While Bitcoin’s Price Dips in Value, Crypto Assets Like Ethereum and Bitcoin Cash Shine | Market Updates Bitcoin News
The price of bitcoin has dropped on Sunday losing more than 6% during the last 24 hours, but a myriad of other coins have seen significant gains in contrast. Cryptocurrencies like bitcoin cash, ethereum, and monero have all jumped in value while bitcoin has seen a decent drop.
** This post has been updated to reflect the recent bitcoin (BTC) price change at 3:33 p.m. (EST) on Sunday, January 10, 2021.
Check out all the latest cryptocurrency price action in real-time at markets.Bitcoin.com.
What do you think about the coins that have seen significant gains while bitcoin prices have slumped? Let us know what you think about this subject in the comments section below.
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Ethereum price tumbles to $915 but traders are bullish for 4 key reasons
Ethereum price may have dropped by 34% in 24-hours but multiple data points show traders are still bullish on Ether.
Published on January 10, 2021
The past week has been an emotional rollercoaster for Ether (ETH) traders as there were seven 4-hour candles of a 10% or larger price movement.
Furthermore, the most recent 30% drop to $920 triggered $550 million in liquidations on long futures contracts. To complicate things even further, this current price correction is taking place just four weeks ahead of the launch of CME ETH futures.
It’s possible that even the most bullish Ether traders did not expect an 85% rally to occur in just eight days. During that short timespan, the top-ranked altcoin blasted through the $800 resistance and quickly climbed to $1,350, which is only 5% below its all-time high.
In 2017, Ether’s swift climb to $1,400 was primarily backed by the ICO boom, but this time a different set of factors drove Ether’s price higher. Many DeFi platforms rely on the Ethereum network, and Ether is the most common asset used as the gateway to these platforms. Aside from increased activity on the Ethereum network, the increased usage has also resulted in high transaction fees.
At the moment, there is not much negative news flow coming from the Ethereum camp or major media outlets. Data shows that Ether’s fundamentals are still strong, and investors are content to wait for further Eth2 network developments.
To understand whether the recent crash reflects a potential local top, investors should gauge the network usage metrics on the Ethereum network. A great place to start is analyzing transactions and transfer value.
The chart above shows the indicator spiking above $8 billion in daily transactions, a 200% increase compared to the previous month’s $2.6 billion average. This noticeable hike in transaction and transfer value signals strength and suggests that Ether’s price is sustainable above $1,000.
Increasing withdrawals from exchanges can be caused by multiple factors, including staking, yield farming, and buyers sending coins to cold storage. Usually, a steady flow of net deposits indicates a willingness to sell in the short-term. On the other hand, net withdrawals are generally related to periods of whale accumulation.
From Jan. 4 to Jan. 11, exchanges faced 460,000 ETH net withdrawals. This move signals a potential accumulation from whales, either transferring to cold wallets or putting these coins into the DeFi ecosystem.
This move contradicts the usual expectation that large holders rush to deposit on exchanges as Ether approaches its all-time high. Apart from a 100,000 ETH net deposit on Jan. 10, the net withdrawal trend has prevailed since December 2020.
Professional traders tend to dominate longer-term futures contracts with set expiry dates. By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.
The 3-month futures should usually trade with a 1.5% or higher premium versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as backwardation and indicates that the market is turning bearish.
The above chart shows that the indicator has been ranging from 3.5% to 6%, which translates as moderately bullish. The current 4.5% rate is equal to a 19% annualized premium and is significantly above the 6% neutral threshold. This shows that despite the recent $1,000 dip, professional traders are still confident in Ether’s price potential.
In addition to monitoring futures contracts, profitable traders also track volume in the spot market. Typically, low volumes indicate a lack of confidence. Therefore significant price changes should be accompanied by robust trading activity.
Last week Ether averaged an impressive $6.7 billion in trading volume, a noticeable increase from the levels seen in previous weeks. Despite the current drop, trading activity surrounding the recent price peak is a positive indicator.
