Bitcoin’s stagnant market is due to investors continuing to explore other cryptocurrencies, says one trader.
The story of boring bitcoin and exciting ether continued in the cryptocurrency markets Wednesday.
- Bitcoin (BTC) trading around $54,925 as of 21:00 UTC (4 p.m. ET). Gaining 0.14% over the previous 24 hours.
- Bitcoin’s 24-hour range: $54,046-$55,710 (CoinDesk 20)
- BTC above the 10-hour and the 50-hour moving averages on the hourly chart, a bullish signal for market technicians.
Bitcoin’s price was holding steady on Wednesday, showing little change over the past 24 hours. At around 02:30 UTC (9 p.m. ET Tuesday), the world’s largest cryptocurrency went as high as $55,710. It then lost steam and returned to the $54,000 level but was at $54,925 as of press time.
Over-the-counter crypto trader Alessandro Andreotti says bitcoin’s stagnant market is due to investors continuing to explore other cryptocurrencies. ”Bitcoin has, in fact, gone up, but I see it as a consolidation move to a new price range,” Andreotti said. “It’s staying relatively stable right now while alts moon.”
Alternative cryptocurrencies, or “alts,” are certainly shining. Bitcoin’s dominance, a measure of its share of cryptocurrency market capitalization, has dropped over 16% to 50.45% since the start of April, according to calculations by charting provider TradingView.
“You can see bitcoin dominance has been steadily decreasing over the last day and week,” added Andreotti. “Overall, the crypto market is behaving in a very similar way to the 2017 run. If it keeps doing that, we can expect a new run for bitcoin in the short to mid term, possibly a new all-time high even, while alts consolidate at their new price ranges.”
In the derivatives space, open interest in bitcoin futures across major venues is way down so far this week. Last week, the total open interest hit $523 billion. So far this week, that number is a paltry $124 billion, according to data aggregator Skew.
As the bitcoin boredom continues, the crypto ecosystem has excitement in the form of ether and decentralized finance, or DeFi, according to Rich Rosenblum, president of cryptocurrency market maker GSR.
“As the space matures, we’ll see more dispersion,” Rosenblum told CoinDesk. “BTC is increasingly a proxy for traditional finance coming to the space via regulated platforms, while ether is more of the crypto natives buying ETH directly or indirectly as a result of DeFi.”
David Streltsoff, chief revenue officer for quantitative trading firm Efficient Frontier, says the lack of BTC market action might simply be newer investors looking elsewhere for quick profits given the low returns bitcoin is putting out. “I don’t think bitcoin has lost its luster,” Streltsoff said. “Investors, at least in retail, are looking for the next DOGE and a mere 20% isn’t good enough anymore.”
Bitcoin is down over 6% so far in April, according to spot data from Luxembourg-based exchange Bitstamp. “BTC holding support of around $54,000 is positive,” Streltsoff added.
Ether price, fundamentals hitting new highs
Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Wednesday, trading around $2,723 and climbing 3.9% in 24 hours as of 21:00 UTC (4:00 p.m. ET). ETH has hit a new all-time high, with the record now standing at $2,743, according to CoinDesk 20 data.
The highest day for ether spot volumes in 2021 occurred last week, hitting $68 billion across major exchanges April 23, according to CoinDesk Research data. Bitcoin’s volumes that day were $88 billion, signalling ether is gaining some momentum on the world’s oldest cryptocurrency.
Total value locked in the Ethereum ecosystem has crossed $64 billion for the first time, a fresh high as investors plow more money into DeFi.
“Ether prices follow total value locked,” said GSR’s Rosenblum. “ETH is much more correlated to DeFi even though BTC is technically DeFi, too.” As of press time, 9.9 million ETH is locked in DeFi, worth over $27.1 billion. Meanwhile, 155,748 BTC, worth $8.5 billion, is parked in various DeFi apps.
Neil Van Huis, director of institutional trading for crypto liquidity provider Blockfills, says ether’s infrastructure is a key reason traders are steadfastly interested in buying ether over bitcoin for the time being.
“I just think the overall landscape for ether has improved greatly,” Van Huis told CoinDesk. The Ethereum blockchain “shook off the [initial coin offering]boom and bust, went through several bull/bear markets and the infrastructure has finally been laid for ETH to do what it was, hopefully, intended to do.”
Author: Daniel Cawrey