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Cryptocurrency News Articles
Bitcoin and Ethereum Dive as Bearish Sentiment Overtakes Cryptocurrency Market
Apr 27, 2024 at 06:00 pm
Bitcoin and Ethereum have exhibited decreased volatility recently, with subdued price movements. Bearish sentiment prevails, driven by anticipation of delays in SEC approval of a spot Ethereum ETF and an increase in short positions against BTC. However, upcoming spot ETF launches in Hong Kong could potentially boost institutional inflows, potentially reversing the bearish sentiment.
Bitcoin and Ethereum Slump Amidst Bearish Market Sentiment
The cryptocurrency market has entered a period of relative calm after weeks of sharp price fluctuations, with Bitcoin (BTC) and Ethereum (ETH) experiencing a decline in volatility. The lull in market activity has raised concerns about a potential storm brewing on the horizon.
A Period of Stagnation
Over the past week, Bitcoin trading has cooled considerably, with volatility dropping significantly. Trading volumes have contracted from 70% to 50%, indicating a consolidation phase in the market.
While consolidation often presents an opportunity for traders to accumulate long positions, the bearish sentiment prevailing across the market has deterred many from doing so. This pessimism stems primarily from the anticipated delays in the US Securities and Exchange Commission's (SEC) approval of a spot Ethereum exchange-traded fund (ETF).
Negative Outlook for ETH
The negative skew of ETH risk reversals, which currently stands at -13% in the front-month contract, reflects the market's preference for put options, indicating a greater concern about potential price declines than excitement about price surges.
Similarly, for Bitcoin, the percentage of short positions taken against BTC has risen from 49% to 54% in the past 24 hours, suggesting a cautious approach among traders.
However, a glimmer of hope emerged this week with the announcement of the launch of spot ETFs for both BTC and ETH in Hong Kong. This could serve as a gateway for institutional capital inflows from Asia, potentially turning the tide in favor of these cryptocurrencies.
Tale of Two Coins
The recent price movements of BTC and ETH have been closely correlated, with both experiencing corrections that have amplified the bearish sentiment. Additionally, the velocity of trading for both cryptocurrencies has declined, indicating a decrease in the frequency of transactions.
Despite the bearish outlook, profitability remains relatively high for most addresses holding BTC and ETH. The MVRV ratio, which measures the profitability of holding an asset, has increased for both cryptocurrencies. Additionally, the Long/Short difference has surged, indicating an increase in the number of long-term holders of BTC.
Conclusion
The cryptocurrency market is currently navigating a period of uncertainty, with Bitcoin and Ethereum facing bearish sentiment due to potential delays in the approval of spot ETFs and concerns about price declines. However, the upcoming launch of spot ETFs in Hong Kong and the increase in long-term holders provide a glimmer of hope for a potential reversal of the current trend.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
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