Our Crypto Upvotes experts summed up results of May on the crypto market. And gave their forecasts for leading cryptocurrencies for the nearest future

May was the first month this year that Bitcoin closed with a loss in price. On January 1, BTC was trading around $16.5 thousand, on February 1 – $23.13 thousand, on March 1 – $23.15 thousand, on April 1 Bitcoin rate reached $28.5 thousand, and on May 1 – $29.3 thousand. By the last day of spring the price of BTC went down to $27.7 thousand.

But despite the BTC price decrease by 5.5% in May, it has grown by 67% since the beginning of the year. The total market capitalization of the cryptocurrency decreased by 3.3% in May, but has increased by 41% since the beginning of the year.

Last month on the cryptocurrency market went mainly in the decline in the prices of leading assets

The growth was observed only in certain projects, such as Ripple. And it was primarily due to internal fundamental reasons.

Otherwise, the correction in the cryptocurrency market within the uptrend of the beginning of the year continues. And to say that the market has found the bottom and will go into active growth, it is not necessary yet, says our expert.

May has not been very good for BTC so far this year, with almost 6% fall of the exchange rate. Despite this, we have not seen a strong collapse. For example, as it was in May of the previous few years. Over the past month, BTC and other major cryptocurrencies by market capitalization were in consolidation phase.

On May 25 the price of Bitcoin updated minimum of two months, sinking to the point of $25.8 thousand. But by the end of May BTC got out of this pit, and steadily crossed the point of $27 thousand.

This decline can be attributed to market instability caused by problems in the U.S. banking sector, says our expert. Recession inevitably leads to higher borrowing costs for individuals and companies. And investments are losing yields. So investors tend to invest in conservative instruments. Cryptocurrency traditionally fades into the background at this time.

The U.S. Treasury Department is actively working to reduce inflation. And if it succeeds, then the cryptocurrency segment of the market will go back to growth

Our experts say that even with the current Fed rate, Bitcoin will be able to stop the decline. And even begin to rise in price, albeit slowly. The same will happen to Ethereum and other popular cryptocurrencies.

The most important key events for the crypto market in June. These are reports on the U.S. business activity, inflation and unemployment index, which are published at the beginning of the month. Then after these reports, on June 14, there will be a Fed meeting on the interest rate. And the change of which could very strongly influence the rate of BTC and altcoins.

In case of good economic reports we may expect that the current price level will be kept. In this case, it will be a positive signal for the crypto market. And that will push the BTC price up, to the current resistance level of $31,000, and possibly higher.

Historically, June is considered a low month for Bitcoin. And for the past three years, its exchange rate has fallen in June, our experts remind us.

In May, Bitcoin was supposed to show BTC down to the $25k level. However, it fell slightly short of that target. At the same time, as in the case with Bitcoin, our experts also expect other assets to decline in prices in June.

For example, the correction target for Ethereum is at $1.6k. And other assets with high market capitalization, such as BNB, XRP, ADA, MATIC may also decrease by 5-15% in the first month of summer, our expert thinks.

As for the fundamental aspects, the attention of market participants remains focused on macroeconomics in the USA. Because the pause in rate hike at the June FED meeting is already built into the current prices. But in case of divergence with market expectations, cryptocurrency may decline synchronously with stock assets.

Important events in June among other top 30 cryptocurrencies

Among all cryptocurrency assets from the top 30, Litecoin (LTC) may be stronger than the market. That’s because the LTC network will be halving in August. It is historically bullish on the cryptocurrency exchange price. Also LTC can become one of the leaders of the subsequent market growth. And even if it won’t show good growth in June.

Our experts Crypto Upvotes note that in June several major unlocks of cryptocurrencies are expected. For example such as 1inch Network (1INCH) here will be released 16.6% of the total supply. And Blur here will unlock 6.62% of the total supply. Our expert warned that after unlocks there is usually a fall in asset prices.

