Bitcoin has remained stable in recent weeks, whereas ERC-20 tokens experienced major market losses.
Bitcoin took a steady position as tracked by Glassnode data since early January and maintained it through market disturbances.
Moreover, ERC-20 tokens, including DeFi and gaming assets, have exhibited sharp downturns, which indicates increased weakness in adoption and investor attitudes toward the technology.
Traders have boosted their Bitcoin trades during this period because they look for secure investments.
Several institutional players choose to invest their funds in Bitcoin rather than take on unpredictable altcoins.
The widespread view of Bitcoin as a safe store of value during ups and downs of the market continues to grow stronger.
Trader volume for Bitcoin has increased because investors use it as protection against losing money in altcoins.
The data provided by Glassnode shows the Bitcoin realized cap expanding steadily due to investors deepening their support for the digital currency.
Bitcoin retains its stability through long-term ownership of its supply, which stays within the possession of investors holding it for extended periods.
Bitcoin has demonstrated robustness through this trend since it contrasts with the intense selling pressure that hit ERC-20 tokens.
DeFi and Gaming Tokens Lead the Decline
Among ERC-20 tokens, DeFi and gaming tokens show the worst performance levels.
The prices of Aave and Compound both plummeted because investment interest specifically in decentralized finance protocols decreased sharply.
Since mid-January, Uniswap and Sushiswap, together with other decentralized exchange tokens, have lost more than 30% of their value.
Besides cryptocurrencies like Axie Infinity, The Sandbox, and Decentraland, investors now avoid speculative investments in metaverse and gaming tokens.
These sales demonstrate a systematic reduction of user interest in DeFi projects and video games.
Numerous DeFi applications experience decreasing user participation, which leads to reduced total value locked (TVL).
Market participants now judge gaming tokens differently due to their diminished speculative value, resulting in waning interest.
Reducing trading activity in these sectors slows down their potential growth, thus making recovery from their current state more difficult.
Using Principal Component Analysis (PCA), Glassnode demonstrates most ERC-20 tokens declined together as a group.
The evident market-wide relationship shows broad factors rather than fundamental project characteristics as the main cause of the price decline.
Investors currently move away from ERC-20 assets in a comprehensive manner because they do not distinguish projects based on their individual strengths or weaknesses.
Customer withdrawals from these tokens demonstrate a downward shift in investor belief about DeFi and gaming systems existing in their present condition.
Altcoins Face Record-Breaking Market Capitalization Decline
Throughout the last two weeks, the combined market value of altcoins has experienced a decrease of $234 billion.
According to Glassnode, there have been only 12 trading days throughout history that resulted in more substantial altcoin devaluation than the current drop.
This decline rivals previous crashes, such as the May-July 2021 market collapse and the November 2022 FTX fallout.
The quick market decline shows investors accept less risk, moving their funds from alternative cryptocurrencies into Bitcoin.
Altcoins experience the kind of substantial market devaluation primarily during the most severe bear market periods, according to historical data.
Many previous market corrections have been exceeded by the current selling wave, which indicates substantial capital deportation across all markets.
The existing market trends indicate that DeFi, along with gaming sectors based on ERC-20 technology, will experience significant disruptions in their liquidity flows.
These tokens will most likely have difficulty recovering their value unless fresh adoption momentum emerges alongside improved marketplace attitudes.
The decline of liquidity throughout the altcoin market could intensify price drops in all affected altcoins.
Furthermore, on-chain analysis indicates Bitcoin holders are increasing their positions despite the present challenges experienced by altcoins.
Glassnode Entity-Adjusted URPD data demonstrates investors continue to purchase Bitcoin within the price region from $95,365 to $101,816 continuously.
The price area between $95,365 and $101,816 demonstrates a strong concentration of on-chain activities, thus presenting itself as an essential support barrier.
The short-term holder population takes a major part in this accumulation pattern.
According to the STH Cost Basis data, Bitcoin currently exists within a vital threshold where profitability can occur.
An upward breach of $101,816 Bitcoin price would establish bullish conditions while drawing extra investment capital.
The price of Bitcoin faces a risk of short-term holder selling when it falls beneath $95,365.
The recent Bitcoin price trend based on MVRV Z-Score (1-Year Mean) shows that the current levels match those that resulted in previous market price adjustments.
The financial performance of past investors is visible through this indicator.
Bitcoin may draw additional buying signals when it maintains its position above the identified accumulation range.
A decrease in price below the accumulation range will likely lead to market volatility through adjustments from unpredictable trader choices.
