Data gathered from on-chain transactions via Glassnode signifies a movement among market players towards reduced risk, taking shelter in stablecoins and Bitcoin as the cryptocurrency landscape teeters on the brink of a consequential shift.
The report from on-chain analysis enterprise Glassnode hints at a significant reallocation of investments, with a shift of capital moving from riskier assets towards safer ones such as stablecoins and Bitcoin. The trajectory of altcoins also hints at a decisive juncture, with outcomes that could swing towards either positive or negative breakout.
According to Glassnode’s evaluation of Uniswap and futures trading activity, a rising trend that set in motion during the first quarter of 2023 started to decelerate by April. This cooling off is attributed to growing regulatory apprehensions and liquidity issues that fostered risk-averse tendencies amongst traders.
The assessment further reveals that the surge in Uniswap’s trading volume may be mistakenly attributed to memecoins. A more detailed examination of Uniswap’s pools indicates that most of the volume involved major cryptocurrencies like Wrapped BTC, Ether, and stablecoins.
Trading bot activities and sandwich attacks were found to contribute significantly to this trading volume. As per Glassnode’s report, the ‘organic’ trading volume on Uniswap could account for more than two-thirds of all Decentralized Exchange (DEX) activity, considering the roles played by bots in arbitrage or sandwich attacks.
The monthly average of Ether futures trading volumes on centralized exchanges witnessed a contraction in May, dropping to $12 billion per day as compared to the yearly average of $21.5 billion. Analysts from Glassnode interpret this decline as an indication of weak institutional trading interest and liquidity.
In terms of market share for perpetual swaps of Bitcoin and Ether, there’s a vast disparity with Bitcoin dominating at 65.5%. The scenario was different in 2022 when the two assets had equal shares in the perpetual swap arena. The trend, however, has seen a considerable shift in the past year.
Tether (USDT) has seen a significant influx from outflows of Binance USD (BUSD) and Circle’s USD Coin (USDC), propelling USDT to an unprecedented supply high of $83.1 billion. As it stands, there’s a clear capital migration from higher-risk altcoins towards more secure assets like Bitcoin and stablecoins.
In the context of Bitcoin’s strength against the price momentum of altcoins, there’s a noticeable uptrend in Bitcoin’s dominance percentage over the total cryptocurrency market in 2023. However, it encountered resistance at the 48.35% level. If Bitcoin cannot breach this resistance, we might anticipate a rally of altcoins in relation to Bitcoin.
On the flip side, the chart depicting the market capitalization of all cryptocurrencies excluding Bitcoin, known as the TOTAL2, demonstrates a reverse in its positive breakout from the triangle pattern. Consequently, the index has been pushed back into a bearish triangle pattern that originated in October 2022.
At present, the total market capitalization of altcoins is confined within a bearish descending triangle pattern. This pattern shows lower highs and a consistent support level of $433.39 billion, beneath which selling could increase. However, if buyers manage to establish support above the parallel resistance of $616.35 billion on a weekly closing basis, altcoins could continue to rally over the next few weeks.