Our experts talked about trends in the staking cryptocurrency niche after the Shapella update and its impact on cryptoasset prices

The price of Ethereum cryptocurrency (ETH) crossed the $2,000 mark for the first time since August 2022. After a major blockchain update of the second largest cryptocurrency took place. And fears of a massive outflow of funds from the network were not confirmed. Since the beginning of the year, the coin has grown by more than 60%.

The fears of many market participants were not justified

The April 13 update to the Ethereum blockchain, working title Shanghai. Which was made as part of the Shapella update group gave investors the opportunity to withdraw coins on a first-come, first-served basis. Which they placed as collateral in a special Beacon Chain smart contract, launched back in 2020. This gives them the status of a transaction validator on the network and allows them to be rewarded by issuing new coins, a process called staking.

Accumulated rewards also became available for withdrawal to the wallets. According to the analytical service Nansen, in the first 12 hours after the activation of the update, investors withdrew only 0.3% of the 18 million ETH. Which were placed in the contract for staking.

Contrary to the fears of many market participants, the rate of ETH tested $2,000. It’s safe to say that traders and investors took the update positively. The possibility of withdrawal of coins [from staking] is limited. As it can put pressure on the price.

Only 43.2 thousand ETH can be unlocked in a day. About 170 ths ETH will be sold at market price in the near future. But even if coins will be withdrawn at the maximum allowed limit per day. That figure would fit into the average ETH inflow to the exchanges and would not critically affect the price of the coin. It’s important to understand that many validators are just now starting to test the new feature. And they are withdrawing exactly the earned funds and not the deposit of 32 ETH. Accordingly, they plan to validate transactions further, our experts explain.

What will happen to the price of ETH in the next week

According to Coin Metrics analyst company, about 1.2 million ETH are expected to be withdrawn from staking in the next five days. Which is equivalent to about $2.3 billion at current prices. About $36.7 billion in Ethereum coins remain in the Beacon Chain.

The price of ETH could experience fluctuations in the coming weeks. As some investors will rush to withdraw coins and sell them. But those who were not ready to freeze their assets before. Then now on the contrary, may decide to place coins in a smart contract. Most likely, the upgrade of the network in the medium to long term will lead to the growth of ETH exchange rate. But before that, a period of increased volatility is possible, our experts say.

Staking as a service

Self-staking Ethereum involves setting up equipment. And mandatory minimum deposit of 32 ETH. But even more private investors use stacking services on cryptocurrency exchanges. And decentralized platforms that provide the service of so-called liquid staking.

In this case, exchanges or services act as a validator. Which pools users’ funds into a single pool with a user-friendly interface. And also with the reward for staking in proportion to their investment. The largest staking platform Lido. At the same time, being a validator, manages about 31% of all ETH in staking. Binance, Coinbase and Kraken crypto exchanges are also in the top five largest validators.

Staking from crypto exchanges

The main advantage of staking services from exchanges is simplicity. The user does not need to understand the intricacies. The user only has to press a couple of buttons and be assured that staking works. Interest payments are made by the exchanger. And it also takes the rights and responsibilities. If there are any difficulties, you can write to the support service and get an answer in a short time. This is always suitable for beginners. That is why the popularity of staking through exchanges or platforms will not suffer much from Ethereum updates.

The possibility of unlocking coins is unlikely to have much effect on the popularity of staking services. Their target audience is not so much those investors who were not ready to freeze their assets. But those who simply don’t have 32 ETH to place in a smart contract. The demand for the service, even if it falls, is insignificant, our experts say.

Kraken leads in the number of applications to withdraw coins from staking. The U.S. exchange accounts for more than 86% of the total amount of ETH. Which are now “in line” for withdrawal. The exchange was forced to stop its staking service in the U.S. and pay a $30 million fine when the Securities and Exchange Commission (SEC) recognized its staking service as the equivalent of illegal sales of securities. Because of such bans in the U.S., it is the decentralized platforms where coins will be put. The use of which the SEC will not be able to prohibit technically.

