Given the increased volatility in the broader cryptocurrency market, Bitcoin has fallen below the important $90,000 level and Ethereum has fallen below the $3,000 price mark. Following the recent selloff, important differences have been discovered between two major cryptocurrency assets that could shape market dynamics.
The widening gap between Bitcoin and Ethereum
As the volatility of the cryptocurrency market increases, the critical differences between Bitcoin and Ethereum are becoming more and more prominent in this space. of Report status The long-running comparison between Bitcoin and Ethereum is about to reach a new level.
On-chain data shows increasing supply Disparity between the two major virtual currencies By market capitalization. This divergence indicates that Ethereum's supply dynamics are changing more dramatically as a result of: network activities, Meanwhile, Bitcoin issuance and holder behavior remain consistent.
It's worth noting that this is the second time this development cycle has occurred. In the coming months, this widening gap may force investors to reevaluate their positions in Bitcoin and Ethereum, which is beginning to change market perceptions.
Mignolet noted that purchasing liquidity is currently running dry. On the other hand, the remaining liquidity does not grow and simply moves through the market. What this simply means is that liquidity is slowing and without new capital inflows, there will be a supply imbalance and Bitcoin and Ethereum It cannot be fixed.
In historical scenarios, this BTC and ETH supply imbalance has only been corrected by a decline in the prices of both assets. Interestingly, this is exactly what happened when BTC was trading above $100,000. As seen on the chart, the same pattern has now resurfaced, hinting at a potential change in market dynamics and direction.
Mignolet argues that without new liquidity flowing into the crypto market, we could see a long period of consolidation or a short-term rebound. However, such a move would result in a meaningless rebound that would ultimately lead to a further decline.
Massive rotation is seen in the set of BTC and ETH
Recent supply dynamics and capital flows have begun to align in a way that indicates an impending large-scale rotation between Bitcoin and Ethereum. After examining the ETH/BTC chart, Melijn The Trader revealed The pair are said to be poised to experience the biggest rotation in the past eight years.
This rotation could completely change the flow of capital between the market's two largest assets in the coming months. According to experts, the last time this rotation occurred, Ethereum saw a notable 50x increase.
In addition to deeper liquidity and organizational firepower, the same trends are re-emerging, so similar price explosion The same thing could happen again, and Marlin believes most crypto investors will be caught off guard. At the time of writing, the price of BTC was trading at $87,920, according to CoinMarketCap data. ETH price It was trading dangerously close to the $2,968 support level.
Featured image from iStock, chart from Tradingview.com
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