It has been a week of fairly meaningless chop in crypto markets, the type of week we sometimes see when the market is in transition. The overall trend year-to-date has been a weak equity market, driven by promise of rate hikes, which in turn pushed crypto to sell off significantly. As we’ve stated here before, it’s difficult for crypto to stage a rally while equities are still in risk-off mode. This week has actually seen a decent recovery in equities. Wednesday was a strong session, but the rally faltered with some fairly disastrous earning from Facebook, err, Meta. On Thursday, equities scuffled until AMZN had a huge earnings beat. While this is all describing a fairly choppy equity market, it does seem to be out of panic mode, and S&Ps are about 3% off their low from last week.

A fairly common pattern is playing out here as well, where crypto tracks risk assets on the way down and then trails on the recovery. Case in point: equities have recovered back to where they were mid-way down the selloff on Jan 21; that was the day when BTC sold off from $43k to $35k. With equities’ partial recovery, all things being equal, one would expect to see BTC back to $40-41k. All things are not equal here, of course. Crypto has chopped around here long enough that traders seem pretty relieved to take some risk off, and we are seeing some of that now that we’re back to $38k.

The most interesting price action this week has undoubtedly been on SOL. This is a coin which was the poster child for the L1 rally in 2021, but scuffled mightily in Jan, trading from $176 on New Year’s Day to a low of $82 on Jan 24^th^. On Feb 1, it saw an impressive bounce, from around $90 to $113. This rally was partially driven by technicals, a chart which appeared to have bottomed out. Additionally, Coinbase and Kraken, exchanges with traditionally strict listing requirements, added multiple tokens from the Solana ecosystem, including ORCA, SBR, and ATLAS. Unfortunately, the rally lost its steam midway through this week when Wormhole was exploited for 120k wETH. Since then, funds have been restored and Wormhole is back up and running, and today SOL is outperforming most of its L1 peers. Again: quite a bit of price action in a single week!

If the L1 sector does stage a comeback (and it seems pretty early in the day to say it has; most of the sector is still down around 25% YTD), the FTM-ONE-NEAR group will certainly get some looks. In mid-January, with ETH down 20% on the year, these were each up around 30%. As ETH moved lower, these lost most of their gains, and right now they’re each down around 15-20%, still outperforming ETH but a far cry from where we saw them earlier in the year. Cumberland’s head of trading, Jonah van Bourg, added “While there are various chain-specific explanations for some of this divergence, traders and portfolio managers should be laser-focused on identifying broader technological and thematic drivers of beta which manifest themselves on any such rally this year.”