Bitcoin's Rally Holds Strong, While Alts Shine Bright, and the Unfolding Market Cycle Shift

• Bitcoin printed fresh yearly highs this week
• Solana jumped to a 14-month high
• Gala and Axie Infinity led a surge in gaming tokens 

Bitcoin's upsurge maintains its course, but overshadowed by alts

The crypto markets maintained their upward momentum, with the total market capitalization of the crypto universe surpassing $1.3 trillion. Bitcoin dominance dipped below 53% as alts outperformed bitcoin this week. Among blue chips, bitcoin saw a 2.7% increase in value over the week, while ether experienced weekly gains of 3.3%.

Among the Layer 1 names, Solana continued its winning streak, recording an impressive 27.7% increase in weekly gains. However, NEAR Protocol outperformed its counterparts with an exceptional surge of 33.9% week on week. The substantial gains in NEAR appear to be closely linked to the recent announcement of a partnership between NEAR Foundation and the privacy infrastructure project Nym. This partnership's focal point lies in the integration of Nym's mixnet into the NEAR ecosystem, introducing enhanced privacy and security features. While the market appears to be celebrating this partnership based on price action, it's also possible that investors are positioning themselves for potential similar developments during the upcoming Nearcon23 conference scheduled for next week in Lisbon.

In the realm of decentralized exchanges (DEXs), Uniswap saw a notable 14.5% increase, while SushiSwap particularly stood out with a remarkable 87.4% rally week on week. However, an on-chain analytics firm, Lookonchain, has raised concerns about potential price manipulation. According to their tweet, a new wallet on DEXs was observed purchasing SUSHI and depositing USDC through multiple addresses, leading to suspicions of manipulative trading activity.

Gaming tokens experienced notable gains this week, with Gala taking the lead among large-cap gaming tokens with an impressive 22.9% rally, while Axie Infinity posted solid weekly gains of 17.2%. Interestingly, there doesn't appear to be a specific catalyst driving the surge in these coins; it seems to be largely fueled by the broader crypto rally. In addition to the performance of well-known gaming tokens, a new crypto gaming platform, Meme Kombat (MK), attracted significant attention from both investors and gamers this week. Meme Kombat blends the humor of memes with blockchain-based gaming, enabling users to spectate and wager on battles featuring iconic mascots like DOGE and Pepe the Frog. The project swiftly raised over $1 million in its presale, reflecting the growing interest and excitement surrounding its unique concept.

Winds of change beyond bitcoin, high betas and the shift in cycles

Market trend shifts often also come with noticeable changes in the performance of small and mid-cap names (usually alts) that display high beta attributes when compared to bitcoin. This phenomenon serves as one of the indicators, suggesting that we could be on the brink of a more substantial market transformation. When the performance of names with high beta tendencies begins to diverge from that of bitcoin, it signifies a potential shift in market sentiment and trajectory.

In periods of market optimism and bullish trends, these high names may outpace the performance of bitcoin, reflecting increased risk appetite and confidence. Conversely, during bearish or uncertain market phases, their underperformance compared to bitcoin could indicate a more risk-averse or cautious investor sentiment.

While the positive gains in bitcoin and ether could likely be driven by a fresh influx of money into the crypto markets, it's plausible that the gains in altcoins could be the result of seasoned crypto investors tactically repositioning their portfolios, speculating on an impending market cycle shift. But only time will tell if the recent change in market dynamics is the beginning of a new cycle or an anomaly in the old cycle.

Macro pulse 

Among TradFi assets, US equities rallied 1.2% compared to the previous week, driven by a backdrop of softer economic data and a dovish response from the Federal Reserve. The Fed opted to maintain unchanged interest rates, acknowledging a significant tightening of financial conditions. However, Fed Chair Powell expressed uncertainty about whether the current monetary policy has been sufficiently restrictive to achieve the 2% inflation target. Meanwhile, oil futures saw a 5% decline week on week as supply concerns ease amidst a dimmer outlook for demand.  Elsewhere, The US Dollar index slipped 10bps, the 10-year US Treasury yields fell by 23 basis points, and the Gold & Silver index experienced a 2.8% drop in value compared to the previous week.

Neelabh Dixit, Commercial Product Manager - Derivatives

*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on November 02, 2023 

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