Week by numbers
During last week in the crypto market has moved slightly downwards. The price of the largest cryptocurrency, bitcoin, fell by about three percent, and the price of the second-largest cryptocurrency, ether, by about four percent. The total market capitalization of the rest of the crypto market (excluding the largest stablecoins) fell by about eight percent.
As bitcoin’s price held up better than the rest of the crypto market during the decline, bitcoin dominance saw a rise of just under one percent (about half a percentage point). As the prices of bitcoin and ether moved fairly in step, there was no significant change in the ETH/BTC ratio.
Among the tokens in the Kvarn X trading selection, the biggest declines during the down week were RAY (-32%), WIF (-23%), and BONK (-22%).
Stocks Back in Uptrend?
In last week’s Kvarn Pulse newsletter, we noted that stock markets were moving sideways without a clear trend.
A week later, the situation remains fairly similar. However, we note that on Wednesday, June 4, 2025, the S&P 500 index narrowly rose above the local high seen two weeks ago.
In the Nasdaq Composite Index, similar signs of a return to an uptrend were already seen last Thursday, and it can be seen more clearly than the S&P 500 index as being in an uptrend.
These upward movements in stock indices over the past week can naturally be seen as positive signals and could be the first sign of a return to an uptrend after a couple of weeks of consolidation.
If we look at the Kvarn X Technical Stock Index we introduced last week, we can see that for the S&P 500 it has remained continuously green for the past two weeks. As long as this condition holds, our base expectation remains bullish.
A slight shadow over the otherwise positive general appearance of the stock market may be cast by the fact that the price of gold has also been clearly trending upward in recent weeks and is already approaching the all-time highs seen earlier in the spring.
This may indicate growing uncertainty, particularly regarding geopolitical situation. In the short term, this could be just noise, but if it continues, the uncertainty signaled by gold could also spread to stock prices, so we find it useful to keep an eye on its price development as well.
Crypto Market Sideways
As the stock market begins to show signs of rising, the crypto market, led by the largest cryptocurrency bitcoin, has somewhat lagged behind stocks over the past week.
Kvarn X Technical Crypto Index we presented last week turned from green to red on Thursday, May 29, 2025, indicating at least a temporary end to the uptrend. While the stock market has turned more clearly upward in recent days, bitcoin’s price has still moved sideways, and the Kvarn X Technical Crypto Index has remained red.
Our basic expectation is that the stock and crypto indexes presented above typically would not show differing signals for long but would converge fairly quickly to the same color. At this stage, our expectation is that this would most likely happen with bitcoin returning to an uptrend like stocks.
Expectations for a return to an uptrend are supported by the fact that despite the price decline over the past week, bitcoin’s price has remained clearly above $100,000, forming a so-called “higher low” compared to early May. As long as this condition holds, we see no reason to question the continuation of the uptrend.
For clarity, it must also be stated that at this point we do not in any way consider the crypto market’s slight lag behind the stock market last week as a sign of any fundamental weakness. The crypto market and especially the largest cryptocurrency bitcoin have performed astonishingly strongly throughout the spring and recovered from the tariff fears that began in April significantly faster than the stock market.
The relative strength of the crypto market can be observed if we compare bitcoin to the S&P 500 stock index. In the graph below, for consistency, instead of bitcoin, we have used BlackRock’s iShares Bitcoin Trust ETF (IBIT), which closely tracks bitcoin’s price and trades at the same time as the stock market.
From the graph above we can draw two conclusions:
- We can see that since the beginning of March, bitcoin has consistently strengthened against the S&P 500 index. This is quite interesting, especially considering how risk-averse the investment markets were after the beginning of April and “Liberation Day.”
- On the other hand, we can see that if this uptrend were to continue unambiguously, the IBIT/SPX ratio is now at levels from which a reversal could be expected. Going much lower than this would give reason to suspect that the trend may be turning sideways or even downward.
Together these two interpretations lead us to think that if bitcoin’s strong relative performance is to continue, the slightly weaker development of the past week may primarily indicate temporary undervaluation and thus an attractive buying opportunity.
Market Still Led by Bitcoin
In the previous Kvarn Pulse newsletter, we also examined the development of bitcoin dominance. A turn in bitcoin dominance to the downside could indicate increasing risk appetite in the market and possibly even the beginning of a so-called alt-season.
So far, we have not seen a turn in bitcoin dominance downward, but it has continued to inch gradually upward since mid-May.
This is perhaps even more clearly visible if we add the shares of the largest stablecoins (USDT and USDC) to the bitcoin dominance of the total crypto market capitalization.
From the graph below we can see that currently as much as 71% of the total crypto market capitalization is concentrated in the largest cryptocurrency bitcoin and the two largest dollar-based stablecoins. This is among the highest readings in over four years.
Our expectations for positive development in the crypto market would grow if we saw bitcoin dominance clearly turning downward. Rising bitcoin dominance does not in itself rule out positive price development, but it often indicates investor caution in the crypto space, where larger tokens and especially the largest cryptocurrency bitcoin are increasingly preferred over smaller and higher-risk altcoins.
With these thoughts, we leave the reader to follow the interesting situation in the crypto market, as the stock market gives the first signs of returning to an uptrend.
We will return next week with the Kvarn Pulse newsletter, so stay tuned!
