The cryptocurrency market awoke to the sight of Dogecoin (DOGE) price surging to as high as $0.69 in the past two days, leading many to wonder if the recent performance of the world’s most popular meme token is now the leading indicator for the arrival of alt season.
Long-time crypto fans mark the fourth of May as a special day for the Bitcoin community as a whole for being the birthday of one of the earliest known supporters of the Bitcoin network Hal Finney, who would have celebrated turning 65.
Data from Cointelegraph Markets and Tradingview shows that while the world’s attention was focused on Dogecoin, Bitcoin (BTC) faced selling pressures, which began the night before and dropped the price of BTC back below the $55,000 support level by mid-day on Tuesday.
BTC/USDT 4-hour chart. Source: TradingView
While BTC continues to trade in the $50,000 to $60,000, or what some traders see as the “twilight zone,” the price of Ether (ETH) again climbed to a new all-time high at $3,519 as institutional managers now hold a record $13.9 billion worth of the top altcoin and smart contract platform.
Yellen’s comments about US Fed rates shake the markets
The global financial markets faced headwinds on Tuesday along with a majority of cryptocurrencies following remarks from U.S. Treasury Secretary Janet Yellen who indicated that the Federal Reserve may need to raise interest rates to “prevent overheating.”
According to Ben Lilly, analyst and cofounder of Jarvis Labs, “US Fed Rates tend to be a barometer for global markets,” so BTC’s status as a macro asset was “surely impacted by Yellen’s comments even though she is not the current Fed Chair.”
Looking deeper into the recent activity on the Bitcoin network, Lilly indicated that “on-chain transactions have been lackluster since the major options expiry last week” which hasn’t helped provide a buffer against negative news like the comments from Yellen.
“It wouldn’t surprise us to see a significant pull back before we realize six-figure bitcoin.”
These sentiments were echoed by David Lifchitz, chief investment officer at ExoAlpha, who pointed to a breakdown in Bitcoin’s previous pattern of higher highs as a sign that BTC will have a difficult time breaking out above $60,000 without a significant catalyst.
When it comes to Ethereum however, Lifchitz stated that “ETH has been in its own bull world” as evidenced by establishing “new highs every day over the past eight days.”
According to Lifchitz, while the exact cause of the ETH run is hard to determine, one plausible explanation could be that “some investors looked at ETH as an underpriced crypto compared to BTC since it’s recent run and decided that ETH was a cheap alternative to BTC.”
Other catalysts identified by Lifchitz include the increased usage of ETH in decentralized finance as well as a possible “buy the rumor, sell the news” scenario developing ahead of the upcoming Ethereum Network upgrade EIP 1559 that will take place in July.
Lifchitz highlighted the tendency of cryptos to make bigger moves on momentum plays than they do on a fundamental basis, “essentially due to investors chasing short-term performance no matter what the fundamentals are.”
“We could see a bit of pure performance chasing on momentum with ETH. Price increases on pure momentum can go on for longer than one can expect, as long as there’s a greater fool, but the fallback is usually pretty harsh and quick when the game stops.”
Dogecoin steals the show
Conversations in the wider cryptocurrency community were dominated by the performance of Dogecoin, which surged by 54% overnight to reach a new all-time high of around $0.68 on some exchanges.
Other notable performances include a 30% increase in the price of iExec RLC (RLC) to a new all-time high at $4.45 and a 50% surge in the price of Ethereum Classic (ETC) to $79.
The overall cryptocurrency market cap now stands at $2.25 trillion and Bitcoin’s dominance rate is 45.2%.
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