Staking on decentralized platforms

Decentralized liquid staking services allow you to invest in staking coins from Ethereum and other blockchains. Which work on the Proof-of-Stake (PoS) algorithm. And receive derivative tokens of equal value in return. Which are also traded on cryptocurrency exchanges. And can be used for additional earning strategies. Examples of such platforms include Lido, Rocket Pool, Stakewise, and others. Many of them issue their own tokens. Which give you the right to vote in DAOs or get discounts on fees for services.

Our Crypto Upvotes experts point out that the investment appeal of such platforms’ tokens depends not only on the set of their services. But also their overall marketing performance, turnover and trends in the market. Some platforms don’t have a token. But this does not prevent them from attracting users. For example, stake.fish is popular due to the experience and reputation of the f2pool behind it. It is a well-known brand in the niche of mining pools.

Tokens of the largest staking platforms also benefited from the successful Ethereum update. The tokens of Lido (LDO), Rocket Pool (RPL) and Stakewise (SWISE) showed growth of 6-7%.

PostFinance, Swiss national postal service’s bank division, will give customers access to buy, hold and sell Bitcoin and Ethereum

PostFinance, the Swiss post office bank, will partner with Sygnum Bank, a Swiss digital asset bank, to open up cryptocurrency transactions to more than 2.5 million customers. The cryptobank said in an announcement that PostFinance customers will be able to buy, store and sell cryptocurrencies such as bitcoin and Ethereum.

PostFinance is one of Switzerland’s largest retail banks. It is wholly owned by the Swiss Post, which in turn is owned by the state. According to the bank’s website, more than 2.5 million people use its services.

Bank Sygnum is licensed as a provider of cryptocurrency services in Switzerland. And it serves a range of institutions, including cantonal and private banks. PostFinance is integrating Sygnum’s b2b platform into its infrastructure.

According to the report, PostFinance has analyzed the investment needs of its customers. And it identified a high demand for digital investment services.

“Digital assets have become an integral part of the financial world. And our clients want access to this marketplace at PostFinance,” said PostFinance Chief Investment Officer Philip Merkt.

PostFinance’s decision to switch to cryptocurrency was driven in part by an outflow of funds from Swiss retail banks into the digital asset class.

PostFinance has noted a multi-million dollar outflow of funds to cryptocurrency exchanges in recent years. So not only did the bank see an opportunity to generate new revenue in its work with digital assets. But it also realized that it made a big difference in retaining existing customers.

Our experts note that in addition to Bitcoin and Ethereum, PostFinance will later add other cryptocurrencies.

Participants of the Arbitrum airdrop project received thousands of dollars in rewards. Review by Crypto Upvotes experts on how the sphere of earning tokens for activity in blockchain services is organized and what other projects can make an airdrop.

Offchain Labs, the company behind Arbitrum, organized an airdrop of tokens to encourage active users of this ecosystem. On March 23, token trading under the ticker ARB started on major cryptocurrency exchanges, and after a period of strong volatility at the time of listing, its price on trading floors stabilized at $1.2. Tens of thousands of addresses received between 3,000 and 10,000 tokens during this distribution. Thus, participants received significant amounts of incentives in dollar terms and caused a stir around other projects. Which in the future may make their own airdrops.

Airdrop is a new form of successful project launch ?

The idea of free distribution of coins to users is not new. The first airdrop, after which the term became popular, was invented by the developers of cryptocurrency Auroracoin back in 2014 at the stage of mass cryptocurrency market birth. According to their idea, every resident of Iceland was supposed to get coins. That project was quickly forgotten, but the concept itself became popular in the crypto industry and continued to evolve.

Now, airdrops serve as an effective method for blockchain services to attract an audience. It is also likely to increase the loyalty of users who receive rewards in the form of project tokens. Some ecosystem decentralized projects, in which investors see potential, conduct multimillion rounds of funding with the participation of famous funds like Sequoia or Andreessen Horowitz.

