Ethereum shows strength as MATIC rises 7%

 Global market jitters spread to crypto at the weekend, with Bitcoin falling to $42K before bouncing to almost $50K.

Markets are digesting multiple uncertainties, including the many unknowns of the Omicron variant, and the possibility of an end to pandemic-era central bank stimulus. Combined with thin weekend trading volume and the build up of leverage, this led to cascading sell orders and liquidations across the crypto market on Saturday. Nevertheless, El Salvador’s President Nayib Bukele was not deterred and joined MicroStrategy in buying the dip.

In a show of strength, Ethereum outperformed Bitcoin during the downturn. The leading smart contract platform stayed above $4K, showing only 6% weekly losses compared to Bitcoin’s 15%. Even stronger, Layer 2 solution Polygon (MATIC) emerged from the downturn with 6% weekly gains.

Ethereum showed relative strength during the weekend drop; losing less value and recovering faster, in line with the trend of recent months.

Both cryptoassets have fallen significantly from the record highs set in November, yet since December 2020 Bitcoin has doubled in value, while Ethereum has gained about 530%. In response, some traders are calling for a “flippening” where Ethereum overtakes Bitcoin as the biggest cryptoasset.

The outperformance could be down to Bitcoin’s more established role as a macro asset that trades on economic data and global trends, compared to Ethereum which is more associated with the hottest crypto growth sectors such as decentralized finance (DeFi), non-fungible tokens (NFTs), and the metaverse.

A flash of green in a sea of red, Polygon’s MATIC token pushed against the falling market to finish the week with 6% gains.

The buoyancy of the Layer 2 network could be attributed to the announcement of a new partnership with GameOn Entertainment to build NFT games on the network, and the recent release of a new JavaScript library.

Elsewhere, few other smart contract platforms matched MATIC’s resilience. Algorand managed to stay flat and hold against the downturn, while Polkadot and Cardano suffered double-digit losses.

eToro’s expansion of supported cryptoassets continues with the listing of Celo.

Celo is the native token of the Celo platform, which aims to use blockchain to bank the unbanked, making it possible for anyone to settle payments in crypto between mobile devices without the need for financial institutions.

The launch brings the total number of cryptoassets available on eToro to 41.

Tune in to Digest & Invest to hear eToro’s Sam North interview the CEO of Chiliz and Socios.com Alexandre Dreyfus.

The swing lower has shifted market sentiment to Extreme Fear, as traders worry that more downside could be in store.

On the upside, others argue that the wipeout has washed out excess leverage in the market, potentially setting up healthier conditions for a more sustainable price rise in the near future.

In the week ahead, regulatory developments could set the tone for trading as a handful of crypto industry executives are set to testify before US lawmakers on Wednesday.

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