Cryptocurrency Market’s Short-Term Correction Seems to be Over

Major data suggests that the two-week correction period of the cryptocurrency market could be over and a rebound has already started. Know more.

Major data suggests that the two-week correction period of the cryptocurrency market could be over and a rebound has already started. In the last 7-days, the price action was unexciting as the crypto market rose by just 1.8% to reach US$2.7 trillion. Despite such muted price action, some altcoins witnessed a decent rally. Until November 28, 2021, the price of Bitcoin was down by 6%. Despite this, the BTC price successfully closed last week after a price rally of US$3,200 on Nov 28, thereby closing the week up by 1.5%. 

The biggest gainers, even in this considerably flat market, are the Metaverse tokens. These tokens continued to outperform the general crypto market. Gala (GALA), The Sandbox (SAND), and Decentraland (MANA) are still among the top 5 gainers. 

The valuation of these metaverse-related tokens is increasing mainly due to the major news and partnerships. Some of the major ones are:

  • On November 24, 2021, Metaverse Group spent around US$2.5 million to buy virtual land in Decentraland. 
  • On November 25, 2021, a digital land plot was sold for 550 ETH (which is around US$2.5 million currently) in the Axie Infinity game.
  • On November 28, 2021, a new collaboration between  Sony Pictures and AMC Entertainment was announced. As per the announcement, 86,000 Spider-Man NFTs (nonfungible tokens) will be offered to celebrate the opening day of the new feature movie.

There are a few other cryptocurrencies that have witnessed significant rallies recently, and they are Zcash (ZEC) and Amp (AMP). 

  • On November 20, 2021, the price of a privacy-focused cryptocurrency, Zcash (ZEC), jumped by 20% in just 24-hours. This was because the developers announced that they are moving from traditional proof of work (PoW) crypto mining to a proof of stake (PoS) network.
  • On November 24, 2021, the price of Flexa payment network’s native collateral token, Amp (AMP), got a shot in the arm after being listed on Binance. It witnessed a decent rally. 
  • 5.4 million Terra (LUNA) tokens were burned in the last 4 days, which caused the token price to rise significantly in the last 7-days. 

Some of the major Ethereum killers and smart contract platforms were the worst performers recently, and they are:

  • Cardano (ADA)
  • Near Protocol (NEAR)
  • Polkadot (DOT)
  • Harmony (ONE)

Vitalik Buterin, the co-founder of Ethereum, issued a proposal on November 24, 2021, to limit transaction call data in a block to cut costs and incentivize "an ecosystem-wide transition to a rollup-centric Ethereum."

The price of collateralized lending and yield platform, Aave Protocol (AAVE), witnessed a continued fall following the 30% drop in its TVL (total value locked) in the last 3 months. The number of addresses having at least 1,000 Dash (DASH) tokens dropped to 5,210, which is the lowest level witnessed since July 2018.

 The OKEx Tether (USDT) premium has improved slightly. This indicator measures the difference between China-based P2P (peer-to-peer) trades and the official U.S. dollar currency. 99% of the readings of the indicator are neutral-to-bearish, which signals weak demand from crypto traders to convert US dollar fiat currency cash to stablecoin. Despite the weak demand, the prevailing conditions are far better than the  5% discount in mid-October 2021. 

The total futures open interest of the cryptocurrency market is holding steady near US$50 billion, which is around -10% from its all-time high (ATH). With the maintenance of a certain level of open interest, it is a good signal because it usually attracts more liquidity providers as well as market makers. 

The crypto market witnessed around US$2.0 billion worth of liquidations of the futures’ open interest during the week. On November 25, 2021, the total cryptocurrency market capitalization dropped by 10% to US$2.37 trillion. This was a major reason for the forced termination of future contracts. On November 29, 2021, both Bitcoin (BTC) and Ether (ETH) were strong. This indicates a rebound from the previous day, probably indicating that the 2-week long correction period is finally over.