Are Small Cap Crypto Assets Rebounding A Sign Risk Appetite Returning?


The cryptocurrency market just saw some slight recovery, but the performance is upside down. Contrary to the way selling is usually done, Bitcoin’s dominance has declined significantly as the asset has underperformed the Small Cap benchmark.

From a market capitalization of $3 trillion last November, the crypto market has now fallen to around $800 billion:

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Total Cryptocurrency Market Cap Drops to $879.871 Billion in Daily Chart | source: TradingView.com

Smaller Altcoins Make a Strong Return

The cryptocurrency market bottomed out last week, and some are now following slight recovery. according to Arcane Research’s latest weekly reportSmaller altcoins also saw red numbers with the Small Cap index down 27%, but it was Best performer overall.

In contrast, the price of Bitcoin fell by 35%. Through this small window of respite during the month of June, we saw the excellent currency without the performance of all other indicators.

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Bitcoin underperformed all crypto indexes in June | source: obscure research

As a result, BTC’s dominance in the market is down -1.51% this week to 43.5%, while Ether is down -0.31. The latter has been declining since May from 19.5% to 15%.

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Bitcoin Dominance Sees Huge Decline As Altcoins Lead | source: obscure research

What makes this winter even colder

The report notes that the main driver of the cryptocurrency crash was the collapse of the hedge fund Three Arrow Capital (3AC). Having invested more than $200 million in selling Luna Foundation Guard tokens, it ended up wiping out 3AC’s liquidity and the margin call was the last straw for an already tight market.

Related reading | How long will CryptoWinter last? Cardano founder provides answers

according to The Wall Street Journal, a private crypto hedge fund has hired legal and financial advisors to help find a solution for investors and lenders. The company is looking for a way out, “including asset sales and the rescue of another company.” The speculation is not very positive at the moment, seeing the wave of liquidation and loss mitigation by crypto exchanges that followed the crash.

“We weren’t the first to get infected… This was all part of the same infection that affected many other companies,” Kyle Davis, co-founder of 3AC, said in an interview.

Arcane Research explained that “in times of insolvency, creditors undo the most liquid assets first, which is likely the root cause of the relative underperformance of BTC and ETH in the past week.”

The report adds, “Illiquid cryptocurrencies are more difficult to sell in volume, particularly during times of stress, which explains why smaller coins have experienced less excessive selling pressure in the past week.”

Meanwhile, Michael Saylor CEO of Microstrategy describe it The events around this winter as a “parade of atrocities” as the consequences of a lack of regulation in the crypto space made it possible to launder trading and secured altcoins to weigh on Bitcoin.

“What you have is $400 billion in opaque, unregistered cloud of securities without full and fair disclosure, all mutually collateralized with Bitcoin.”

“The general public should not buy unregistered securities from unruly bankers who may or may not be around next Thursday,” said Saylor, criticizing the recent crashes and suggesting that future actions by regulators could prevent the level of volatility that BTC has now reached. suffer.

Related reading | Crypto investors find safety in stablecoins, bitcoin and altcoins ditch



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