Bitcoin and Crypto

Stick to Bitcoin, play safe with Altcoins

While the Bitcoin rally is certainly a good sign, there are some whale movements which we need to be wary of.

Written by : Team Giottus

This year has been action packed so far, and it’s exciting. While the Bitcoin rally is certainly a good sign, there are some whale movements which we need to be wary of. On this issue, we track four recent trends which you need to understand better so you can invest better. 

1. AI is the hot new topic

AI has taken centre stage this year – with the adoption of ChatGPT and with global companies including Microsoft and Alphabet (Google) announcing their future big plays. 

Google Trends has shown a significant interest in retail investors trying to catch the train quick.


Source: Google Trends

In crypto, the story is the same.


Source: CoinGecko
 
Top trending coins are majority AI based – Valot, GNY, SingularityNET and Fetch.ai have all surged in price in the last week or so.

If you are buying any of these coins, keep in mind these are ones with low market cap and even a couple of million dollars can be used to manipulate the prices. 

2. Bitcoin is at the ‘cross’roads

Have you heard about a golden cross or a death cross in technical analysis? 

Well, Bitcoin just had (or is about to have) both! While the golden cross usually signals a great rally ahead, a death cross signals quite the opposite. The upcoming death cross on the weekly for Bitcoin will be the first ever such event in its history. Four out of the last five golden crosses led to a strong increase in BTC price. One didn’t – February 2020 with COVID-19 hit. Two articles on this, here, and here

Where is Bitcoin heading now? We believe that a strong pullback is possible by the end of March post which it will be able to consolidate and take on a sustained rally.

3. Whales have spiked the altcoin market

Whales (large crypto asset owners) often play the market by making strategic moves before retail investors try to copy them (and lose money since they are late in the game). 

 
Recent surges in the altcoin market have all been whale-led according to this twitter thread. Growing altcoins – FTM, LOOKS, LDO, FXS and GMX – have all benefited from their activity.

While this looks great, the concerning point to note is that whales have been depositing Bitcoin to exchanges – this usually means a sell-off is incoming (such as the one witnessed today).

 

Whales – net deposit/withdrawals of Bitcoin from exchanges. Source: Glassnode
 

4. US SEC may crackdown on staking

This is a concerning development for the Ethereum and altcoin fanbase. Most altcoins are all on PoS consensus protocol and staking is usually a viable, safe way to earn rewards while contributing to network health. This also leads into the other securities v/s commodities debate emanating from the US. While Bitcoin is classified as a commodity, all other crypto assets including Ethereum maybe classified as a security (and thus inviting additional governmental intervention on them).

So, takeaways?

Invest in Bitcoin. Period. We have previously argued that Bitcoin dominance is likely to increase this quarter. Let the market noise settle around altcoins. Invest only when you are sure that altcoins won’t bleed more (against BTC or USD).

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