Trader and Investor Enthusiasm for Cryptocurrencies This Week
Traders reduced their leverage amount as BTC prices stabilized. Holders remained unprofitable despite price appreciation. Grayscale Bitcoin ETF records first inflows after $1.6 billion losses in 4 months.
Holders and traders have become hopeful about BTC, as its price reached to $64,000 over the past 24 hours, staying close to such level without fluctuating much.
This stability is accompanied by good news from the derivatives market, which is showing signs of health.
In other news, investors have become more enthusiastic about GBTC and Bitcoin ETF’ recent change from outflows to inflows. Investors feel that Bitcoin will probably hit new all-time highs. Whether this trend will be so remains to be seen, as there are uncertainties in regards to capital markets and regulations.
Decreasing Leverage
The reset in funding rates, which came after the recent price drop, suggests that leverage in the market may be declining, analysts say.
Adding to the positive sentiment is the fact that open interest as a percentage of market capitalization has fallen below 2%. This has not happened since February and is another indicator of lower leverage in the market, which can be seen as a sign of reduced risk, which is generally positive for the long-term health of BTC.
However, traders leaned more towards the skeptical side when it came to BTC. Data from Coinglass indicated that the percentage of short positions taken against BTC was much higher than that of long positions taken.
How Holders Are Faring
Recently, BTC was trading at 64,232.57, having risen in price by 1.37% in the last 24 hours. However, BTC trading volume decreased by 11.18% during this period.
Despite the recent rise in BTC price, holders remained unprofitable.
AMBCrypto’s examination of Santiment data revealed that BTC’s MVRV ratio had fallen, implying that most holders were waiting for their holdings to turn green.
This may be positive for BTC in the short term as these addresses are likely to hold onto their BTC until prices rise above a certain price point.
The short-term holders are expected to exhibit what is known as “paper hands,” which means the tendency to sell their holdings amid market volatility and without believing in their holdings.
The outlook and conviction of these short-term holders will play a huge role in determining BTC price movement in the future.
Grayscale Remains Hopeful about Ethereum ETF
Grayscale believes that the SEC will approve its Ethereum ETFs this month, even though there have been recent concerns about the SEC’s level of commitment to the applicants as well as their ongoing research on Ethereum.
Legal director at Grayscale Craig Salm explained that there are similarities as of how Bitcoin and Ethereum spot ETFs have been considered for approval. Salm noted that the core operations are fundamentally the same, with the key difference being the underlying asset being analyzed. Such consistency should make the SEC’s review process easier, contributing to Grayscale’s optimism for a positive outcome.
Based on parallels between the processes for both Bitcoin Spot ETFs and theirs, Grayscale is positive that the SEC will approve Ethereum Spot ETFs.
In other words, Greyscale believes that the key issues the SEC, addressed during the approval process for Bitcoin ETFs, are largely the same for Ethereum ETFs. Thus, the regulator’s experience with Bitcoin may help Ethereum’s case.
However, Grayscale’s viewpoint contrasts with that of Bloomberg ETF analysts Eric Balchunas and James Seyffart. Both observers have lowered their expectations for Ethereum ETF spot approval in May to just 25%.
By Leonardo Perez