What is Project Arbitrum. And why it’s the most expected airdrops of this year

A few years ago, crypto companies chose different forms of ICO (initial coin offering) to raise capital and liquidity. Now there is a risk that tokens will be classified as unregistered securities in the U.S. or Europe when raising funds this way. The free distribution of tokens helps create a market for crypto projects. At the same time, most of their supply stays with developers and investors. At the same time, it creates a financial base for the former and a source of profit for the latter.

Developers of blockchain services often do not announce a token when launching their project. But the experience of their competitors helps community members determine which projects will sooner or later decide to release their own crypto-asset. And which types of activities will be eligible for rewards.

This was the case with Offchain Labs: an infrastructure has already been built around Arbitrum – decentralized exchanges, NFT marketplaces, games, wallets, social networks and other services. All of them are at an early stage of development and need active users and testing. It is for activity in such projects that tokens are eventually distributed.

The company remained silent about its airdrop until recently. But the successful experience of large projects such as Aptos, Blur or Optimism ( the main competitor of Arbitrum) made it clear that participation in projects on the Arbitrum blockchain. Most likely, in the end, will not remain without encouragement from developers.

From which projects to expect launch of new Airdrops

The first obvious candidate is zkSync, an Ethereum scaling solution with a different technical approach than what Arbitrum or Optimism offer. In November 2022, zkSync developer (Matter Labs) led several investment rounds totaling $258 million. And LightSpeed, Andreessen Horowitz as well as major venture capital crypto funds – Blockchain Capital and Dragonfly took part in them.

The zkSync development team includes Anthony Rose, who led engineering teams at SpaceX, creating software for Falcon, Dragon, and Starlink. And Steve Newcomb, who founded Powerset, which was acquired by Microsoft and later became part of the search engine Bing.

In one week before the launch of token from Arbitrum, users transferred $8 million in assets to projects in the zkSync ecosystem. According to DefiLlama, the amount of funds (total value locked) locked in the pool of the decentralized exchange ZigZag. Which runs on the zkSync platform, rose from $1.5 million to more than $13 million in just one day. In a comment for Coindesk, Martin Lee, head of analytics platform Nansen, says that it was the distribution of Arbitrum tokens that triggered the increased activity of “airdrop hunters.” They have attracted both new entrants and those who have participated in airdrops from other projects.

Other potential candidates for future airdrops include several other projects:

StarkWare – Ethereum scaling solution, similar to zkSync. The developer is the Israeli company StarkWare Industries, with an investment of over $150 million and an estimate of $8 billion.

Scroll – a similar Ethereum scaling solution. The project has attracted funding of $80 million with an estimate of $1.8 billion.

Fuel Network – an Ethereum scaling solution similar to Optimism or Arbitrum. The project’s developer, Fuel Labs, raised $80 million in funding in September 2022.

Aleo – DeFi-protocol with a focus on privacy. The developers of Aleo Systems raised $200 million from SoftBank, Andreessen Horowitz, Samsung Ventures and other funds.

LayerZero – a protocol for exchanging data between blockchains from different ecosystems. The company behind the development, LayerZero Labs, has raised more than $173 million, with investors including PayPal Ventures and Andreessen Horowitz.

Other major projects without their own token include Sui, Celestia, Sei, Linera and others.

Terms of participation in airdrop from similar projects

As a rule, the developers of such projects do not name any criteria or conditions, fulfilling which it will be possible to get tokens in the future. Moreover, none of them guarantee the availability of airdrop for early users or the launch of a token. Activity sets are formed in the community based on the experience of predecessor projects. And when an airdrop is announced, the project team decides for itself each time who can claim their tokens and for what.

Some projects have even given away tokens for a single interaction with the ecosystem. And in the case of the Blur Marketplace, for example, a full-fledged multilevel airdrop strategy with a gamified approach was developed.

Risks from participation and scammers

Anonymity when using cryptoservices opens the door to manipulation. According to a joint study by journalist Colin Wu and the blog x-explore, about 150,000 addresses and at least 4,000 groups were identified in the Arbitrum airdrop.
Which are engaged in activity generation, which accounted for more than 253 million ARB tokens. And that’s about 22% of the entire airdrop.

