Frank Chaparro says BTC no longer drives the crypto market

Frank Chaparro, the news director of The Block, believes Bitcoin (BTC) has, to some extent, lost its power over the crypto market. He shared his sentiments during an interview on January 19, noting that the flagship cryptocurrency no longer dictates the direction altcoins take. Explaining why this is the case, he said most crypto traders are now paired against Tether (USDT) instead of BTC.

According to Chaparro, the current state of the market differs from the one in 2018 where most coins were paired against BTC. With BTC decoupled from the majority of crypto trades, Chaparro believes the divergences in the market are normal. He pointed out that in 2018, BTC’s performance dictated the direction the rest of the market would take.

However, the market currently has mini-cycles, in which BTC plunges in one cycle while non-fungible tokens (NFTs), stablecoins, or DeFi tokens soar. Chaparro added that this divergence makes the crypto market all the more interesting.

While he admitted BTC no longer controls the market, Chaparro said it would remain the benchmark for the nascent asset class. With investors relying on BTC’s price movement to dictate where they inject funds, he said this development means investing will be a little convoluted, seeing as coins like Ethereum (ETH) can easily shatter their market cap ceilings.

Still, Chaparro believes BTC is a vital component of the crypto ecosystem because it attracts new investors into the space. According to him, BTC rallying to $60,000.00 (£44,043.00) would likely push a hedge fund or trading firm that has not embraced crypto to dabble in the industry.

Fears of the Fed hiking rates continue driving outflows

This news comes as investors continue pulling funds out of the crypto market as fears of the US federal reserve hiking rates mount. According to data from Coinshares, total outflows hit a record of $73 million in the past week. While this is a significant value, Chaparro says it is worth noting that 2021 was a massive year for crypto, with investors pumping billions of dollars into the space.

According to him, outflows might stabilize as the market digests the Fed news. He added that risk assets would need to rally before recording notable inflows.

Chaparro added that although the crypto market has seen some outflows, the private sector is injecting funds into the sector. He cited examples of FTX’s $2.00 billion (£1.47 billion) fund and Katie Haun, who is trying to create a $900.00 million (£660.64 million) fund.