The Next Big Crypto Trade and Why Long Holders Sell Bitcoin

Bitcoin continues to face resistance at the psychologically important $100,000 threshold, and investors’ focus is shifting from BTC to altcoins. Metadata tokens, especially tokens that rebounded in the 2021 bull run and metadata tokens like Decentraland and Sandbox, have witnessed a revival in trading volume on centralized exchanges like Upbit.

Ethereum (ETH) has observed an increase in open interest, driven by increased demand among derivatives traders. The rise is supported by metrics that reveal increasing bullish sentiment among market participants. A surge in Ethereum prices is likely in the short term as institutional interest expands and traders diversify their portfolios to include tokens with gain potential this market cycle.

Bitcoin struggles below $100,000, altcoins offer trading opportunity

Bitcoin missed the $100,000 target by less than $500 on Friday, November 20. Since its first attempt to reach the threshold, Bitcoin has fallen nearly 5% to $95,719 on Thursday, November 28.

Institutional investors pulled capital from Bitcoin ETFs this week; Data from Farside Investors shows outflows of $435.30 million on Monday and $122.80 million on Tuesday.

As Bitcoin strengthens and altcoins recover from previous bull markets, institutional investors are shifting their focus to Ethereum and other alternatives that could provide higher returns in the coming weeks.

Bitcoin ETF Flows | Source: Farside Investors

Altcoins such as Cardano (ADA), Ripple (XRP), Stellar (XLM) and metadata tokens such as Decentraland (MANA) and Sandbox (SAND) witnessed a surge in trading volume on centralized exchanges this week. South Korean cryptocurrency exchange Upbit has recorded several consecutive days of increases in trading volume between fiat metaverse tokens and altcoin pairs from the 2021 bull run.

Data from 10xResearch noted the rise and charted the altcoins on the chart below.

Increased trading volume and tokens with increasing trading volume on Upbit | Source:10xResearch.co

Trading activity on South Korean exchanges is often considered the forerunner of spot trading on centralized exchanges around the world. Altcoins such as Sei, Polkadot (DOT), and Dogecoin (DOGE) are gaining traction among market participants.

Ethereum derivative investors are bullish on ETH

Among the altcoins that rose with the consolidation of Bitcoin last week, Ethereum is at the top of the list. Derivatives traders are increasingly bullish on Ether, and there is a shift in institutional investor sentiment.

Farside Investor data shows that institutional investor interest in Ethereum ETFs is slowly recovering with moderate inflows into the asset. $133.60 million in inflows were recorded into Ethereum ETFs this week.

Derivatives market data shows open interest in Ethereum has surpassed $24 billion, a four-month high. Even though the Ethereum spot market price is slow to catch up with open positions, derivatives traders expect the ETH price to rise.

Ethereum futures open interest in USD | Source: Coinglass

Ethereum recorded an increase in implied volatility between November 14 and 27, while Bitcoin’s IV remained relatively stable. Market participants are expecting a possible move in Ethereum price as Bitcoin consolidates, confirming the bullish thesis for the altcoin.

Ethereum volatility index | Source: T3index

Over the past eight days, Ethereum whales have increased their ETH holdings by 6% to $102.27 million on Thursday. An increase in the accumulation of whales is generally considered a bullish trend for a token. Large wallet holders are known to increase their holdings in anticipation of a price increase in a token.

Santiment data shows an increase in Ethereum prices in the weeks and months following the whales’ accumulation, recorded by the whale-held supply (excluding exchanges) metric.

Ethereum supply held by whales (excluding exchanges) and ETH price | Source: Santiment Recent events point to a big win for the Ethereum ecosystem

A US appeals court overturned sanctions against Tornado Cash, a crypto mixer on the Ethereum blockchain. In 2022, a court accused the firm of laundering over $7 billion for North Korean hackers and malicious entities.

Coinbase Chief Legal Officer Paul Grewal said Tornado Cash’s smart contracts should now be removed from the sanctions list. US-based individuals will now be allowed to use the privacy protection protocol.

Privacy wins. Today the Fifth Circuit held that @USTreasurySanctions against Tornado Cash smart contracts are illegal. This is a historic victory for cryptocurrencies and everyone who cares about defending freedom. @coinbase He is proud to lead this important fight. 1/6

— paulgrewal.eth (@iampaulgrewal) 26 November 2024

With Donald Trump winning the recent Presidential election, US-based traders are hopeful that there will be a change in regulatory stance on crypto and policymaking in 2025. Upcoming developments could act as a catalyst for Ethereum’s price.

Long-term Bitcoin holders sell their BTC

Long-term Bitcoin holders reduced their BTC holdings by nearly 3% in November, from 14.09 million to 13.69 million BTC. As the supply of Bitcoin held by the holders category decreases, concerns about selling pressure on the asset are increasing.

Bitcoin price has yet to see a negative impact from profit taking, and demand has depleted the supply of BTC sold by long-term holders as of Thursday.

Investors need to keep their eyes peeled for further declines in long-term holders’ BTC holdings as this could signal incoming selling pressure in Bitcoin and a prolonged correction.

Bitcoin: Total supply held by long-term holders | Source: Glassnode Strategic considerations: Bitcoin and Ethereum

Bitcoin began consolidating after struggling to reach the $100,000 target. The closest support for BTC is the November 17 low at $88,722. BTC may find support in the imbalance zone between $81,500 and $85,072.

The momentum indicator relative strength index is downward sloping and reads 65. Moving average convergence and divergence flash red histogram bars below the neutral line, signaling a negative fundamental momentum in the Bitcoin price trend.

BTC/USDT daily price chart | Source: Crypto.news

Investors need to closely monitor the Bitcoin price chart and technical indicators for signs of a reversal in the coming weeks.

Ethereum could rally towards the imbalance zone between $3,709 and $3,760, gaining 6% from the current price. Once ETH closes above this level, the May 2024 high of $3,977 and the March 2024 high of $4,093 will become two key resistance levels for the altcoin.

The MACD and the great oscillator support the thesis of a positive fundamental momentum in Ethereum price. As Bitcoin strengthens, ETH could extend its gains and present an opportunity for buyers who have been sidelined before the end of 2024.

ETH/USDT daily price chart | Source: Crypto.news

The three-month correlation between Bitcoin and Ethereum is 0.95, which means investors should monitor BTC for signs of a sharp correction. A sudden reversal in Bitcoin’s price trend could impact Ethereum investors and long positions in ETH, so strategic considerations are required.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.