O Bitcoin (BTC) – and the market cryptocurrencies in general – consecrated the month of May as the first in the red since January 2023. To the cryptocurrencies were in an uptrend, after a bad year in 2022, with the break in FTX and crises such as Terra (LUNA).
Is this an indicator for a trend reversal or just a healthy correction?
For Orlando Telles, an analyst and specialist in crypto assets, in the last half of the year, the market was experiencing a moment of euphoria since the bank failure, which began with Silicon Valley Bank (SVB).
During this crisis, there was an injection of capital into the US economy that resulted in significant increases in the market, including meme cryptocurrencies, the memecoins, as Telles recalls.
The injection of capital into the US economy, as well as indicators of increased risk appetite in the country, always tends to be positive for cryptocurrencies. The reason is the attraction of institutional capital, which increases the liquidity and volatility of this market, considered risky by large investors.
Put it in the macro scenario account
After the euphoria, due to the injection of more capital in the United States, came the correction. Investors are putting reason to work, taking profits and reassessing their portfolios. Not only that, but also uncertainty about the US reality, after the renegotiation of the debt ceiling came to light.
“During this week, we noticed a significant inconsistency in the speeches of the Fed, and of people from the entity, that we will have a rise in interest rates, which brought down the market”, explains Telles. Initially, this rise in interest rates was priced in, with falls in traditional markets.
However, recent data from the CME indicate that the view was changed shortly after an interview by one of the members of the Fed to the WSJ, which indicates that this hike would not come later this month.
Uncertainty in the short and medium term acts like bulls fighting bears and equating highs and lows. The result of this confrontation is the laterality of prices.
Where to invest in the cryptocurrency market?
Telles comments that, when looking at the long-term expectations of investors, it is possible to observe that, at the end of 2023 and beginning of 2024, we will have a drop in interest rates, making it more friendly and attractive for the crypto market.
“This is the moment to understand which segments will stand out in the next semester and in the next 365 days, so that we can start building this portfolio thinking about this scenario of macroeconomic stabilization and more perennial cycles of increase”, he says.
In this sense, the analyst comments that he sees Ethereum as a well-established asset. The ecosystem has a significant diversification of revenues and demands in the block space, such as NFTsdecentralized finance (DeFi)stablecoins and new entries from developers.
In addition to Ethereum, Telles comments on second layer solutions called rollups, which can take advantage of a possible reduction in operating costs due to future updates.
“I see the case of rollups in general, especially with the proximity of the end of the year to the update of EIP-4844 [proposta de melhoria da rede Ethereum], which will reduce their cost by 20%. In these models, I would look at Polygon (MATIC) and Arbitrum (ARB), which will absorb a lot of this price reduction, as well as a token distribution season”, he says.
A market that Telles also says he is looking at is that of zero layers. They are blockchains that focus on the unification of all others, in order to facilitate the liquidity of the market as a whole.
“In that sense, I look to Zetachain and LayerZero Labs as possible future airdrops,” he commented.
These two analyst mentions still do not have their cryptoassets, although the analyst believes in the possibility of a launch through free distribution, as happened with Arbitrum (ARB) two months ago.
Source: Moneytimes
I am an author and journalist with a focus on market news. I have worked for a global news website for the past two years, writing articles on a range of topics relating to the stock market. My work has been published in international publications and I have delivered talks at both academic institutions and business conferences around the world.
