitalization has been circling around the symbolic 2 trillion mark, tearing out – and falling back again. Profit-taking and follow-up purchases are currently not free, the market is in a classic stalemate situation between the bear and bull camps. With an increase of five percent, the market is once again preparing to recapture the key brand. A brief bubbling up or a first attempt at liberation?

Crypto market in snooze mode

Minus 16 percent: The balance of the crypto market in 2022 is sobering. At the end of March, the key cryptocurrency BTC reached the level it had at the beginning of the year. The BTC rate is currently around six thousand US dollars below that. Not to mention the record high of $69,000 reached in November 2021.

There is a drought on the crypto market – one might think. A look at some of the beneficiaries of the last few weeks shows that this is only a partial explanation. If ApeCoin, Stepn, Zilliqa or recently Dogecoin again: There is no shortage of outliers. Only the “fat” can be asked.

Has the old season started?

A typical pattern. When BTC goes to sleep, the altcoins party. A development that is reflected in the BTC dominance that has been stuck for months. The dominance measures the share of the BTC market capitalization in the overall market. A share of currently just over 40 percent shows the increasing influence of altcoins on the crypto market.

Accordingly, profits can still be realized on the market. The cycles of many altcoin rallies are mostly short-lived. All the more lucrative for that. At least in the short term, investment strategies can be derived from hype topics such as the Metaverse.

BTC Heading For “Bullish Month”

The fact that BTC price performance is looking for old strength is also due to a tense macroeconomic environment. According to BTC-ECHO financial expert Stefan Lübeck, “despite the negative impact of interest rate hikes by the central banks FED and ECB and a weakening stock market, there are also bullish signals”. In the past, May was “traditionally more of a bullish month with rising prices”.

Measured by the monthly growth rate, May is the third strongest month. According to Binance average growth is 26 percent. But: BTC historically performed better in April. A strong development in the past alone is no guarantee for forecasts.

Hot ride on the Hodl Waves

A more valid indication of a long-term positive outlook are the Hodl Waves. This indicator shows how long investors remain loyal to their BTC. Broader periods tend to be classified as bullish.

With regard to the wave movements, “the relative weakness of the key crypto currency does not seem to worry the hodlers among investors,” says Stefan Lübeck. “64 percent of all BTC in circulation has now not been moved for at least one calendar year”. This is “an absolute high”. According to the trader, “long-term investors seem to continue to believe in positive price action over the coming months and years.”

The BTC supply is decreasing

With 2.4 million Bitcoins currently available, the BTC held by exchanges is at its lowest level since August 2018. The shortage of BTC stocks should turn out to be a value-adding factor in the future – especially if companies like Terraform Labs stick to their aggressive purchasing policy.

The company behind the stablecoin network Terra and the LUNA token is currently building up $10 billion in BTC reserves. Since the end of January, Terraform Labs has bought around 42,000 BTC, as of Data from Bitinfocharts emerges. In the background, the course could be set for a crisp summer.

But not only for BTC: One of the biggest events of the year is the long-awaited consensus switch at ETH. “The Merge” has since been postponed, but should take place in the fall – and leave its mark on the overall market. Cardano could also spark a small rally with June’s hard fork “Vasil”, while Polkadot is starting to fill up its parachain slots, Ripple could be home to a win against the SEC in the next few months, and Dogecoin from Elon Musk’s Twitter acquisition is euphoric. It would actually be an exciting time on the crypto market if it weren’t for the courses that have fallen asleep.