First Mover Asia: Metaverse ETFs Are Underperforming Gaming ETFs; Cryptos Return to the Red

Don't miss CoinDesk's Consensus 2022, the must-attend crypto & blockchain festival experience of the year in Austin, TX this June 9-12.

Good morning. Here’s what’s happening:

Prices: Bitcoin and most other cryptos return to the red.

Insights: Metaverse ETFs are struggling to keep pace with gaming ETFs.

Technician's take: BTC's upside appears limited despite short-term support.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.

That didn't last long.

A day after bitcoin broke a week-long losing streak, the largest cryptocurrency by market cap and other major cryptos were in the red again on Monday.

Bitcoin was recently down over 3% over the previous 24 hours and has fallen seven consecutive weeks. Still, it spent much of the day near or above the psychologically important $30,000 level. "As far as the last 24 hours, we've seen a consolidation from six to eight weeks of sell-off," 3iQ Digital Asset's Head of Research Mark Connors told CoinDesk.

Bitcoin and other cryptos' performances dovetailed with equity markets, which dropped slightly on Monday and have been tumbling since last fall as inflation and supply chain issues continued to surge and investors became more risk averse. The tech-heavy Nasdaq dropped more than a percentage point on Monday.

Such growing cautiousness fanned last week by the collapse of the terraUSD stablecoin (UST), and the luna token that supports it, rocked altcoins particularly hard over the past week. On Monday, AXS and AVAX were recently down 12% and 8%, respectively. SOL declined more than 6%.

Ether, the second-largest crypto by market cap, fell over 4.6%, although it held fast above $2,000.

"In equities, you've taken almost a year of returns off so [there was] a rapid resetting as the Fed hiked [interest rates] in the first week of May," Connors said. "You've seen digital assets, bitcoin, ether and the rest of the altcoins fall. What's happened is there's been a stabilization. What people are assessing is whether the interest rate hike has been taken out. In our opinion, it hasn't.

Trading volume rose from the lower levels to which it hewed for the first few months of the year, a sign of a potential, and at least temporary upswing. But few analysts are predicting a more permanent departure from the the current bear market. The coming weeks may be particularly hard on stablecoins even as Terraform Labs CEO Do Kwon released a “revival plan” to save the Terra network. Kwon proposed forking Terra into a new chain without UST.

Connors said that investors would likely see three to nine months of "choppy markets," and that prices would likely drop, possibly with support in the $20,000 to $24,000 range. In this environment, he sees investors focusing more on Bitcoin and Ethereum. "Bitcoin dominance should and will happen when markets sell off," Connors said. "People go to quality, but it seems that Ethereium is now building up as a number two quality asset in the ecosystem.

Previous Post Next Post