After suffering significant losses over the weekend, bitcoin and the cryptocurrency market moved sideways in the week. Market participants are investing more capital into altcoins, despite the bearish short-term price action.
Bitcoin (BTC), which trades at $21,500, has a profit of 2% over the last 24 hours and a profit of 11% over the previous 7 days. The Bitcoin Dominance (BTC.D), an indicator used to measure the percentage of the crypto market’s total market cap comprised of BTC, has been trending downwards as altcoins take off yearly lows.
The metric is showing a large loss from July 2022. This was evident in the chart below. However, it moved sideways throughout August and then resumed its bearish trend over the last week. This metric is often trending to the downside when altcoins are experiencing bullish momentum.
Sentiment data shows a rise in Bitcoin transactions that settle at a loss due to traders turning into altcoins. As seen below, the BTC Ration of On-Chain transactions, a metric used to measure the number of transactions in profit versus those in losses, has followed Bitcoin’s dominance indicator and could be on the verge of further downside pressure. Santiment noted:
Bitcoin prices have fallen since Aug 14, when they briefly rose above $25k. Trades in Bitcoin have been focusing on Ethereum and other altcoins. $BTC transactions tend to be at loss as traders turn their attention towards them. This is the lowest ratio of profit taking we’ve seen on record.
Santiment observed that Bitcoin performs better in certain areas than Ethereum. Market cap second, Bitcoin trades in a crucial area. It has a 5.5% profit over the past 24 hour.
Ethereum is probably positively responding to the expectation around “The Merge”, the event that will complete its transition from a proof-of-work (PoW) consensus to a proof-of-stake (PoS) consensus.
As Bitcoin Lags, Ethereum Shows Bearish Signs Ahead Of “The Merge”
Santiment claims Ethereum has displayed a high correlation with the world’s biggest financial indexes, the S&P 500 and the Nasdaq 100. This only highlights the hype around “The Merge”, as many see it as an important moment in the history of Ethereum and the first milestone into a road full of improvements.
As this major event approaches, there is a higher possibility of a “buy the rumor, sell the news” price action. In other words, Bitcoin could continue to lag Ethereum’s price until “The Merge” when the price could see an increase in selling pressure.
These patterns often occur with high-anticipated crypto events. Analyst Justin Bennett showed the “Head and Shoulders” pattern below that could provide a potential trajectory for ETH’s price for the short term.
You’ll want to keep an eye on this potential head and shoulders for $ETH.
If confirmed, the measured goal will be aligned with $1k support.
Confirmation under $1,500#Ethereum pic.twitter.com/voioPizlhX
— Justin Bennett (@JustinBennettFX) August 23, 2022
Bennett shared his thoughts on current market conditions, and why traders need to be patient.
Many investors will fall for the trap of chasing the bottom at least one time. Investors who have less than 50% capital will still be able to participate in the market’s eventual bottom. It’s never as easy as it looks.