Ratio to compare The price of Bitcoin, the largest digital asset, and Ether, the second largest, suggest that risk appetite in cryptocurrencies may decline.
This week the ratio expanded 20x to reach its highest level since April 2021, reflecting more resilient demand for the oldest cryptocurrency than its smaller rivals.
Cryptocurrency trading firm QCP Capital said in a note on Friday that if Ether is seen as a proxy for sentiment towards smaller tokens, this pattern could lead to fomo, or “extreme “This could be an early signal,” he wrote.
Bitcoin reached an all-time high of US$73,798 in mid-March following a surge in inflows to a dedicated US exchange-traded fund (ETF) that debuted in January. Since then, the token has fallen about 9% as demand for the ETF cools. The size of smaller digital assets fell further over the same period, declining by around 20%.
Looking outside the crypto market, Barry Bannister says the possibility of Bitcoin reaching new highs as investors lose appetite for cryptocurrencies “suggests a downturn in the stock market.” Stifel, Nicolaus & Co. strategists, including, said in a note this week.
Cryptocurrency traders are currently awaiting the quadrennial event known as the Bitcoin halving, which will reduce the new supply of Bitcoin. Questions have been raised about whether the halving will live up to its reputation as a bullish development.
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Bitcoin fell 1.5% to $66,940 as of 9:10 a.m. ET, and Ether fell by a similar percentage to $3,278. Most of the other major tokens also suffered losses. — Sidhartha Shukla and Ryan Weeks, (c) 2024 Bloomberg LP