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Latest Findings Show A Reduction In Sell Off, Is A Bitcoin Rally Ahead?

Bitcoin and the broader crypto market surprisingly performed over the past week. At the beginning of the week, the market saw more movements to the south in most crypto asset prices. A few hours following the release of the US CPI data for September saw the entrance of the bears into the market.

However, almost all the tokens had a reversal in the direction of the trend. The bull suddenly appeared and forced massive volatility pushing the assets to the north.

The performance of the primary crypto asset, Bitcoin, was calm throughout the weekend. Bitcoin sustained its anchor at around $19,200 through the period. But some participants in the industry are wondering about a possible turn for the leading cryptocurrency.

Possible Price Spike With Present Indicators

According to indicators from on-chain platforms, BTC might record a more bullish trend soon. The sentiment is drawn from the indication of the Bitcoin futures market.

An analyst at CryptoQuant, Dan Lim, gave some supporting explanations for this positive trend expectation. According to him, the token currently has low selling pressure in the futures market.

Lim says there’s been a drastic decline in the BTC amount transferred from spot exchange to derivatives since October. He recalled that since the fall in June, the volume continued to rise, but Bitcoin retained its June low of $17,600. Currently, the volume is dropping sharply, negating any occurrence of intense selling pressure.

But, the funding rates of Bitcoin futures have become negative in the market. This was due to the decline in the price of BTC from $22,000 to the $19K level. Comparing these occurrences with the 2019-2021 period shows a drop in the metrics showing a low activity and demand in BTC futures market.

Bitcoin price grows on the chart l BTCUSDT on Tradingview.com

According to Greatest_Tracker, a CryptoQuant analyst, the indicator usually leads to a consolidation and range phase period. However, the analyst noted that extreme negative values might result in a short squeeze triggering a price reversal for Bitcoin.

Volatility Through Bitcoin Futures’ Stance

With the present condition of the Bitcoin futures, many predictions revolve around the price of BTC. But some traders are anticipating increased volatility following the market situation.

Michael Van de Poppe, a notable crypto trader, expected a price surge. However, he wrote that following four months of consolidation in prices; it’s possible to get massive market volatility. Van de Poppe noted that some people still expect a more bearish trend, but an increased northward move could be the odds.

But the worsening global macroeconomic conditions bring contrary opinions for some traders. Nicholas Merten, the founder of DataDash, indicated concerns with macro factors. He reported that the Nasdaq Composite went below its average performance for the first time in 14 years. It recorded a weekly close below the 200-week moving average.

The trader noted that the crypto market, especially BTC, will face more bearish trends in the future with such conditions.

Featured image from Pixabay and chart from TradingView.com

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Institutional Investors FOMO For Ethereum Exposure

Ethereum trends show it’s becoming more valuable as ETH 2.0 draws near. Thus, institutional investors are clamoring to get in on the action before it is too late. A signal for this has been ETH Futures have been trading at a higher basis premium than BTC Futures on CME. ETH Futures have continuously traded at a higher rolling basis than BTC Futures for the past three months. This could show that institutional investors are more bullish on ETH’s future in comparison to BTC. But other factors have also led to the ETH Futures trading so high.

Related Reading | Ethereum Fee Burns Clocks $100 Million, Here’s Why The Burn Is Important

ETH Futures on CME have only been live for February. This means that the market has not yet had time to adjust to market conditions. Whereas in the case of BTC Futures, investors have been trading on them for the past four years on CME. So the market has had more time to get used to the market conditions surrounding BTC Futures, along with established setups to utilize cash and carry trades in the most efficient manner.

ETH Futures basis higher than BTC Futures basis | Source: CME Crypto Futures 3-Month Rolling Basis from Arcane Research

ETH Futures being just six months old has not given the market much time to establish the same patterns with BTC Futures. The ETH futures are still evolving and investors are trading in a mature which is yet to mature. But this has started to change.

Institutional Investors Need More ETH Exposure

ETH Futures experienced high basis premiums at launch, which most likely was due to institutional investors using the ETH Futures on CME as a way to get more exposure to ETH. But as time moved on, the ETH Futures market has continued to mature. ETH Futures’ basis saw a declining trend as more trading firms take advantage of the CME to carry out cash and carry trades. Following the same trend on the BTC basis.

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The passage of time has however seen this contango grow from the lows. A spike saw the BTC basis shooting up, before finally stabilizing at around 3%. While ETH basis saw an even higher spike, which had eventually stabilized at 7%. ETH Futures have remained in an uptrend in the weeks following the spike to the current position.

This higher climb in the ETH basis than the BTC basis shows that institutional investors are currently more bullish on Ethereum compared to Bitcoin. Basis trends between the two futures put Ethereum on a higher trajectory than its Bitcoin counterpart.

Ethereum Institutional Interest Showing In Price Movements

The CME ETH Futures are not the only indication that institutional investors are showing more interest in Ethereum. Price movements in ETH also indicate more interest in the asset over pioneer cryptocurrency Bitcoin.

ETH’s price is up 240% in 2021 alone | Source: ETHUSD on TradingView.com

ETH’s price has outperformed the price of Bitcoin this year by over 200%. While the performance for Bitcoin for the year 2021 sits at less than 38%, ETH’s performance is up 240%. This disparity in performance shows investors are moving more towards Ethereum. Leading to the high growth in price compared to BTC.

Ethereum network continues to expand its use cases with the upgrade to ETH 2.0. It is the leading network for DeFi and NFT development. Its TPS is higher than that of Bitcoin, and the move to proof of stake will cut down the network’s energy usage by 99%.

Featured image from The Cryptonomist, charts from Arcane Research and TradingView.com