Market Wrap: Altcoins Outperform as Geopolitical Concerns Fade

Most cryptocurrencies traded higher on Tuesday as tensions between Russia and Ukraine eased.

Russian President Vladimir Putin said during a news conference on Tuesday he is “ready to work further” with the West to de-escalate tensions over Ukraine. Russia also decided to partially pull back troops from military districts bordering Ukraine.

Equities and cryptocurrencies rose, while traditional safe havens such as gold and the U.S. dollar declined over the past 24 hours.

Alternative cryptocurrencies (altcoins) led the rally on Tuesday, indicating a renewed appetite for risk among crypto traders. ETH was up 8% over the past 24 hours, compared with a 4% rise in BTC over the same period.

Still, trading volume in the bitcoin spot market remained weak relative to previous price jumps on Feb. 4 and Feb. 10. That could point to limited gains around $46,000-$50,000 BTC according to some technical indicators.

Latest prices

●Bitcoin (BTC): $44172, +4.73%

●Ether (ETH): $3115, +7.60%

●S&P 500 daily close: $4471, +1.58%

●Gold: $1855 per troy ounce, −0.67%

●Ten-year Treasury yield daily close: 2.04%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

The chart below shows the decline in BTC trading volume over the past few months.

"Currently, traders look indecisive, shown by the market sentiment hovering between fear and greed and bitcoin ranging between the $42,000 support and the $46,000 resistance," Arcane Research wrote in a Tuesday report. "If bitcoin breaks out of this range, we might see increased market activity going forward."

Over the past 24 hours, the volume of sell orders exceeded the volume of buy orders in the BTC perpetual swaps market, according to market data compiled by CryptoQuant. That indicates short-term selling pressure.

Over the past year, "trading volumes as a percentage of market cap in many of the major cryptocurrencies are lower compared with previous months," CoinDesk's Lawrence Lewitinn stated. "The end result is that it may take smaller amounts of capital to move the markets wildly."

Bullish sentiment wanes

The bitcoin Fear & Greed Index dipped back into "fear" territory as traders reacted to macroeconomic and geopolitical uncertainty. The current reading of 46 is neutral, however, which means there is no strong bullish or bearish bias among market participants.

The Fear & Greed Index can oscillate between extreme lows and highs for many months, similar to the erratic signals during the 2018 crypto bear market. Frequent shifts in sentiment could signal short-term opportunities for buyers and sellers, while those who are more committed to a trading position would rely on smoother indicators such as cycles and trends.

Some technical indicators show long-term trend weakness, which could limit potential upside in BTC.

Still, over the past month, sentiment has improved as the crypto sell-off stabilized.

For tactical traders, one positive blockchain indicator to monitor is the stablecoin supply ratio (SSR), which shows when there is enough liquidity available to buy into the market (locked into stablecoins) or, on the other hand, when the buying power is not enough to move up the price relative to BTC's market cap, according to CryptoQuant.

SSR recently triggered a positive signal, similar to what occurred during the July and October price rallies.

Altcoin roundup

• GALA jumps 20%, leads metaverse index gains: GALA, the eponymous token of blockchain-based gaming platform Gala Games, surged as much as 20% in the last 24 hours, outpacing other major metaverse tokens as well as Meta’s stock. The move came after Gala Games said it plans to deploy $5 billion within the next year to bolster its non-fungible token (NFT) offerings by buying intellectual property rights and building a theme park, according to CoinDesk’s Sam Reynolds. Read more here.
• JPMorgan is the first bank Into the metaverse: JPMorgan, the largest bank in the U.S., said it has become the first lender to arrive in the metaverse, having opened a lounge in Decentraland, a virtual world based on blockchain technology. As well as the unveiling of the Onyx lounge (the name refers to the bank’s suite of permissioned Ethereum-based services), JPMorgan also released a paper exploring how businesses can find opportunities in the metaverse, according to CoinDesk’s Ian Allison. Read more here.

Relevant news

• Binance.US Faces SEC Probe Over Trading Affiliates: Report
• US Rep. Josh Gottheimer Introduces Bill for Government-Backed Stablecoin Insurance
• Silvergate to Continue Working With Regulators Ahead of Stablecoin Pilot Launch
• Bitstamp Founder Loses UK Court Bid to Prevent New Owner Buying His Shares
• How the Marshall Islands Is Trying to Become a Global Hub for DAO Incorporation

Other markets

Digital assets in the CoinDesk 20 ended the day higher.

Largest gainers:

Asset Ticker Returns Sector Polygon MATIC +9.9% Smart Contract Platform Chainlink LINK +9.6% Computing Algorand ALGO +7.7% Smart Contract Platform

There are no losers in CoinDesk 20 today.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.