Crypto and stocks mixed, Bitcoin outperforms altcoins

Most cryptocurrencies were lower on Monday, tracking the decline in global stock markets. The Federal Reserve FOMC meeting is expected to make a ruling on interest rates on May 4. Cryptocurrency and stock markets continue to be weak, and there are currently no signs of any short-term factors that can reverse the bearish trend.

The stock market is also on a downward trend, and according to researcher Clara Medalie, the stock prices of companies holding Bitcoin have also taken a significant hit. Medalie said, "Block, Tesla, Microstrategy and Coinbase are down 20%-50%."

Bitcoin, the world's largest cryptocurrency by market value, has fallen less than most altcoins last month, suggesting that traders' risk appetite is generally low. Bitpush terminal data showed that in the past 24 hours, Bitcoin was roughly flat, SHIB tokens fell 3%, and Solana's SOL tokens fell 2%.

Still, some altcoins are trading slightly higher, including Avalanche’s AVAX token, which is up 4% in the past 24 hours but down 17% in the past week. Overall, both stocks and cryptocurrencies have experienced volatile price action over the past few months.

On Monday, the S&P 500 fell to a new low for the year, and the 10-year U.S. Treasury yield hit 3% for the first time since 2018. In addition, European stocks plunged within minutes of opening, causing some exchanges to temporarily suspend trading. Gold prices, a traditional safe-haven asset, also fell today.

The chart below shows Bitcoin’s dominance ratio, or the ratio of Bitcoin’s market capitalization relative to the total cryptocurrency market capitalization, which has risen to over 40%.

Typically, Bitcoin’s dominance ratio falls during risky periods if altcoins outperform Bitcoin. During market downturns, the ratio rises as Bitcoin’s selling pressure is lower than altcoins. The last significant rise in the dominance ratio was during the crypto bear market in 2018.

Currently, the ratio is above its 200-day moving average, which could signal a reversal of its sharp downtrend. A further increase in the ratio could also limit the upside for several altcoins relative to Bitcoin.

According to independent market analyst Rekt Capital, focusing on closes above the 200-day exponential moving average (EMA) is a simple way to assess the current level of weakness in Bitcoin. The analyst describes the metric as “an indicator of investor sentiment towards Bitcoin in the long term.”

Rekt Capital said, “Since mid-2021, BTC has failed to stay above the black 200-day moving average for long. Every time BTC breaks above the moving average, it quickly loses support and falls back to lower levels.”

Crypto trader and Twitter user “Cantering Clark” spoke about his insight into where Bitcoin’s price might go next, posting the following chart highlighting the similarities between the current price action and Bitcoin’s price action in July 2021.

“A similar pattern is a weak uptick after a strong sell-off, as we saw in July 2021, after a long sideways range forms and lows begin to fall in favor,” Cantering Clar said.

Veteran trader Peter Brandt noted that if the current “bear channel” continues, Bitcoin prices could fall to new lows.

Despite the current downtrend, data from Glassnode suggests that BTC accumulation continues to increase, with analyst Negeypic stating that “spooked short-term holders are seeing losses, while long-term holders are seeing an increase in net position changes.”