Dominance refers to the ratio between the market capitalization of BTC to the total market capitalization of all cryptocurrencies combined and is often used as a gauge for market sentiment. PLUS: Some Solana tokens are up as much as 70%.

Solana’s SOL and ecosystem memecoins, such as popcat (POPCAT), led crypto market gains on Thursday, with bitcoin (BTC) and majors mostly flat. A bitcoin trader believes the rising dominance rate for suggests short-term bearishness.

BTC added under 1% in the past 24 hours, with majors ether (ETH), BNB Chain (BNB), xrp (XRP) and dogecoin (DOGE) showing mixed price action. The broad-based CoinDesk 20 (CD20), a liquid index tracking the largest tokens by market capitalization, rose 0.43%.

Last week, a widely tracked bitcoin dominance indicator reached over 57% on CoinMarketCap, to its highest level since April 2021. Dominance refers to the ratio between the market capitalization of BTC to the total market capitalization of all cryptocurrencies combined and is often used as a gauge for market sentiment.

High dominance might indicate that bitcoin is leading the market, which can be seen when investors prefer the relative stability and established nature of bitcoin over the higher risk associated with altcoins.

Conversely, a decrease in bitcoin’s dominance might suggest that investors are moving their capital into altcoins, potentially signaling the start of an “altcoin season.”

“Ethereum continues to lose market share to bitcoin and other altcoins. As a result, BTC’s share of all cryptocurrency capitalization has risen to 57.3%, the highest since April 2021,” Alex Kuptsikevich, senior market analyst at FxPro told CoinDesk in an email. “But that doesn’t necessarily mean an upward trend for the top cryptocurrency, which has pulled back below $67K, losing 1% in the last day and nearly 4% from its peak on 21 October.

“The price is now close to a local support level at $66.8K. A break of this support will open the way for a deeper correction to $65.5K, near the 61.8% retracement level from the last rally and the late September top,” Kuptsikevich warned.

SOL leads market

SOL jumped 5% to $173 in the past 24 hours, extending weekly gains to 14% as it reached price levels last seen in early August. SOL set a record high against ether, as reported, while, network-based memecoins POPCAT, BONK and GOAT rose as much as 70% amid a bump in network volumes and trading activity.

The Solana ecosystem is a flourishing hotbed for trading activity for its engaged community and prevalence of small-cap trading – where frenzied memecoins trend often last a few weeks that boosts SOL prices.

Artificial intelligence-themed memecoins are the current flavor of the week, where projects claiming to have AI tools are driving trading narratives on the network. That pushed revenues and token issuances on the Solana token deployer Pump to record highs earlier this week.

Active addresses grew to 85,000, of which 37,000 were new wallets, indicative of strong demand. A Pump-connected fee account sold over $6 million worth of SOL late Monday, taking its lifetime sales to over $78 million or 500,000 SOL.

Over 40,000 new tokens were created on Solana in the past 24 hours, SolanaFloor data shows.

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Source: Vietnam Insider

Federal Reserve Bank of Chicago economists predict low inflation and a resilient economy, a potential goldilocks scenario for risk assets, including cryptocurrencies.

Economists at the Chicago Fed argue that rate increases implemented since March 2022 have set inflation on a path to 2% while ensuring soft landing for the economy.

Further tightening may not be needed, the economists say.
A recession-free return to that level of inflation might spur risk taking in global financial markets.

Risk assets, including cryptocurrencies, seem headed for a goldilocks moment as new research from economists at the Federal Reserve Bank of Chicago suggesting the U.S. central bank has raised interest rates high enough to cut inflation to its 2% target without sparking a recession.

In the September edition of the Chicago Fed Letter, Stefania D’Amico and Thomas King say their vector autoregression (VAR) model shows the 500 basis points of rate increases implemented since March 2022 have taken a substantial toll on output, and further hikes may not be necessary to bring prices under control. The so-called tightening cycle was partly responsible for last year’s crypto market crash.

“We estimate that although the majority of the effects on output and inflation have already occurred, the policy tightening that has already been implemented will exert further restraint in the quarters ahead, amounting to downward pressure of about 3 percentage points on the level of real gross domestic product (GDP) and 2.5 percentage points on the Consumer Price Index (CPI) level,” they noted. “The abatement of inflation occurs without a recession, as real GDP growth remains in positive territory throughout the projection.”

According to the model, the headline consumer price index will probably drop below 2.3% by mid-2024, which, according to the economists, equates to a 2% inflation rate as measured by the personal consumption expenditure (PCE) price index. The Fed has long maintained that that level is consistent with its mandate for maximum employment and price stability. D’Amico and King’s model does not signal rate cuts or outright liquidity easing ahead.

A combination of sliding inflation and a relatively resilient economy would mean a so-called goldilocks scenario, which is an ideal situation for risk-taking in global financial markets. Ever since the Fed began raising rates, markets have worried that the tightening would break something in the global economy, leading to another financial crash.

The forecast from D’Amico and King comes as worries that headline CPI, which has dropped to 3% from 9% in the past 12 months, might rebound, sparked by a renewed rally in oil and food prices amid signs of a trough in prices paid in manufacturing and service sectors. That has markets concerned the Fed may hold rates elevated for longer.

Several investment banks have predicted an end of the tightening cycle while maintaining that rates are likely to stay higher for longer than previously expected.

The Fed, however, has been wary of signaling an end of the rate-hike cycle. According to the VAR model, the Fed’s persistent explicit forward guidance has made expectations a more critical influence in reducing the time for rate increases to affect inflation and the economy.

“A strong expectations channel also means a more powerful monetary policy, so the estimated effects not only occur faster, but also are bigger than typically estimated,” the letter said. “This implies that the effects that are yet to come may still be big enough to bring inflation near target reasonably quickly.”

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Source: Vietnam Insider