There is growing evidence on the web that organized groups typically in countries such as Vietnam or Bangladesh – are scamming activity in blockchain projects. They use multiple accounts and wallets, working in offices on a schedule and getting paid. Our Crypto Upvotes experts managed to find several international groups in Telegram and Discord messengers. In these groups administrators offer services of “outsourcing” activity. Prices for the services range from $10 to $200 per account, depending on the project and activity set.

The growing popularity of cryptocurrency airdrop is being actively exploited by scammers. Interacting with blockchain projects implies a certain level of technical expertise. Therefore, inexperienced users often become victims of scammers. Tens of thousands of phishing pages appear on web that imitate sites of famous projects.

Sometimes these sites are designed with attention to detail and have high-quality design and convincing scenarios of interaction with the victim. It helps to avoid risks by interacting only with the official resources of the services. Where they also post links to ecosystem projects in which it is possible to participate, claiming a future airdrop.

Cryptocurrency platforms providing liquid staking services came in second place in DeFi sector by volume of funds sent to them

Staking platforms came in second in terms of funds in the DeFi sector, overtaking lending services. According to DeFi platform Llama, the volume of total blocked value (TVL). Liquid staking platforms exceeded $14 billion, while TVL in cryptocurrency lending protocols is about $13.7 billion.

Liquid staking, allows users to earn from Ethereum stacking without having to make a mandatory deposit of 32 ETH. Users can send any amount of ETH or other Proof-of-Stake cryptocurrency coins to staking. Users will receive tokenized versions of their assets in return. For example, in form of stETH token in a 1:1 ratio. The latter can be used in parallel to generate additional income in DeFi-protocols. At the same time, you will not lose earnings from staking assets in the liquid staking service.

Decentralized exchanges (DEX) lead in terms of funds on DeFi-platforms. TVL on them is $19.3 billion. However, this category includes 716 services. While the staking services whose data is collected by the analytics platform are 71.

Over the last month, TVL of just one stacking protocol Lido increased by $1 billion to $9.3 billion, while this figure for leading DEX is almost twice as low: Curve has $4.9 billion, Uniswap has $4.1 billion, and Pancakeswap has $2.5 billion.

On February 25, the Lido team noted that it recorded the largest daily inflow of funds amounting to more than 150,000 ETH (about $245 million). According to crypto analyst Lookonchain, these funds were contributed by Tron blockchain founder and Huobi exchange chief Justin Sun.

On February 27, cryptoprotocol specialists from 0xScope noted that Sun continues to contribute funds to stake on Lido. Additionally, he sent another 88,000 ETH (about $144 million) there.

Reasons for growth

Our experts point out that the influx of funds into liquid staking protocols is caused by the fact that the Ethereum network is scheduled to start updating Shanghai in April 2023. Which will allow to withdraw previously blocked funds in ETH from staking. After it was revealed in January that developers had decided to focus on this particular upgrade feature, staking platform token rates soared by dozens percent and continue to rise.

Also, the growth in popularity of DeFi-protocols from this category was promoted by rumors about the possible ban on staking in USA. There has been no official confirmation of this yet. But the major U.S. exchange Kraken in early February closed stakng for U.S. customers at the request of the U.S. Securities and Exchange Commission (SEC).

Launch of a new cryptocurrency, attached to Australian dollar exchange rate on Ethereum blockchain, scheduled for mid-2023. Crypto-Upvotes expert review

National Australia Bank (NAB), one of four major Australian banks, has created an AUDN stablecoin on the Ethereum blockchain. It will be attached to the rate of Australian dollar (AUD), according to Australian Financial Review. Banks plan to launch this coin in mid-2023.

The goal of creating AUDN is to allow bank customers to make real-time blockchain-based settlements in Australian dollars, the NAB said. AUDN can also be used for a number of other purposes, including carbon credit trading and repo transactions.

NAB also intends to use AUDN for low-cost international transfers. According to the bank, the technology will avoid using the SWIFT system. And reduce dependence on complex and costly relationships with correspondent banks when sending money abroad.

