BTC's First Touch at $100k and Legacy Altcoin Revival: Unpacking Two Current Key Market Themes
BTC briefly broke above the important psychological level of $100k for the first time yesterday, supported by Paul Atkins' SEC chair nomination, a move welcomed by many in the crypto industry, and Jerome Powell's comments at the New York Times DealBook Summit, where he framed BTC as a gold competitor rather than a dollar challenger.
However, a quick correction ensued and took us back to five-digit price territory. Given the current setup of the underlying liquidity trends, the hard grapple at the $100k threshold should be expected. The correction's intensity was notable, as nearly $400 million in BTC perpetual long liquidations triggered a brief dip below $90k on one exchange before stabilizing just under $100k.
The BTC spot order book skew (ask side divided by bid side) remains tilted towards the sell side. In other words, the executed buy orders were not replaced by new buy flow, which may set up the market for short but quick corrections.
BTC's break above $100k also occurred on relatively modest turnover. Yesterday's spot volume of $26 billion, while high compared to historical levels, falls short of November's post-election levels when volumes consistently exceeded $30 billion and occasionally brushed $50 billion.
The broader market environment remains exceptionally constructive. Since November 6, BTC spot ETF net inflows totaled a whopping $8.8 billion. This is good reason to believe that a chain of positive news flow related to a more friendly policy and regulatory environment could start hitting the tape over the coming months.
On top of this, BTC's 30-day correlation with major equity indices has nearly halved over the past four months, highlighting the growing importance of crypto-specific catalysts.
That said, liquidity trends suggest that while improved expectations drove us near $100k, a sustained and decided push past this level may require some of these positive catalysts to materialize.
Another notable, and perhaps even more surprising, theme is the surge in legacy alt assets. The table below ranks the top five assets by 30-day performance across market cap segments. Among the assets with a circulating market cap of more than $10 billion, legacy alts dominate (HBAR, XLM, XRP, ADA, and DOT).
Combined spot volumes for the larger legacy tokens (HBAR, XLM, XRP, ADA, and DOT) rarely hit $3 billion in 2024 pre-election, but now consistently range between $10-25 billion. While XRP dominates this volume, the chart below shows the volume surge extends to the historically less liquid tokens as well.
The exchange spot volume market share breakdown suggests strong participation from US/European retail traders. As the chart below shows, Coinbase gained over nine percentage points in spot market share among these tokens since the beginning of November, while Kraken added another two, mainly at the expense of Huobi, Bullish, and Bybit.
Our desk flows confirm this trend.
Volume in these five legacy tokens surged over 70% in the past week compared to the prior period, with roughly half coming from retail aggregators. But unlike our BTC flow, where buy orders outpaced sells by over 70% at our desk, these tokens saw more balanced two-way flow.
Flow dynamics could shift a bit, however if these trends remain as we get closer to the month-end rebalancing process of crypto index funds. Given their substantial market caps, XRP and ADA in particular could gain increased portfolio weightings, potentially attracting more institutional capital to these names.
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