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Thursday, September 16, 2021

Prepare for Lift Off: April 2021 Market & Outlook

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VIP clients are the first to receive Kraken Intelligence reports. If you’d like access to our newsletter or want to start trading, get the resources Kraken clients worldwide trust. Check out Kraken’s video breakdown of the April Report.

This bitcoin rally couldn’t go straight up forever, could it? Well, no. In fact, for the first time since October we have witnessed a “brief pause” in the form of this latest correction.   

The correction appears to have hit bitcoin the hardest as alternative cryptoassets appear to be decoupling. Most notably, ethereum is flexing its muscle by crossing over $2,700 and the ETHBTC pairing broke out from a multi-year consolidation. 

In addition to BTC & ETH, Kraken looks at the monthly performance of DOT, ADA, and UNI. ADA and DOT are maintaining their strength and attracting more interest in staking. This week, Kraken will begin allowing clients to participate in Cardano staking.

Inflation is once again a topic of concern in traditional markets. As stocks continue to rally to new highs, people are wondering how this will be reflected in bitcoin’s price. Our team examines where inflation is hiding in the economy and what the continued money printing by central banks means for the crypto markets.

NFTs continue to captivate the attention of investors and content creators worldwide. Companies such as McDonald’s, the New York Stock Exchange and Spotify, alongside celebrities like Steve Aoki, Tom Brady and Ashton Kutcher have become the latest to foray into the growing asset class. 

Inside this report, you will learn why corrections have been more shallow in bitcoin, why value is rotating into alternative cryptoassets and how directives from central banks could affect the crypto markets.  

Key Takeaways:

  • Risk-On Risk: Bitcoin’s dominance fell to a near three-year low of 49% in late April amid an increasingly greater demand for altcoins. The three-month long rotation into altcoins tells us that market participants having developed an increasingly greater taste for riskier cryptoassets and are coming to terms with the “Law of Large Numbers.” The most notable outperformers in April were centralized exchange coins and decentralized exchange coins with a return of +60% and +53%, respectively.
  • Bitcoin’s Adoptive Strength: Bitcoin’s corrections have been more shallow this bull run compared to historical rallies. This may be reflective of increased liquidity and lower volatility. We dive deeper into exchange flows, institutional demand and whale wallet balance to make sense of these dynamics and to see how much upside the market believes there is from the current price.
  • Two in a Row: For a second month, ETH (+45%) outperformed BTC (-2%) and hit a new all-time high ($2,776). ETH’s outperformance comes off the back of increasingly greater interest from institutions and excitement surrounding upcoming technology rollouts. ETH ended up closing just below a key resistance level, which tells us a price target of $5,000 may be on the horizon.
  • DeFi’s Future: Decentralized finance continues to attract the attention of both market participants and venture capital investors alike. ConsenSys, Cosmos, Polkadot and NeptuneDAO are just some of the projects that saw greater investment into improving their infrastructure. Last month, aggregate total value locked (TVL) on Ethereum DeFi projects rose +38% to an all-time high of $66B.

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