Bitcoin and Ether continue to dominate the cryptocurrency market, holding over $1 trillion and $260 billion in market capitalization. With over $100 billion in aggregate daily trading volumes, these two tokens are actively bought and sold by retail or institutional players, as the crypto revolution continues to unfold.
The appearance of trading platforms such as Markets Legion, where traders can focus solely on crypto due to a large cryptocurrency asset coverage, continues to favor new people joining in, especially since the volatility in BTC and ETH remains elevated.
For more than a year, the market witnessed one of the most impulsive bull runs in history and for the past two weeks, the upside showed some vulnerabilities, demanding a review of the latest trading trends.
Bitcoin reaches $65,000 and starts to weaken
Bitcoin had a very impressive performance since Q1 2020 when it dipped towards $4,000. The bull trend that followed pushed valuations to new all-time highs, with the price almost reaching the $65,000 key area on April 14th. That had turned out to be a short-term top, given weakness emerged and the price dipped below $51,500 by April 18th.
There had been a lot of speculation with crypto and despite favorable conditions for growth (US dollar weakness, positive risk sentiment, etc.) many experts believe the moves in Bitcoin are overstretched, creating an environment where a strong pullback that could last up to a few weeks becomes more probable.
An important development had been the growth of cryptocurrency-based derivatives. Bitcoin is the largest cryptocurrency in the world and had been the first one in line as new instruments had emerged over the past years. If in 2017, the activity was mostly focused on traditional exchange platforms, in 2021 people also have access to futures, options, Bitcoin trusts, CFDs, and even ETFs in some parts of the world like Switzerland.
Also, large companies like PayPal, Tesla, or Visa, have joined the Bitcoin industry and major retailers now accept payment in BTC. All of these combined are creating a consistent demand and combined with a limited supply, the upside in Bitcoin becomes very speculative.
Ether capped by $2,500
Although it managed to reach an all-time high in February 2021 and its market capitalization is still 4 times lower as compared to BTC, Ether, the token powering the Ethereum ecosystem, had managed to defy all critics and is now trading around $2,300.
On top of the favorable tailwinds seen with Bitcoin, in the case of Ether it would be critical to note the start of the Ethereum 2.0 implementation. This opens up a new chapter for the blockchain and comes with new enhancements, such as a Proof-of-Stake consensus algorithm, faster transaction processing, and enhanced security.
There are many new Ether-based trading instruments people can use to take advantage of the volatile price action moves. The Markets Legion trading services are an option to consider since traders can profit from bullish/bearish conditions without holding tokens on a wallet. Also, Ether futures, trusts, and other derivatives had created an environment for new capital to flow in.
Regulatory fears resurface?
The Bitcoin and Ether sentiment took a hit on April 16th, 2021, when the Turkish Central Bank issued a statement, banning the use of cryptocurrency for payments. Same as in late 2017, regulatory pressures are starting to increase, as governments want to clamp down on crypto speculation.
Crypto rising as a solid replacement for traditional money is not something public officials want, due to limited control over decentralized systems like BTC or ETH. The selling pressure eased slightly for the time being, but there is little sign of buyers resuming impulsively.
After months of outperformance, a longer retracement in crypto would actually be beneficial, since it will create an environment with more attractive valuations.
Decoupling from the US dollar
US dollar weakness had resumed again despite acting as a tailwind for the past year, that doesn’t seem to be the market’s focus for the time being. A break in correlations is something market participants need to consider.
Weakness in USD should, in theory, be positive for the value of BTC and ETH. However, if other variables are considered more relevant to price, the market could ignore the dollar tailwind for an extended period.
Despite a short-term price action weakness, the BTC and ETH trend continues to be in play. A retracement was becoming probable and now that it is occurring, long-term buyers need to remain on hold until the price action will start pointing towards gains once again.
Both Bitcoin and Ether remain the dominant tokens of the crypto market and due to massive inflows via different investment vehicles, should hold the upper hand over the short to mid-term horizon.