The recent relationship between bitcoin (btc) and ethereum (eth) prices suggests a possible decline in risk appetite within the cryptocurrency market. The ratio has reached its highest level since April 2021, indicating stronger demand for bitcoin than its smaller rival, ethereum.
This development has led crypto asset trading firm QCP Capital to speculate that this change in ratio could be an early indication of a transition from “fear of missing out” (FOMO) to outright fear.
bitcoin and ethereum Performance
Looking at recent market trends, the second quarter of 2024 has started with relatively subdued activity. bitcoin price has fallen below the $70,000 mark and has held limit range between $65,000 and $68,000 over the past few days despite briefly touching the $70,000 mark on Monday.
According According to QCP analysis, the inflow of funds into the bitcoin exchange-traded fund (ETF) spot market has not been substantial enough to drive significant price movements in either direction.
As a result, the company has seen funding rates have stabilized and the front end of the term curve has declined from previous highs of 50% to less than the current 20%.
Curiously, while the front of the forward curve has decreased, the rear remains raised. This has generated interest in rolling over spot-forward basis positions down the road, potentially driven by continued long-term bitcoin call demand extending into 2025.
On the other hand, ethereum's performance has been relatively weak. QCP also notes that the ETHBTC ratio cross tests a critical support level after falling below 0.05. In particular, there has been sustained ethereum call selling, resulting in lower volatility and downward pressure on the price.
Ultimately, QCP believes these developments are prompting speculation as to whether this could be an early sign of FOMO becoming fear, particularly about ethereum's role as a substitute for altcoins.
While bitcoin may find support from higher demand and ETF inflows, ethereum's performance and its impact on altcoins will be important factors to watch closely.
Will btc experience a double top?
Renowned crypto analyst crypto Con has raised an intriguing question about whether btc is primed for a double top similar to the patterns seen in 2013 and 2021.
Analyzing previous market cycles, crypto Con x.com/CryptoCon_/status/1775909689173115224″ target=”_blank” rel=”nofollow”>reflexes that the most obvious double tops, such as those observed in the first and third cycles of 2021, triggered significant initial increases in the Fisher Transform indicator.
In contrast, the 2017 double top formation showed a more subtle initial rise in June. Notably, all the final cycle highs ended with a regular bearish divergence, where the price reached higher levels while the indicator declined, as seen in the chart below.
Currently, bitcoin is approaching levels similar to those seen in 2017, as seen at the bottom of the chart. crypto Con suggests that if the Fisher Transform indicator can consolidate around these levels without reaching the line seen in 2013 and 2021, it could indicate a higher probability of a unique higher educationwhich is the most likely result according to the analyst, for December 2024, marking the climax of this cycle.
Featured image from Shutterstock, chart from TradingView.com
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