Key Metrics Show Crypto Growth

06.02.23 04:45 AM By Stormrake

Two key metrics have started to show signs of growth amidst the recent resurgence in digital assets. Both Ethereum TVL and USDT market cap have reclaimed key levels and today we dive into the implications for the wider crypto markets.

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

Stablecoin Supply Increasing

Interactive chart: click on image for higher resolution

There are two key metrics to understand the potential for a continued run higher within the crypto markets. The first to understand is the USDT market cap as it plays an important role in understanding rotations. When a stablecoins market cap grows, it shows an increased appetite for exposure to the crypto ecosystem especially by traders. The inverse shows a complete lack of interest in. the crypto ecosystem, as when people wish to rotate profits or be more defensive they move into stablecoins but when they exit entirely back into fiat, they don't plan on rotating back into the crypto markets anytime soon. Now that it's growing, if USDT market cap was to reclaim the 70 Billion USD handle, the market would have completely retraced the FTX debacle.

The second key metric to understand is the Ethereum Total Value Locked (TVL). As the largest layer 1 ecosystem with the lion's share of DeFi and NFT activity, when the TVL of ETH grows, it shows an increase in risk appetite as traders branch out the risk curve seeking higher returns. It's also important to note that there is a significant amount of leverage that is sought in the ETH ecosystem, this can then drive further growth as borrowed capital is used to create more economic activity within the overall crypto market landscape.

Altcoin Watch: Lido DAO

Amidst the bear market relief rally we have witnessed in the crypto markets, some of the projects that have put in an impressive but not mind melting pump have been forgotten. One of these names is Lido DAO (LDO), Lido is a liquid staking solution for Ethereum backed by some of the largest staking providers. Lido lets users stake their ETH - without locking assets into the staking contract whilst participating in on-chain activities. LDO is one of the most popular liquid staking solutions and has captured 73% of the liquid staking market.
Should this segment of the market (liquid staking derivatives) get larger and there is an increase in demand for these products, we can expect a strong bid on LDO to carry on as a persistent theme in 2023.

BTC/USD Key Levels

Bitcoin has been relentless all year and met its first real resistance/liquidity challenge at the $24,000 USD handle. Should we break and close above that key level of $24,000 on the daily chart, the next key level to test will be $24,425. If momentum remains to the upside, we cannot rule out a move towards $25,000 before end of week. To the downside, if we remain below $23,000 for a duration of the week, it will setup a retest of $21,487. Should we close below $21,487 on the daily chart, then we will watch for a retest of $20,521 before major support kicks in and BTC catches a bid.

ETH/USD Key Levels

Ethereum has underperformed when compared to Bitcoin but has had a great start to the year nonetheless. The key level to break to the upside is $1,661 USD, should we manage to do so on the daily chart then watch for a sharp move towards $1,748. If momentum is particularly strong to the upside, a retest of $1,888 by end of week cannot be ruled out. To the downside, if we remain below $1,661 we are setting up for a retest of $1,510. With a daily close below $1,510 having us retest $1,339 before major support kicks in.

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

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