How long can crypto rebound last? Altcoins are soaring

Stock market indexes continue their strong rebound, with the Nasdaq technology index trading at its highest levels in a month. Risk appetite has increased markedly recently, which was immediately reflected in the valuation of Bitcoin and smaller cryptocurrencies. 

Investors have long been able to observe a fairly high correlation between US indices and the prices of major cryptocurrencies. The significant improvement in sentiment in the stock market has benefited cryptocurrency investors, who have started buying not only major projects, but also so-called altcoins. 

Nevertheless, it is worth noting that Bitcoin has already bounced approx. 30% from the local lows set at $18,000, while an even bigger rally has taken place for Ethereum, which is preparing for the network's transformation to version 2.0, which will result in up to a 99% drop in energy usage or introduce a deflation mode for the cryptocurrency. Due to the still high valuations of Bitcoin or Ethereum, their volatility may be limited compared to lesser-known projects

In all likelihood, the cryptocurrency market's gains will be as long as the recovery in the stock market, which is benefiting from reduced fears of a recession. Nonetheless, during a rebound in the cryptocurrency market, it is worth taking an interest in smaller projects, which can often bring far more volatility than major cryptocurrencies such as Bitcoin or Ethereum, which are slowly being treated by investors as safe havens in the cryptocurrency market. 

The correlation between Bitcoin and the stock market has recently fallen to levels seen earlier this year, suggesting that cryptocurrencies will go their own way. However, as risk appetite increases, we are again seeing a marked increase in correlation between these markets. Source: Bloomberg

What should we pay attention to in the near future in the cryptocurrency market? 

• The sudden increase in correlation between cryptocurrencies and indices suggests that it may be hard for cryptocurrencies to recover without the support of the stock market.

• Ethereum awaits news on testing of new network to take place in August

• Ethereum 2.0 is scheduled to go live in September, but has been postponed several times before.

• The current stock market recovery is still very fragile and uncertainty remains, particularly in terms of further interest rate hikes and a potential recession

• The altcoin rebound could be particularly strong and last as long as Bitcoin and Ethereum themselves gain.

• The biggest altcoin gains could come as the fuel for the major cryptocurrencies' market upturns is exhausted, but while maintaining their high levels

Which projects are worth paying attention to in the near future?

Filecoin

The Filecoin Foundation (creator of Filecoin) aims to provide blockchain technology solutions and create decentralized storage within the growing space industry. The infrastructure being built by the company is expected to help exchange information, speed up communication while reducing the cost of storing data between Earth and space. Filecoin has signed a contract with US defense giant Lockheed Martin for this purpose. The partnership between the two entities was announced at the World Economic Forum in Davos.

Algorand

The cryptocurrency is backed by fintech Circle, which creates the USDC stablecoin and in which BlackRock has decided to invest. Algorand is mentioned among a group of potential 'Ethereum killers' that include Cardano, Solana and Avalanche. Altcoin valuations have risen recently despite a hard-charging Ethereum, which is looking to increase its competitive edge with a move to Proof of Stake and an increase in network scalability.

FTX

The cryptocurrency acts as a currency within the FTX exchange created by Sam Bankman-Fries, a well-known cryptocurrency billionaire and investor in blockchain technology. The FTX exchange has recently enjoyed a surge in popularity and positive sentiment from institutional investors thanks to its transparency and the implementation of all mechanisms that deepen its centralization like AML and KYC.

FTX project chart, H4 interval. From a technical point of view, the cryptocurrency is currently in a consolidation zone after the recent upward momentum. The bullish mood was somewhat dimmed today in the $30 zone, where a clear supply zone was outlined. We can currently consider the areas of $28.93 and $28.26 as local support. Source: xStation 5

Decentraland

One of the forerunners of the metaverse niche, which became famous for the creation of an original universe. The metaverse is now not only a hotbed of Internet geeks, but also a business field for multinational corporations like fashion house Gucci, Adidas and Google, which are increasingly actively engaged in conducting their business there. Plots of land on the Decentraland platform, which are being sold for hundreds of thousands of dollars, are catching the attention of people fascinated by new technologies. Investors' attention was recently caught by the news of a partnership with Playboy, which intends to recreate an iconic property in the Decentraland world.

FTX chart, H4 interval. From a technical point of view, the cryptocurrency is currently in a consolidation zone after the recent upward impulse. The bullish mood was somewhat dimmed today in the $30 zone, where a clear supply zone was outlined. We can currently consider the areas of $28.93 and $28.26 as local support. Source: xStation 5