Global crypto markets lost $10 billion in value last week as total market capitalization fell to $268 billion at the end of the week. Traditional markets inked their worst week since March, with the Dow Jones falling -5.6% on the week. MAKER ( MKR ) was the market out-performer, surging +30% last week.
Total cryptocurrency market capitalization fell to $268 billion, which represented a -3.5% drawdown last week. 92% of the top 25 cryptocurrencies sold off last week with only MAKER and Crypto.com coin finishing positive. Bitcoin finished the week -2.10% which was substantially better than most altcoins. With this being said, Bitcoins market dominance stayed relatively constant at 64.8%.
|7 Day Performance
MAKER ( MKR ) Price Surge
As mentioned above, MAKER was the out-performer last week, surging nearly +30%. The catalyst behind the surge was the recent Coinbase listing. MAKER was recently listed on Coinbase Pro and started trading on June 9th. Following the listing, momentum continued to the upside. This isn’t out of the ordinary, since many digital assets have historically rallied following a Coinbase listing. For those unfamiliar, MAKER is a utility/governance token. MAKER manages the Ethereum token known as the DAI stablecoin. MAKER is also seeing a positive push due to its affiliation to the stablecoin markets. As mentioned in a recent article, stablecoins on the Ethereum network have seen significant upside in 2020. Following the Coinbase Pro listing, MAKER saw the strongest on-chain volume since January 2019. Despite the recent surge, it will be interesting to see how MAKER stabilizes in the near term. It’s not out of the ordinary to see a digital asset surge after a Coinbase listing and then later sell off.
Bitcoin held up pretty well last week given the circumstances. Despite the -2.10% drawdown last week, fundamentals are holding up well post halving. In the previous weeks, hash rate was a fundamental issue given the circumstances for miners post halving. In a previous market report, Visionary Financial outlined that Bitcoins hash rate continued to fall to December 2019 lows. It was critical for hash rate to stabilize post halving. Two weeks ago, Bitcoins hash rate started to stabilize which was a bullish indicator. It was outlined that the hash rate was bouncing off December 2019 lows and starting to trend back up. As of yesterday, the hash rate continued the positive momentum, and appears to be heading to yearly highs. If Bitcoin hash rate can surpass yearly highs, it could fuel the next leg up. This would give a positive indicator that the miner network is healthy after the 3rd halving.
Bitcoin Correlation To Traditional Markets
So far this year, Bitcoin has been much more correlated to traditional markets than previous years. The January rally has been the separator for Bitcoin this year. On a year to date basis, Bitcoin is still widely outperforming traditional markets, seeing +31% growth. Ever since January the correlation has been extremely tight. In February, Bitcoin and the SPY saw very similar price action with the large sell-offs. March through May, both were also highly correlated with the upward momentum. So far in June, the two assets have also gone neck to neck, which Bitcoin slightly outperforming. During COVID-19 and economic uncertainties, Bitcoin has failed to separate itself. This goes against its historical norms, but the fundamentals behind Bitcoin arguably put itself in a better position for outperformance looking forward. Aside from hash rate signaling bullish price action, Bitcoin is also extremely undervalued based on leading fundamentals.
Traditional markets are coming off their worst weeks since March. The Dow Jones fell -5.6% last week and the S&P 500 fell -4.8%. Investor hesitation surfaced last week due to the Federal Reserve outlook and potential COVID-19 “second waves.” Last week, the Federal Reserve announced it would keep near zero interest rates “for years.” In addition, it plans to keep stimulus coming due to the uncertainties COVID-19 has placed on the markets. With unemployment near 50 year lows, the Fed stated that they don’t believe economic difficulties to come to an end anytime soon. The report by the Fed spooked investors as the recovery may not be as quick as many initially thought. As of recent, the divergence between S&P prices and corporate earnings was the largest since the tech bubble. Despite the correction last week, many would argue that stocks could head even lower on dull outlook.
Historically speaking, the stock market has been very “forward looking.” As the economy started reopening, investors were gearing up for positive sentiment to close out 2020. With COVID-19 potentially entering a “second wave” based on last week’s data, this has thrown all sorts of curveballs at the market. If a portion of the economy had to shut back down, this could result in many fundamental issues for the global economy. Despite COVID-19, other issues raising questions for traditional investors are upcoming elections and China/US geopolitical concerns.
Wall Street Veterans Flip Sentiment
On the flip side, a couple Wall Street veterans seem to be shifting to the bull side. Yesterday, it was reported that Paul Tudor Jones and Stanley Druckenmiller were impressed by the markets recovery since March. Paul and Stanley have been known to take contrarian positions historically. With Wall Streets top traders starting to become bullish due to “the unparalleled response by the Fed and Congress” , it will be interesting to see how the market digests these viewpoints. Despite Paul and Stanley praising the Fed and Congress, they didn’t give much feedback on key issues that were weighing down investor sentiment last week.
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