Top 3 Trending Coins: RUNE, AVAX Outperform, KCS Hit by KuCoin FUD

Key Points

• Major cryptocurrencies are rangebound on Monday in holiday-thinned volumes with US markets closed for Independence Day.
• Bitcoin was last trading just above $19,500 and Ethereum close to $1,100, both with an intra-day upside bias.
• RUNE and AVAX are notable outperformers in the altcoin space, whilst KCS is an underperformer amid KuCoin-related FUD.

Market Update

Most major cryptocurrencies are trading with modest gains in thin volume trade on Monday, with US market participants away given market closures there for 4 July Independence Day celebrations. Bitcoin was last trading higher by about 3.0% in the last 24 hours, as per CoinMarketCap, and just above the $19,500 level.

The $19,000 level has been acting as a decent area of support over the last few days. Ethereum, the world’s second-largest cryptocurrency by market capitalization was last trading just under 5.0% higher in the last 24 hours just below $1,100 and eyeing a test of its 21-Day Moving Average in the $1,120s.

Like Bitcoin, Ethereum has been reasonably well supported in recent days but is still well within recent ranges. Monday’s subdued trading conditions are unsurprising given important upcoming risk events later this week. On Wednesday, US ISM Services PMI data for June is scheduled for release ahead of the publishing of the meeting minutes from June’s FOMC meeting.

The current narrative is that 1) the US economy is slowing (the Services PMI data is seen signaling this) and 2) the Fed will press ahead with tightening in the coming quarters regardless (given high inflation). Wednesday’s data is unlikely to shift this. Friday’s official US labor market data will be the week’s main event from a macro perspective.

The data will probably show that despite the slowing US economy, the labor market remains tight given the continued strong demand for workers/under-supply of them. That might weigh on sentiment (and crypto prices), if it boosts bets that the Fed will continue with aggressive rate hikes this year and into next.

But another narrative playing out at the moment, and one that could boost risk appetite (and crypto prices) is that, in the longer term, the Fed won’t need to keep interest rates too high. The market has come to terms with the fact that the Fed is going to take interest rates well above the so-called neutral rate (around 2.5%) before the end of this year.

But markets have in the last few weeks been paring back on bets as to how high the Fed will take interest rates in 2023 and increasingly pricing in rate cuts in late-2023/2024. This can be seen by looking at price action in long-term bond yields, with the US 10-year having pulled back sharply from as high as 3.5% in mid-June to back under 3.0% by the end of last week.

In a sense, what (bond and money) markets are telling us here is that inflation is going to come back under control without the Fed having to do anything too extreme regarding rate hikes. That could be because global supply chain issues ease. Or it could be because commodity prices crash in anticipation of a global recession (this is already being seen in industrial metals).

The more this idea gains traction, the room there is for a recovery in risky assets like stocks and crypto in the second half of this year. Anyway, for now, expect quiet trading conditions for the next few days ahead of upcoming risk events, with crypto prices likely to remain fairly rangebound.

Here is a list of Monday’s trending altcoins.

KuCoin (KSC)

Major global crypto exchange KuCoin’s utility token KSC has been underperforming the broader cryptocurrency market in the last few days as the crypto exchange faces a slew of rumors about its potential insolvency. The exchange had exposure to Terra’s ill-fated LUNA and UST cryptocurrencies and to insolvent crypto hedge fund Three Arrows Capital (3AC), some social media users claims.

KuCoin has vehemently denied these claims. But the associated FUD (fear, uncertainty and doubt) has nonetheless seemingly had an impact on KCS. KCS/USD was last changing hands at around $8.3 per token, a little above the new annual lows it printed on Sunday just above $8.0.

The cryptocurrency slid over 22% last week, with more than half of that loss coming on Saturday alone. Since the end of May, KCS has shed over 50% of its value and is down over 70% from the record highs it hit back in December 2021.

The next key area of support is in the $4.0-5.0 per token area (lows from H1 2021). To the upside, $9.0 has now become a key area of resistance. Until uncertainty about the health of KuCoin’s balance sheet it cleared up, KSC may not be able to mount a sustained recovery, even if broader cryptocurrency markets can.

THORChain (RUNE)

THORChain’s RUNE token is one of the best performing cryptocurrencies in the top 100 (by market cap) on Monday and, according to CoinMarketCap, was last up more than 13% in the last 24 hours. RUNE/USD recovered back above the $2.0 level on Monday and while it has pulled back from earlier session highs in the $2.11 area, is comfortably holding around $2.02 for now.

The cryptocurrency’s latest push higher has seen it bounce more than 17% from last week’s lows just above $1.70 and back above its 21DMA (at $1.93). That clears the way for a run higher towards the 50DMA just under $2.50. The $2.30s-40s will be a tough area for RUNE to crack back above, with this area having acted as support back in May and resistance in June.

Avalanche (AVAX)

Avalanche’s AVAX token is another strong performer in the last 24 hours according to CoinMarketCap. The cryptocurrency is the best performer in the crypto top 20 over this time period, having gained around 8.0%.

AVAX/USD is currently changing hands just above $17 per token, comfortably above last week’s lows just under $16.0. But the pair has not yet been able to crack back above its 21DMA.

Even if it can muster further upside momentum in the coming days, it faces a formidable hurdle in the form of a downtrend linking the 31 May, 6 and 26 June highs. This negative trendline will come into play as resistance before AVAX/USD can make it back to $20 per token.

An upside break of this level (which remains far too soon to call) would likely see AVAX rally to test the key support-turned-resistance $22.50 area, where the cryptocurrency’s 50DMA also resides.