Introduction

Bitcoin made another attempt to break its all-time highs, reaching $70,000 before dropping down to $66,000 and then recovering. While some altcoins like ETH and SOL hit new cycle highs, most other altcoins from the previous market peak are yet to achieve record levels. How does Bitcoin's volatile movement to new highs and subsequent decline impact the wider market?

The Trend

Following Bitcoin's rapid rally, altcoins experienced a downturn, leading to a half-percent decrease in the total crypto market cap against BTC at its peak. This decline in alt strength caused the ETH/BTC pair to drop by 3% from its peak, although the ratio still displays resilience by maintaining levels above a crucial downtrend line since September 2022.

Market Analysis

While many altcoins have not reached all-time highs, the stablecoin supply is currently around 25% below its peak levels. Expectations are optimistic for stablecoin supply to rise further, especially if the Federal Reserve lowers interest rates, making stablecoins with high interest rates more appealing due to leverage demand. Onchain yields have surged past 5% for the first time since March 2022, indicating heightened interest in long-term leveraged positions that can potentially lead to increased yields.

Market Conditions

Funding rates, which eased after a recent peak, have slightly increased for top cryptocurrencies like ETH and BTC, hovering around 50% annually. Despite this uptick in rates, they remain within acceptable ranges as long as the crypto market maintains its upward momentum trend.

Outlook

While bullish traders celebrate new highs in the crypto market, Bitcoin's retracement from its peak offers a glimmer of hope to bearish investors, suggesting that the market may have reached a turning point.