As the cryptocurrency market continues to change and evolve, it is critical that investors stay informed and alert about potential trends and patterns. A recent report by Santiment highlighted some interesting insights into the current state of the market, especially regarding ETH and BTC. Here are the details…
Cryptocurrency report from Santiment: How are market participants moving?
According to the report, recently on the market, cryptocoin.com As we have also reported, there have been numerous divergences that temporarily halted the growth of ETH performing the Shapella update. These differences show that the risk appetite of the market is relatively low, with some participants expecting a drop, while others expect a breakout of 32k in BTC and 2,000 in ETH. An important part highlighted in the report was the behavior of “rich investors”. Santiment’s analysis shows that whales have reduced their BTC positions until recently, but this trend has started to change after the successful implementation of the “Shapella fork” and ETH topping above 2,000. This change was also reflected in the transaction volumes.
Santiment also says that a significant number of traders betting against ETH after Wednesday’s raise could trigger a larger move to the upside. Another thing to consider, according to Santiment, is perpetual contract funding rates. Deribit, in particular, is an exchange that has seen wild fluctuations between shorts and longs over the past three months. Santiment uses the following expressions:
After some long positions appeared in the stock market, the price started to peak as expected. But once the funding rates became neutral, ETH started to rise along with BTC. As of now, we’re actually seeing quite a bit of insecurity. Short selling is pretty common, and that’s a good sign that there may be more liquidation to add a bit more rocket fuel as a result to push prices up.”
What other metrics to look out for?
The analytics firm also points to the possibility of a “short squeeze.” This is a process where traders sell an asset at a lower price and borrow it at a certain price in hopes of pocketing the difference, but when momentum moves against them, they rush to cover their losses by buying back the assets, triggering more rallies. In addition, Santiment states that there is a decrease in the number of transactions with profit, which has not reached such a high rate since January 20, when the market corrected. Santiment says:
With ETH rising above $2,000, we are seeing the highest increase in profit and loss transaction ratio. The number of trades in profit today is 2.59 times the number of trades in loss. This is the highest rate seen since January 20, when there was a minor correction. We interpret this as a short-term bearish signal, as these heavy profit takings can historically push prices down temporarily.
Santiment also notes that another bearish signal is the number of ETH shark and whale owners selling, including those holding between 10,000-100,000 ETH. Another indicator Santiment looked at was the 30-day market cap to real value ratio (MVRV) of ETH, which traders use to detect overbought or oversold conditions. The analysis says that ETH’s MVRV is high, but not yet at an alarming level.
Watch for signs of FOMO in the market
For many, it’s crucial to stay vigilant and watch for signs of FOMO (fear of missing out) as the market continues to change. The report highlights several FOMO indicators, such as a significant increase in individual investor savings, a decrease in stablecoin holdings, and an increase in overall network activity. When these indicators coexist with increasing funding rates and a consensus among “influencers”, it can signal that the market is approaching a top.
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