For at least three months AUDN will not be available to customers. Because while the bank under the supervision of regulators is conducting internal testing. Including transfers between subsidiaries and branches.

AUDN is not the first stablecoin to be pegged to the Australian dollar. 9 months earlier, Australia-New Zealand banking group ANZ Bank issued the A$DC (“A dollar DC”) coin. Also Novatti payment system created the AUDD stablecoin on Stellar blockchain. And Ettle has launched AUDE token on Ethereum and Algorand.

There are also stablecoins linked to Australian dollar exchange rates such as AUDT, XAUD, AUDRamp and TrueAUD. Volumes of these cryptocurrencies are minimal.

Last month, Reserve Bank of Australia Governor Philip Lowe said that regulating stable coins should be a priority and should be treated the same as bank deposits. Our experts note that Australia is also actively developing legislation and introducing technology for other digital assets. For example, in the middle of last year, Australian Gold Coast Mayor Tom Tate proposed accepting cryptocurrency in payment of municipal taxes.

ENS registrar reported that more than 80% of all addresses appeared in the past year. Crypto-Upvotes expert review

Last year, users registered more than 2.2 million addresses in the Ethereum Name System (ENS). This was reported by representatives of the ENS registrar in its official Twitter account. According to ENS Domains website, the number of .eth addresses exceeds 594,000.

Vitalik Buterin, co-founder of the Ethereum ecosystem, called ENS-domains the most successful application of NFT technology in an interview with WIRED.

An ENS domain is technically an NFT on a particular wallet. To make a transfer to this wallet, you can specify not its address in the usual format. And replace it with a conveniently readable address such as “vitalik.eth”. Such a wallet address can also be used for authorization in decentralized applications (dApps) and searches in blockchain browsers such as Etherscan.

Domains in the form of NFTs can be traded on leading marketplaces such as Looks Rare or OpenSea. However, the largest marketplace by volume is ENS.Vision, which specializes in ENS domains. According to the platform, the most expensive addresses were “333.eth” and “metaverse.eth,” sold for 100 and 99 ETH, respectively.

Domains are becoming a form of identification in the crypto community. And this provokes demand for short and easily recognizable addresses. Floor price for domains in the “999 Club” category, that is, three digit addresses consisting of numbers, is at 20.22 ETH.

Visa is using a proposal from Ethereum developers. It will allow automatic pre-scheduled payments from non-custodial crypto wallets

Visa has developed a blockchain-based autopay solution. A document published by this company details a new concept based on Account Abstraction (AA) technology from Ethereum developers. It will allow the implementation of automatic pre-planned payments using smart contracts in non-custodial users’ wallets.

Account Abstraction technology was proposed back in 2016. Since the core Ethereum network does not yet support AA. Therefore, VISA implemented its solution in StarkNet, a second-tier blockchain built on top of Ethereum blockchain. The account model in StarkNet just uses AA technology.

Whereas normal accounts check if a transaction is correctly signed for a specific address. With StarkNet, they simply verify that the transaction is coming from a given address. In addition, the introduction of Visa’s concept into this blockchain has not only enabled the deployment of a new auto-payment feature. But also increased transaction throughput.

Visa notes that it sees autopay as a key functionality that the existing blockchain infrastructure lacks. And it invites interested companies working in this area to work together on projects in the field of programmable payments.

Our experts note that payment companies from traditional financial industry this year began to actively develop projects related to blockchain and cryptocurrency. Also at the end of September, SWIFT and Chainlink oracle network announced joint work on a blockchain project. This project will allow traditional financial companies to conduct transactions on a platform that supports almost all blockchains.

Daily futures trading volume on DeFi platforms reached $5 billion. This is the biggest amount since Terra collapsed in May of this year. Crypto-Upvotes expert review.

DeFi platforms increased revenues amid the outflow of funds from centralized exchanges that occurred due to the collapse of FTX. On-chain data showed an increase in activity on decentralized futures trading platforms and an increase in revenue for DeFi protocols, Cointelegraph reported.

