Is there still room for growth in the overall cryptocurrency market, or is Ethereum's recent independent surge an anomaly?
Bitcoin's Status and Ethereum's Unexpected Rise
Bitcoin has shown volatile trends after reaching its projected target price of $120,000-$130,000 earlier this year. In contrast, Ethereum has recently surged independently, an unusual occurrence given that most other cryptocurrencies have not followed suit. This raises questions about whether this independent movement signals an impending end to the rally or if Bitcoin and other cryptocurrencies will soon catch up, leading to a broader market uptrend.
The Influence of Political Figures
A crucial factor in answering this question is understanding the changing status of Bitcoin and Ethereum during Donald Trump's potential term. As a businessman, Trump prioritizes profitability. While his campaign promises for "MAGA" have yet to materialize, his administration's approach to the market has reverted to previous patterns since mid-year. Notably, Trump's eldest son has been a vocal supporter of Ethereum and his own tokens this year, significantly elevating Ethereum's profile to the extent that it has become a "face" for the U.S. President's (son's) endeavors.
Ethereum's Fundamentals vs. Market Hype
Ethereum's current surge appears to be driven by celebrity endorsement rather than fundamental strength. On-chain activity for Ethereum has been sluggish for some time, as evidenced by the low gas fees on both Ethereum and its various Layer 2 solutions. This situation is akin to a stock with a soaring price but deteriorating financial reports. With various contributing factors, the likelihood of Ethereum regaining its previous on-chain prominence is diminishing.
Bitcoin's Enduring Role
Bitcoin, conversely, still represents a degree of crypto belief, although the introduction of ETFs and regulatory compliance has somewhat diluted this attribute. Despite this, Bitcoin remains more representative when comparing market forces with intangible influences. The current market situation suggests that the market and capital flows are hesitant to push further upward, opting for a pause. Meanwhile, those driving the price increases hope to maintain market enthusiasm or, ideally, attract new investors through speculative rallies.
Market Leadership and Future Outlook
The ultimate direction of the market will likely depend on Bitcoin's performance as the leading cryptocurrency. A market where only one asset offers profitability is unsustainable in the long run. Bitcoin's daily chart shows critical support between $115,635 and $116,090. A new low, following the formation of a secondary high, would indicate at least a neutral or slightly bearish bias on the daily chart. Bitcoin needs to reach new highs to ignite renewed bullish sentiment and buying interest in the market.
Given that long-term targets have been met, it is a prudent choice to take profits at this juncture. If new highs are indeed achieved, one could consider re-entering with strong-performing assets. For Ethereum, neither its continuous short-term ascent nor the breakout rally in the ETH/BTC exchange rate suggests an abrupt reversal. Historically, a 40% monthly increase is often followed by a market top within the next one to two months. A bearish position should only be considered after a weekly close shows a decline
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