By measuring whether more activity is going through call (buy) options or put (sell) options, one can gauge the overall market sentiment. Generally speaking, call options are used for bullish strategies, whereas put options for bearish ones.
A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30% and is therefore bullish.
At the moment, there is no sign that investors have flipped to more neutral-to-bearish (put option) strategies, as the indicator stands at a 0.77 and favors call options. This trend has also prevailed over the past week, as investors continued to open new bullish positions.
This data is very encouraging, considering that Ether rallied 38% since Jan. 4 until reaching its $1,350 peak. Nevertheless, it is essential to monitor how today’s sharp correction will affect these bullish signs in the future.
Like Bitcoin (BTC), Ether continues to show positive fundamentals, even during the current sell-off, and this suggests that there is a good chance that the uptrend has not been broken.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Ethereum (ETH) all-time high seems imminent – reasons behind the rally
Scratching its all-time high price, Ethereum (ETH) continues its rally with a momentum followed by the so-called “altcoins”. In the possible start of a winning season for the altcoins, ETH is shaping up as one of the biggest winners.
ETH is trading at $1,344 with gains of 131% in the last 30 days and 66% in the last week. Although Bitcoin (BTC) has started the crypto market rally, Ethereum has outperformed it due to 3 main factors.
First, the Ethereum network has had a year of achievements in terms of development. The launch of the deposit contract for the deployment of the Beacon Chain of the Ethereum 2.0, marked a milestone for the cryptocurrency that has begun its transition towards a Proof-of-Stake consensus.
Investors have been quick to “lock” funds to the contract to receive staking rewards. At the time of publication, 2.5 million ETHs have been allocated to the deposit contract, valued at $3 billion. The network’s 56,434 active validators currently receive a reward rate of 11.55%.
🤑 Reward rate: 11.55%
👨🌾 Participation rate: 99.05%
💻 Active validators: 56,434
⏰ Wait time: 18 days, 12 hours
💻 Validators: 16,640
📉 Rewards impact: -0.69%
—Projected Annual Returns—
Ξ 3.7 ($4,793.02)
— Eth2 Rewards Bot (@Eth2Bot) January 10, 2021
However, Eth2 is just one of the driving factors. The growth of the DeFi sector since the beginning of 2021 is another one. Within the first 10 days of the year, the DeFi ecosystem has reached historic all-time highs and currently, the total value locked (TVL) of DeFi protocols stands at $23.38 billion, with $8 billion allocated in a single week.
Jon Squires of Currency.com is optimistic in Ethereum’s DeFi community continuing to grow in popularity. The protocols offer investors a variety of attractive products to earn profits by lending, offering liquidity, and other financial services. In addition, Squires identifies retail investor participation as a key component. About what’s driven Ethereum’s rally, Squires told CNF:
One word: DeFi (…) These applications have exploded in popularity and their market caps shot up in 2020. So people are seeing value in the Ethereum project and buying up its native cryptocurrency, Ether. That’s why the currency is approaching its ATH levels.
Squires believes there is a possibility that the “alt-season” is just in its beginning stages. This is reflected in the profits that cryptocurrencies such as Cardano, Litecoin, Bitcoin Cash, and others present. Investors have begun to diversify their portfolios and allocate resources to cryptocurrencies other than Bitcoin (BTC). Squires believes this will increase the buying pressure in the market:
(Investors) put some of their investment in other assets, too. And as more retail investors get involved, the price goes up.
Another important factor could be the shrinking liquid supply of ETH on the market. The flow of ETH received by the exchanges has decreased to its lowest levels in the last 6 months. The DeFi sector and the deposit contract seem to be absorbing most of these funds. Consequently, a supply shock has not just hit Bitcoin, but also Ethereum.
Most of the trade in Bitcoin and Ethereum seems to be occurring on exchanges like Coinbase via “over the counter” (OTC) deals. In that sense, the flow of ETH and BTC entering Coinbase has become a crucial indicator to measure the market trend, as Squires concluded:
Exchanges such as Coinbase are catering to retail investors like never before.