Crypto Market Review, Aug 18

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Arman Shirinian

Bitcoin’s value is lagging behind in adoption as meme coins show better performance than “serious projects”

With record inflation figures in Europe and the US dollar strengthening, Bitcoin and other cryptocurrencies once again came under pressure, with both currencies gaining a small percentage of their values.

DXY growth cycle begins

Since August 16, DXY has gained about 1.5% of its value after successfully bouncing off the 50-day moving average support level, which has been tested four times during this rally. The technical situation on the chart also correlates with fundamental factors in the market.

DXY data
Source: TradingView

Despite the positive CPI data, market euphoria faded as the Fed still has a long way to go before bringing inflation to its target, meaning the economy will see another cycle of rate hikes, with a soft landing in about 2023.

As for the European currency, the USD is still prevailing over the Euro, causing another 1.1% drop in recent days, making parity between the two assets possible for the foreseeable future. On July 28, the value of the euro officially fell below the $1 threshold for the first time in 20 years.


Bitcoin is not catching up with adoption

Based on data provided by an analyst at Fidelity, as we’ve covered above, Bitcoin’s adoption rate far exceeds its market value, which technically makes it “cheap,” according to numerous pricing models.

Bitcoin price model
Font: Jurien Timmer

With BTC’s most recent price performance, the asset has fallen well below its desired growth pace, technically causing it to be oversold against adoption value. The analyst used various pricing models, mostly based on the adoption of technologies such as mobile networks and the Internet.

But despite problems moving head-to-head with various price models, Bitcoin is still growing exponentially compared to where it was just a few years ago. Crypto influencers like Vitalik Buterin have criticized pricing models for their subjectivity and rigidity. Taking into account the difference between the technologies, the times when they were created and a general change in technologies, it is difficult to predict a certain rate of adoption and growth of an asset or a technology.

Altcoins move sideways

Most of the alternative L1s in the market are still moving sideways or showing a slight uptrend in the market. XRP has shown record volatility in the market, moving in the 2% range for the last 20 days on the market.

Meme coins like Shiba Inu and Dogecoin were the most notable assets in the market, with those two gaining around 20% of their value, standing out compared to an anemic XRP. Unfortunately, the lack of fundamental support behind the rally in DOGE and SHIB caused a quick reversal, which now pushes away the possibility of an accelerated rally in both meme coins.

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