Bitcoin sustains $21K, but rally in cryptocurrency meme suggests correction ahead

In line with a stable session on the Nasdaq, Bitcoin remained above $21,000 yesterday, a level that continues to hold in the early hours of this Wednesday (18th) amid Wall Street futures trading zero-zero. As of 7am, BTC was unchanged over the previous 24 hours at $21,228.

With that, the cryptocurrency rounds out another day with a stable weekly gain of around 22%, a number that marked a seven times greater recovery than the WSCI World stock index last week.

“The fact that we are now flirting with $21,500 is unbelievable,” JJ Kinahan, CEO of trading provider IG North America, told CoinDesk. “It correlates a little bit with the equity markets right now as we’re starting to see people taking a little more risk. Volatility has decreased.”

“We will reach towards the $22,500 level before we really start to see resistance,” Kinahan added.

For some traders, however, the $21,600 region is seen as the main resistance to overcome at the moment and, if overcome, could trigger a new run-up for Bitcoin.

“If you can make it through the week, I have no hesitation in saying that very soon we will see BTC at $32,000,” assesses cryptocurrency analyst Fernando Pereira, of brokerage Bitget. “If you reject this region, you should go back to $18,000,” he reflects.

As usual in the cryptocurrency industry, Bitcoin’s stability after the bullish move pushes more capital into smaller cryptocurrencies, called altcoins. If yesterday the highlights were the assets related to the concept of metaverse, today the winners are the meme coins, which started out as a joke but soon created huge communities. This is the case of Shiba Inu (SHIB), which registers an increase of 14.8% in the last 24 hours.

The SHIB token gains come shortly after the project’s developers announced the imminent launch of a new network called Shibarium, which aims to be another to be proposed to lighten Ethereum (ETH) at peak times.

But experts are warning of a possible sign that a fix may be on the way. “Every time that [o] DOGE price starts to skyrocket, market-wide drop occurs moments later,” analyst firm Santiment wrote in a report. While SHIB is not DOGE, the projects are seen as related, both originating from a meme.

In the broader market, traders are eyeing the potential impacts of the US earnings season. Although the Nasdaq was positive yesterday, other indices closed the session lower, reflecting declines in fourth-quarter earnings from banks Goldman Sachs and Morgan Stanley.

Within the crypto space, the disappointment came from bank Silvergate Capital, which reported a net loss of $1 billion in the fourth quarter, compared with a net profit of $40.6 million in the third quarter and 18 million dollars in the same period last year.

In a note, Arcane Research said cryptocurrencies are “extraordinarily strong and alive,” but cautiously added that “in the short-term, the momentum seems exaggerated.”

“Last week saw seven days of consistently positive returns for the first time since March 2022 and the RSI momentum indicator (an index that measures the strength of moves) moved towards extreme highs. The recent increase has been predominantly fueled by a short squeeze driven by consistent and aggressive BTC sales,” Arcane said.

According to the experts who signed up to the report, Bitcoin’s surge to over $20,000 was accompanied by a stabilization in the value traded in derivative contracts, a commonly used metric to measure investor appetite. The data, evaluates Arcano, suggest that the short sellers has become conservative, which could lead to price stabilization in the near term.

Check out the performance of the main cryptocurrencies at 7:06:

Cryptocurrencies with the biggest gains in the last 24 hours:

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Find out how cryptocurrency ETFs closed in the last trading session:

Optimism surprises with an increase in the number of transactions

Second-tier network (helping another blockchain) Optimism, which runs parallel to Ethereum, is seeing a rapid increase in the number of transactions in recent weeks.

The data consulted on the blockchain shows that optimism, which until then was at the bottom of the queue in terms of usability, has already stolen the place from rival Arbitrum, whose activity has dropped by 50% since November.

The scenario is seen by experts as an indicator of future investor interest in Optimism’s OP token, indicated by analysts interviewed by Crypto+ as one of the most promising cryptocurrencies for 2023.

Complete polygon update

Polygon, Ethereum’s leading tier two network, has successfully completed a hard fork (upgrade) designed to fix bugs in the technology, including sudden spikes in the fees charged for transactions.

Only 15 validator teams participated in the voting process, which is extremely low as the number of validators that arrived is at least 100.

The price of Polygon MATIC’s native token has increased nearly 15% over the past seven days, following a broad recovery in digital assets.

Digital Currency Group suspends dividends

Cryptocurrency conglomerate Digital Currency Group, which owns Genesis, Grayscale and CoinDesk, has informed its shareholders it will suspend dividends until further notice.

“In response to the current market environment, DCG has focused on strengthening our balance sheet, reducing operating expenses and preserving cash. We have therefore made the decision to suspend distribution of DCG’s quarterly dividends until further notice,” DCG said in a letter to shareholders on Tuesday.

DCG owner Barry Silbert is in talks with billionaire entrepreneurs Cameron and Tyler Winklevoss, whose cryptocurrency exchange Gemini offered a lending product that fell apart because its partner Genesis stopped customer withdrawals.

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