Bitcoin remains under pressure from 'King Dollar'

This time we look at how the rampaging dollar is pressuring both the stock market and crypto before giving an overview on other exciting L1 updates and what our onchain analytics say about the latest market movements.

What's in the news?

Surging dollar adding momentum to macro tsunami

The week’s news has been dominated by the market turmoil caused by the surging US dollar. As the DXY (index of US dollar measured against other currencies) approaches levels not seen since 2002, it has unleashed a wave of secondary and tertiary macroeconomic effects that are further destabilising a jittery global economy.

The strengthening dollar is denting the appetite for US goods overseas and cutting profit margins for US businesses that have large international exposure (roughly a third). For example, Amazon recently had its stock downgraded, largely due to FX impacting earnings per share, and this is putting downward pressure on the stocks which is having a knock-on effect on crypto.

Furthermore, the underperformance of gold and other safe-haven assets during this time of macro and geopolitical stress has seen more investors flock to the dollar which has supported its rise. Here, though bitcoin has so far held its June local low, its “store of value” credibility has lost its shine due to its -60% decline YTD.

The Eth merge hype is over but important L1 upgrades continue

Though Ethereum hogged much of the spotlight on network upgrades, other L1s have quietly been executing their own in the background. Cardano’s successful Vasil hard fork on Thursday represents the network’s most important update since adding smart contracts in Q4 2021 with the Alonzo upgrade. According to IOHK, Vasil increases network throughput, script efficiency, and reduces latency in block transmission. The upgrade will likely see a sharper increase in the number of smart contracts live on Cardano’s network, already up 19.6% since June, and points to the network’s continued development during the bear market.

Additionally, Algorand’s upgrade went almost unnoticed in which they introduced ‘State Proofs’ that enable trustless cross-chain communication and increase performance from 1,200 to 6,000 TPS. These updates should give the network more onchain capabilities to host the diversity of DApps on the network that range from sports to music to CBDCs and DeFi.

What does the onchain data say?

Onchain data shows clear rejection levels amid dollar pressure

Onchain data shows that bitcoin’s minor relief rally to regain $20K on Wednesday was rejected at $20,300 which perfectly coincided perfectly with the resistance band formed by whale bubbles in August and September.

At the same time, the onchain volume profile (OVP) shows that $18,650 – $19,100 is a key level which if broken decisively could see price fall to the next onchain supports seen at $16,550, $13750, or even down to $10,700.

Realised Price of larger wallets now acting as resistance

As mentioned in our digest from September 12th, the failure of the price to hold above the realised is a reliable indicator of a prolonging of the consolidation phase both past and present. But taking a more granular look, our realised price by address shows that price rejection was previously happening at the <1 BTC cohort, however, the more recent price rejection is coming from larger wallets (1000-10K BTC). This indicates that while the number of wallets with small balances is hitting all-time highs, the price action is being dictated by larger wallet holders in this phase of the bear.