Market Wrap: Altcoins Outperform as Bitcoin Stabilizes Around $30K

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Crypto markets were less volatile on Tuesday as some traders stepped in to buy the dip.

Bitcoin's (BTC) price stabilized at around $30,000, which is the bottom of a year-long trading range. The cryptocurrency appears to be oversold, similar to what occurred in late January, which preceded a brief relief rally. Still, some analysts are cautious, pointing to risks in the stablecoin market.

On Tuesday, U.S. Treasury Secretary Janet Yellen discussed ongoing distress in stablecoin UST during her testimony before a U.S. Senate panel. Yellen's comments came just hours after the purportedly dollar-pegged token plummeted to a low of $0.61 over the past 24 hours and at least one platform halted trading it.

"I think that simply illustrates that this is a rapidly growing product, and that there are risks to financial stability, and we need a framework that's appropriate," Yellen said.

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Most alternative cryptos (altcoins) outperformed bitcoin on Tuesday, suggesting a greater appetite for risk among short-term traders. For example, Polygon's MATIC token rallied by as much as 19% over the past 24 hours, compared with a 15% rise in SHIB and a 4% rise in BTC over the same period.

Typically, BTC declines by less than altcoins during market recoveries because of its lower risk profile relative to smaller tokens.

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.

Exchange inflows spike

The chart below shows the recent spike in the transfer volume of BTC onto exchanges. The latest uptick is the highest since March 2020, when BTC fell by 50% during the coronavirus pandemic-induced sell-off.

Theoretically, exchange inflows suggest that traders are looking to sell their crypto assets, whereas outflows occur when traders are moving tokens to storage (digital wallets) and by doing so will incur a transaction cost.

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