AQTIS Market Insights Newsletter #6 — Monday Feb, 26th 2024
It’s been Ethereum’s turn in the spotlight over the last seven days. While Bitcoin’s blistering run has cooled, Ethereum has kicked on, finding support above $3,000 for the first time in years. It touched above $3,126 at the time of writing. This has been fueled by rumors that an Ethereum ETF may not be far away.
Over the weekend, discussion of an Ethereum ETF heated up as Coinbase waded into a discussion regarding Grayscale’s request to launch a new ETF. Coinbase’s response stated that ETH should be treated the same way as Bitcoin, as Ethereum has long been considered a commodity by several US regulators, and therefore should be given the green light to launch.
As with Bitcoin, Grayscale has been leading interest in an Ethereum ETF. It has nearly $7 billion locked up in its Grayscale Ethereum Trust, dwarfing trusts from other providers. As with Bitcoin, if Grayscale is given the green light, the Trust will convert to an ETF.
While news of the ETF has been pushing up prices, Grayscale’s research team has also suggested that Ethereum’s upcoming Dencun upgrade is helping push up the price. Scheduled for March 13 this year, the upgrade will address scaling issues that have meant it lagged behind rival chains like Solana.
No wonder Open Interest in Ethereum has been steadily increasing in the last seven days.
Chart of the week
Perpetual volume for Ethereum has surpassed Bitcoin, another bullish signal for interest in the world’s largest cryptocurrency. Historically, when volume has been higher on ETH than BTC, signals have turned bearish shortly afterward.
Source: X
BTC Analysis
While Ethereum has hogged the headlines, our technical analysis of Bitcoin revealed volatility has eased off.
Using high time frames, there is a clear target around the $56–58,000 mark. There are also strong indicators that $50,000 is acting as support, with the next line of support or invalidation area being in the $47,000 region.
Zooming in, we can see that we’re entering an accumulation phase. These are areas of particular interest, as the next move is likely to be strong either way. At present, we’re seeing bullish patterns, suggesting at the end of this consolidation phase signs are suggesting another leg up is on the cards.
Order books
Checking our order books, we can find more evidence of our initial analysis. It’s clear from the below chart that there are resistance lines around $53,00 and $55,000, with $48,000 and $50,000 acting as lines of support.
Taking a closer look at exchanges, however, a more nuanced picture emerges. On Bitfinex, there is a heavy wall sell — the heavy read lines on the chart below — which suggests the order books are turning bearish at present.
But when we examine sentiment, whales behavior still has an appetite for buying BTC.
In summary: Bitcoin is ranging and chopping while the market is reacting with shorts at the lows and longs at the top, creating liquidity for the next move.
Coin of the week
Unsurprisingly, ETH is our coin of the week. Thanks to the ETF narrative and upcoming network upgrade, the next key levels for the coin are $3,320 and $3,580. However, this is a stretch for where the price is at the moment, and support is sat around the $2,700 mark.
We have a simple model based on whale behavior in the markets, and it has served as a useful basis for a mean reversion model. As you can see from the charts here, we have a mark for a local top when we reach the top bands. ETH’s price has hit these in the last few days. With additional bullish signals in open interest and trading volume, the outlook continues to be bullish.
But, when we look at sentiment metrics, we can see the market is overheating. An intelligent move for long holders for ETH would be to wait for a retrace down to $3,000 or $2,900 before hopping into the market.
Looking Ahead
More data on the US economy is due out this week. This helps traders understand what direction the broader economy is heading. Among reports due this week is the Consumer Confidence Index, along with the Personal Consumption Expenditures Price Index, PCE Report for short. Both will indicate how effective the Federal Reserve’s policies on combating inflation will be, and whether interest rates can be eased.
❓ Questions or Feedback?
As always, we’re eager to answer all your questions and consider your suggestions. We’d love to hear your thoughts, so please share them in our Telegram or Discord.
Would you like to better understand and eventually beat the markets?
AQTIS is delivering an institutional-grade Market Insights Newsletter straight into your inbox, for free! ▶️ Subscribe here!
That’s all for now. Stay tuned for more exciting updates, and we’ll catch you in the next one!
