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Bitcoin is still facing resistance at the psychologically important $100,000 threshold, and there has been a shift in investor focus from Bitcoin to altcoins. Notably, tokens that have been on the bull run for 2021 and tokens like Decentraland and Sandbox have seen a rebound in trade volume via centralized exchanges like Upbit.
Ethereum (Ethereum) noticed a significant spike in open interest driven by increased demand among derivatives traders. This rise is supported by metrics that reveal increasing bullish sentiment among market participants. The price of Ethereum is likely to rise in the short term as institutional interest expands and traders diversify their portfolios to include tokens that have the potential for gains this market cycle.
Bitcoin Struggles Below $100,000, Altcoins Offer Trading Opportunity
Bitcoin missed its $100,000 target by less than $500 on Friday, November 20. Since its first attempt to reach the lower bound, Bitcoin has fallen approximately 5%, reaching $95,719 on Thursday, November 28.
Institutional investors pulled capital from Bitcoin ETFs this week; Data from Farside Investors shows outflows of $435.30 million on Monday and $122.80 million on Tuesday.
With Bitcoin consolidating and altcoins rising from previous bull markets, institutional investors are shifting their focus to Ethereum and other alternatives that could deliver higher returns in the coming weeks.
Altcoins like Cardano (Ada), ripple(XRP), astral (XLM), and metaverse tokens like Decentraland (Mana) and sand box )sand) saw a significant spike in trade volume this week across central exchanges. South Korean cryptocurrency exchange Upbit has recorded several consecutive days of increased trade volume across fiat pairs of Metaverse tokens and altcoins from the 2021 uptrend.
Data from 10xResearch recorded the rise and identified altcoins in the chart below.
Trading activity on South Korean exchanges is usually considered a precursor to spot trading via centralized exchanges around the world. Altcoins such as Sei and Polkadot (a point), and Dogecoin (Doug) is gaining importance among market participants.
Ethereum derivatives traders are turning bullish on ETH
Among the altcoins that rose last week amid Bitcoin consolidation, Ethereum is at the top of the list. Derivatives traders have turned increasingly bullish on Ethereum, and there is a shift in institutional investor sentiment.
Farside Investor data shows that institutional investor interest in Ethereum ETFs is slowly recovering with moderate inflows into the asset. This week, Ethereum ETFs recorded inflows of $133.60 million.
Derivatives market data shows that open interest in Ethereum has risen to over $24 billion, the highest level in four months. Although the spot market price of Ethereum is slow to catch up with open interest, derivatives traders expect the price of Ethereum to rise.
Ethereum recorded a significant spike in its implied volatility between November 14 and 27, while Bitcoin IV was relatively flat. Market participants are anticipating a possible movement in the Ethereum price while Bitcoin is strengthening, confirming the bullish thesis for the altcoin.
In the past eight days, Ethereum whales have increased their Ethereum holdings by 6%, reaching $102.27 million on Thursday. A rise in whale accumulation is usually considered bullish for the token. Large wallet holders are known to increase their holdings in anticipation of token price gains.
Santiment data shows a sharp rise in Ethereum prices in the weeks and months following a whale pileup, captured by a measure of the supply held by whales (excluding exchanges).
Recent events point to a major win for the Ethereum ecosystem
US Court of Appeals I turned over Sanctions have been imposed on Tornado Cash, a cryptocurrency mixer on the Ethereum blockchain. In 2022, the court accused the company of laundering more than $7 billion for hackers and malicious entities from North Korea.
Paul Grewal, chief legal officer at Coinbase, said Tornado Cash’s smart contracts should now be removed from the sanctions list. US-based individuals will now be allowed to use the Privacy Shield protocol.
With Donald Trump winning the recent presidential election, US-based traders are hoping for a shift in the regulatory stance on cryptocurrencies and policy making in 2025. The upcoming developments could serve as a catalyst for the Ethereum price.
Long-term Bitcoin holders sell their BTC
Long-term BTC holders decreased their BTC holdings by approximately 3% in November, down from 14.09 million to 13.69 million BTC. As the supply of Bitcoin held by the holder class dwindles, it raises concerns about selling pressure on the asset.
The price of Bitcoin has not yet seen a negative impact from profit taking, and demand has absorbed the supply of Bitcoin that has been sold by long-term holders as of Thursday.
Traders need to keep their eyes open for a further decline in long-term holders’ BTC holdings, as this could indicate incoming selling pressure and an extended correction in Bitcoin.
Strategic Considerations: Bitcoin and Ethereum
Bitcoin started to strengthen after it tried to rise to the $100,000 target. The closest support for BTC is $88,722, the November 17 low. BTC could find support in the imbalance zone between $81,500 and $85,072.
The RSI of the momentum indicator is sloping downward and reading 65. The Moving Average Convergence Divergence is flashing red histogram bars below the neutral line, indicating negative fundamental momentum in the Bitcoin price direction.
Traders need to closely monitor the Bitcoin price chart and technical indicators for signs of a reversal in the coming weeks.
Ethereum could rise towards the imbalance zone between $3,709 and $3,760, registering a gain of 6% from the current price. Once ETH closes above this level, the May 2024 peak of $3,977 and the March 2024 peak of $4,093 are the two major resistance levels for the altcoin.
The MACD indicator and the impressive oscillator support the hypothesis of positive fundamental momentum in Ethereum price. ETH could extend its gains while Bitcoin strengthens, providing an opportunity for marginal buyers before the end of 2024.
The three-month correlation between Bitcoin and Ethereum is 0.95, which means traders need to monitor BTC for signs of a sharp correction. A sudden reversal in the Bitcoin price trend may impact Ethereum traders and long positions in Ethereum, thus calling for strategic considerations.
Disclosure: This article does not constitute investment advice. The content and materials contained on this page are for educational purposes only.
