Key Points
- Bitcoin faces resistance at $100,000, leading to increased investor interest in altcoins.
- Ethereum sees a surge in open interest due to increased demand among derivatives traders.
Bitcoin struggles to surpass the significant $100,000 mark, which has led to a shift in investor focus from Bitcoin to altcoins. Tokens that performed well in the 2021 bull run, including metaverse tokens like Decentraland and Sandbox, have seen an increase in trading volume on centralized exchanges like Upbit.
Bitcoin’s Resistance and Altcoin Opportunities
Bitcoin fell short of the $100,000 target by less than $500 on November 20. Since its first attempt, Bitcoin has dropped almost 5% to $95,719 on November 28. There have been significant outflows from Bitcoin ETFs this week, with data showing $435.30 million in outflows on Monday and $122.80 million on Tuesday.
As Bitcoin consolidates and previous bull market altcoins rally, institutional investors are shifting their focus to Ethereum and other alternatives that could yield higher returns in the coming weeks.
Altcoins such as Cardano, Ripple, Stellar, and metaverse tokens like Decentraland and Sandbox have seen a surge in trade volume this week across centralized exchanges. Upbit, a South Korean cryptocurrency exchange, recorded several consecutive days of increased trade volume across the fiat pairs of metaverse tokens and altcoins from the 2021 bull run.
Ethereum’s Bullish Turn
Among the altcoins that rallied in the past week, Ethereum is at the top of the list. Derivatives traders have become increasingly bullish on Ether, and there is a shift in institutional investor sentiment.
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. Open interest in Ethereum has climbed past $24 billion, a four-month peak. Despite the Ethereum spot market price being slow to catch up with the open interest, derivatives traders expect the ETH price to climb.
In the past eight days, Ethereum whales have increased their ETH holdings by 6%, to $102.27 million on Thursday. An increase in accumulation by whales is typically considered bullish for a token.
Recent Developments in the Ethereum Ecosystem
A U.S. court of appeals overturned sanctions against Tornado Cash, a crypto mixer on the Ethereum blockchain. The firm was previously accused of laundering over $7 billion for North Korean hackers and malicious entities.
With Donald Trump’s win in the recent Presidential elections, U.S.-based traders are hopeful of a shift in regulatory stance on crypto and policymaking in 2025. These upcoming developments could act as a catalyst for Ethereum’s price.
Long-term holders of Bitcoin decreased their BTC holdings by nearly 3% in November. As Bitcoin supply held by these holders dwindles, it raises cause for concern regarding selling pressure on the asset.
Strategic Considerations for 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.
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.
The three-month correlation between Bitcoin and Ethereum is 0.95, meaning traders need to observe BTC for signs of a steep correction. A sudden reversal in Bitcoin’s price trend could impact Ethereum traders and long positions in ETH.