Beyond Bitcoin: The Next Big Trade and the Real Reason Long-term Holders are Cashing Out
The cryptocurrency market has been witnessing a significant shift in investor focus from Bitcoin to altcoins. With Bitcoin struggling to break the $100,000 threshold, institutional investors are turning their attention to Ethereum and other alternative assets that could yield higher returns in the coming weeks. In this article, we will delve into the reasons behind this shift and explore the potential opportunities for traders.
Altcoins Offer an Opportunity for Trade
Altcoins like Cardano (ADA), Ripple (XRP), Stellar (XLM), and metaverse tokens like Decentraland (MANA) and Sandbox (SAND) have witnessed a spike in trade volume across centralized exchanges. This surge in activity is indicative of a growing interest in these assets among market participants. South Korean cryptocurrency exchange Upbit recorded several consecutive days of increase in trade volume across the fiat pairs of metaverse tokens and altcoins from the 2021 bull run. Data from 10xResearch recorded the spike and identified the altcoins in the chart below.
Ethereum Derivatives Traders Turn Bullish on ETH
Among the altcoins that rallied in the past week amidst Bitcoin’s consolidation, Ethereum is at the top of the list. Derivatives traders have turned increasingly bullish on Ether, and there is a shift in institutional investor sentiment. Farside Investor data shows that institutional investors’ interest in Ethereum ETFs is slowly recovering with moderate inflows to the asset. This week, Ethereum ETFs recorded $133.60 million in inflows.
Recent Events Point at Major Win for the Ethereum Ecosystem
A U.S. court of appeals overturned sanctions against Tornado Cash, a crypto mixer on the Ethereum blockchain. Chief Legal Officer of Coinbase, Paul Grewal, said that Tornado Cash’s smart contracts must now be removed from the sanctions list. This development is a significant win for the Ethereum ecosystem and could act as a catalyst for Ethereum’s price.
Long-term Bitcoin Holders are Selling their BTC
Long-term holders of Bitcoin decreased their BTC holdings by nearly 3% in November, down from 14.09 million to 13.69 million BTC. This decline in supply held by long-term holders raises cause for concern regarding selling pressure on the asset.
Strategic Considerations: Bitcoin and Ethereum
Bitcoin started consolidating after it attempted to rally 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 to $85,072. The momentum indicator relative strength index is sloping downward and reads 65. Moving average convergence divergence flashes red histogram bars under the neutral line, signalling a negative underlying momentum in the Bitcoin price trend.
Ethereum could rally towards the imbalance zone between $3,709 and $3,760, marking 6% gains 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 key resistance levels for the altcoin.
Conclusion
The cryptocurrency market is witnessing a significant shift in investor focus from Bitcoin to altcoins. Ethereum, in particular, is gaining traction among institutional investors and derivatives traders. Recent events have also pointed to a major win for the Ethereum ecosystem. Traders need to keep a close eye on the market trends and technical indicators for signs of a reversal in the coming weeks.
Prediction
Based on the analysis, we predict that Ethereum will continue to rally towards the imbalance zone between $3,709 and $3,760, marking 6% gains 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 key resistance levels for the altcoin. We also predict that Bitcoin will continue to consolidate and may find support in the imbalance zone between $81,500 to $85,072.
Actionable Insights
- Traders should focus on Ethereum and other altcoins that have shown significant growth in trade volume and open interest.
- Institutional investors and derivatives traders are shifting their focus towards Ethereum, indicating a potential rally in the altcoin’s price.
- Traders should keep a close eye on the Bitcoin price trend and technical indicators for signs of a reversal in the coming weeks.
- The Ethereum ecosystem is gaining traction, with recent events pointing to a major win for the altcoin.