However, not all decentralized applications (DApps) and protocols show such a trend. Because some of them have financial ties to FTX and Alameda. But data on DeFi projects’ revenues show that at least three protocols have exceeded $1 million in the last seven days, including Ethereum and OpenSea Marketplace.

Decentralized futures trading platforms have increased their trading volumes to record levels. Their daily turnover reached $5 billion, the highest since the Terra token crash in May of this year.

Despite the increase in trading volume, the total value of locked-in assets (TVL) at DeFi only increased at seven networks. Gains Network, a futures trading platform on the Polygon network, showed the biggest increase. Its TVL increased 17.3% over the week. And inter-network protocol Ren saw its TVL drop by 50%. This is because Ren worked closely with Alameda. And received quarterly funding and stored its funds directly on FTX.

Blockchain’s profit growth comes on top of an unchanged number of daily active users. Compared to previous weeks, the daily profits of leading blockchains have increased by more than 300%. This suggests that transactions among existing users are occurring more frequently.

Despite growth in profits, only Ethereum made profits among PoS-based blockchains. Other leading networks such as Polygon, BNB Smart Chain and Optimism did not profit. Holders of these tokens suffered inflationary losses.

Our Crypto-Upvotes experts discussed how US dollar affects cryptocurrency market. And gave predictions about the further movement of leading cryptocurrencies

Bitcoin rate rose from $19.5 ths. to $21 ths. per day. Ethereum rose by 13% and passed the mark of $1.5 ths. Among the top 30 cryptocurrencies by capitalization, all coins, except stabelcoins, increased in value. Market capitalization of entire digital currencies market showed growth of 6.9% and exceeded $1.047 billion.

At the same time, the US dollar collapsed against the euro on Forex market to its lowest level in five weeks. For the first time in this time, the U.S. currency became cheaper than euro. Dollar index (DXY) is also near a three-week low.

Impact of dollar index on cryptocurrency rates

How Bitcoin and the crypto market in general behave is influenced by the U.S. Dollar Index. Our expert explained that the DXY index (U.S. Dollar Index) shows the dynamics of the dollar against a basket of major world currencies. Such as : Euro, Swiss Franc, Pound Sterling, Canadian Dollar, Japanese Yen and the Swedish Krona.

Thus, the index shows the growth or decline of the U.S. dollar relative to a basket of currencies. When the index goes up, Bitcoin usually goes down. And when the index falls, Bitcoin goes up. This inverse correlation between the dollar index and Bitcoin was noticed a decade ago, and has been confirmed constantly since then.

Now Bitcoin’s rise above the $20,000 mark is due to the DXY index going down. The reason for this is the release of good reports by IT giants. As well as relatively positive data on the US labor market. And investors’ hopes that this information will lead FED to stop raising the rate.

Short-term strengthening of BTC or not?

However, despite some slowdown in U.S. inflation. The Fed will continue to tighten monetary policy. According to our expert, there is now too big a gap between inflation and the rate. Therefore, there is no reason to expect a strong slowdown in prices.

As early as next week at the meeting, Fed policymakers may raise the rate again by 75 bps (0.75%) to 4%. If FED declares that this trend will continue in the coming months, then today’s rate rally will be crossed out and sent to the trash garbage can.

According to our expert, we should expect in this case a new decrease of Bitcoin to the area of $15 thousand or even lower. Ethereum may go down to $1,000.

Under current conditions, cryptocurrency investors can liquidate futures positions. And make a profit by simply locking in profits on buy trades. Because there is no certainty that the current growth trend will continue now. Most likely, in the coming days it will be possible to observe the development of demand for the US dollar again.

What are prospects for growth of BTC?

Most likely, the trend of declining cryptocurrency rates may begin to change only in the first half of 2023. According to our expert, that is when the process of Fed’s monetary policy tightening may end. Or the step of rate increase will not exceed 0.25%. Then stock markets will start to form trends on increase of quotations. And on cryptocurrency market too, it will happen.