Although crypto markets continue to decline, the overall picture is still one of caution and not panic. Bitcoin and Ethereum both fell after weeks of low-volume trading. Capital hasn’t been moved into more risky assets.
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- Bitcoin and Ethereum continue to fall, without any signs of panic. Volatility has only increased modestly since its previous lows.
- Ethereum has remained close to Bitcoin and no indication of any capital shifting into altcoins, higher-risk investments or other currencies.
- Bitcoin dominates the crypto market, suggesting a defensive posture in which there is a lack of risk appetite.
As of press time, Bitcoin was (BTC() traded near $69,000, the highest level in more than a year. Ethereum (ETHAround $2,060 was being exchanged, a drop of almost 4% in comparison to last year.
These three graphs show how the market continues to be low-conviction despite falling prices.
The Bitcoin volatility has dropped after weeks of compression
Bitcoin traded in a narrow range for most of December, and into early January. Bollinger Bands have been narrowing steadily on the daily charts, signaling a falling volatility.
The average true range (ATR), while rising, is still below the typical range associated with panic selling.
Bitcoin broke below the Bollinger Band’s lower band, signaling a new momentum. ATR hasn’t risen sharply in tandem with the movement. But volatility has only increased modestly.
The word “suggest” suggests that the recent selloff reflects Trimming the position in A low-liquidity environmentIt is better to be calm and rational than capitulating in a state of panic.
Ethereum and Bitcoin are still linked with no signs of separation
Ethereum’s pricing closely resembles that of Bitcoin. ETH was also trading within a small range before breaking down. It is similar to Bitcoin. failed to hold key support levels Once volatility increased, it was a sign of heightened risk.
ATR has begun to increase on Ethereum, although it remains far below the levels usually associated with events of stress. Lack of relative strength indicates traders do not differentiate between major assets.
The market will be treated instead as one single trade with reduced exposure across the board.
As risk appetite declines, Bitcoin’s dominance remains high.
Bitcoin dominance has remained elevated near the 59–60% range. Despite the wider pullback of prices, this metric is still close to its moving 20-day average.
When there is a greater risk of decline in Bitcoin, capital will often be redirected to Ethereum and other altcoins. This can lead to a lower dominance. This pattern is not evident. A defensive attitude among traders is indicated by the absence of sustained drops in dominance.
Instead of reallocating crypto within their own ecosystem, it appears that participants are taking a step back.
Together, these three charts show that the market is still in an “await-and-see” mode. Prices are declining, without the spikes in volatility which usually signal panic. The volatility has increased, but it is only from a compressed level. The risk appetite is still low and the participation remains low.
Crypto markets will likely remain cautious until a catalyst is identified. Traders are more focused on capital protection than positioning themselves for the next rally.
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Source: crypto.news
