Narrative of Altcoins Decoupling From Bitcoin Goes Up in Smoke
  The latest moves in crypto markets, in context January 21, 2022 Sponsored by  If you were forwarded this newsletter and would like to receive it, sign up here.
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Market Moves The developing narrative of ether and alternative cryptocurrencies, or altcoins, decoupling from bitcoin in an adverse macro environment went up in smoke early Friday as a sell-off in stocks and the largest cryptocurrency caused extensive damage to the broader crypto market.
Bitcoin fell to a five-month low of $38,300 during the Asian hours, an 8% slide on a 24-hour basis.
Ether, the second-largest cryptocurrency, tanked 10%, printing lows near $2,800. The convincing move under $3,000 saw some traders book bearish option strategies, Swiss-based derivatives analytics platform Laevitas said.
While binance token slipped 10%, native tokens of Looping, Yearn Finance, Compound and Aave fell between 12% and 15%, CoinDesk data show. Recent outperformers such as Fantom's FTM and Cosmos's ATOM dropped 10% and 5%, respectively.
All crypto market sectors, including gaming and metaverse, traded in the red and suffered more significant losses than bitcoin.
"It appears as though the whole market is simply correlated to equities now," Laevitas said. "So it will be interesting to see how that evolves with the Federal Reserve looking increasingly likely to raise rates faster."
The price action perhaps indicates that the market value of cryptocurrencies promising sound money and democratized finance is heavily dependent on centralized liquidity – the Fed's money printing program.
Ether and the broader crypto market had stayed relatively resilient following bitcoin's early December crash to a then two-month low of $42,000. That had several observers calling a continued ether outperformance over the near term.
What next?
Bitcoin's retreat from record highs near $69,000 reached in November appears to have cleared the froth, as evidenced by the decline in meme tokens like shiba inu (SHIB).
The self-proclaimed dogecoin-killer is down over 70% from the late October peak. The token surged 830% in October, signaling retail frenzy often observed at market tops.
However, the key to a fresh bull run is renewed institutional participation, which remains elusive.
"The awaited institutional inflows have still not returned, and with that $40,000 BTC support broken, the wider market has been pushed lower," Laurent Kssis, a crypto exchange-traded fund (ETF) expert and director of CEC Capital, said.
The focus will be on bitcoin's UTC close on Friday, as potential failure to rise back above $40,00 may invite more chart-driven selling.
"The loss of the $40,000 mark today will likely lead to more bearish sentiment, which in turn could push the price further down – it could even test last July's low of $30,000," Robbie Liu, a researcher at crypto financial services provider Babel Finance, said in an email.
"In addition, as we near the Lunar New Year, Chinese investors' demand to cash out is also putting the market under greater selling pressure," Liu added. China's week-long Lunar New Year holiday begins on Jan. 31. While several traditional market observers were quick to call out El Salvador's supposedly utopian decision to adopt bitcoin as legal tender and invest in the top cryptocurrency as the reason for the spike in the country's CDS, the U.S. Federal Reserve's hawkish turn also appears to have played a role.
Read the full story here: Ether, Altcoins Tank With Bitcoin as Decoupling Narrative Goes Up in Smoke
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Technician's Take By Omkar Godbole Bitcoin's daily UTC close pivotal  Bitcoin's monthly chart with MACD histogram (Source: TradingView) Bitcoin looks south, having found acceptance under the key 61.8% Fibonacci retracement.
A UTC close under the horizontal support at $39,600, the bullish higher low created in September, may bolster bearish sentiment.
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