Over the past weekend, the crypto market experienced a tumultuous blend of emotions, characterized by fear and greed, as Bitcoin plunged to lows of 64,500. However, it swiftly rebounded, with the leading asset surging back above the 67,000 mark.
While Bitcoin has exhibited significant resilience, the same cannot be said for Ethereum.
Ethereum’s Rocky Road Amidst Bitcoin’s Resilience
The heavy selling of BTC put options indicated a dissipation of fear among investors, who seemed eager to capitalize on the dip.
Interestingly, amidst this sentiment shift, there’s a notable inclination towards greed, evidenced by the increasing interest in long-dated Sep and Dec BTC calls targeting lofty price levels of $100-150k. According to the latest analysis by QCP Capital, this optimism reflects a bullish outlook despite recent volatility.
The Singapore-based digital assets trading firm said Ethereum presents a contrasting narrative as concerns loom as perpetual funding rates turn negative and risk reversals portray a “downside skew,” signaling apprehension within the market about a potential downturn in the crypto asset’s price despite the continuing rally in alts.
Despite Ethereum reaching a peak of over $4,000, its highest value in two 3years, QCP previously observed a change in market sentiment, evident in the negative risk reversals. These reversals indicate the contrast in implied volatility between call and put options, a shift likely attributed to the decreased chances of a spot Ethereum ETF approval in the US in the near future.
Following the long-awaited Dencun upgrade, which QCP had anticipated, the crypto asset saw a decline to under $3,500 over the weekend amid a market-wide slump.
Is Ether Overvalued?
A different analysis by CryptoQuant revealed that ETH’s total supply is diminishing as a result of heightened network activity and the utilization of transaction fees for burning. The subsequent uptick in staking participation was also observed, with over 31 million ETH staked, indicating growing confidence in the asset’s long-term prospects.
Its network also witnessed a notable surge in activity, characterized by increased daily transaction volumes and ETH transfers. However, the current elevated MVRV Ratio implied that ETH might be overvalued.
“The current high MVRV Ratio suggests that ETH might be overvalued, which calls for a cautiously optimistic approach. Despite these challenges, the Dencun upgrade reinforces Ethereum’s strong fundamentals. Yet, the market’s recent preference for SOL over ETH signals that we might see some adjustments ahead.”
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