Matrixport analyst Markus Thielen said that Q1 will be a challenging quarter. Bitcoin greed and fear indicators have not yet reached contrarian buying levels, and BTC may pull back to 38K. He is still optimistic that ETH is the next potential candidate to rise.
🚀 The Bitcoin Greed & Fear indicator has yet to reach a contrarian buy level
👇 1-10) We expected that Q1 would be challenging to trade. Volumes in Korea have declined to the lowest level since early October ($1.2bn on Upbit 24 vs. $7.7bn on Jan 12), and Dogecoin has become the…— 10x Research (@10x_Research) January 22, 2024
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ToggleQ1 will be a challenging season
Maxtrixport expects trading to be challenging in the first quarter of this year. Trading volume in South Korea has fallen to its lowest level since early October, while Dogecoin has become the most actively traded coin in the country, suggesting that even those creative cryptocurrency investors have exhausted their knowledge of where their money is going. Fresh ideas.
Looking at the top 88 tokens by market capitalization, only 24% are up so far this year, while Bitcoin is down 2% and ETH is up 8%.
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Bitcoin Greed and Fear Indicators Still Still Not Reaching Buy Levels
Matrixport’s Bitcoin Greed & Fear Index (G&F index) has still not reached buy levels. In the past 18 months, two readings below 20% have been triggered (circled in red):
- On November 25, 2022, Bitcoin was trading at 17,000
- On September 6, 2023, Bitcoin was trading at 26,500
Both have proven to be excellent buying opportunities.
Expected BTC to pull back to 38K
Because the Bitcoin Greed and Fear Indicator has not yet reached buy levels, Thielen still maintains his view that it needs to wait a little longer and expects Bitcoin to retrace to 38K or even the 36K to 38K area, which will be a Painful trading range.
Bitcoin’s 30-day actual volatility currently exceeds 52%, which is a few percentage points higher than the implied volatility (46-48%), and Maxtrixport expects it to fall back to 30% in the next two months. That’s why trading a straddle can be a winning strategy, even if it’s not as exciting as riding a high-beta Altcoin in a bull market.
Note: Straddles: The right to buy or sell the underlying asset with the same execution price and the same expiration date at the same time. Because volatility is expected to fall, selling options at this time can charge a higher premium.
Caution on crypto-related stocks, but attraction emerges
The rise in the fourth quarter of last year was often driven by Oridinals, which is why Maxtrixport was previously bullish on Bitcoin mining companies and the upcoming Bitcoin ETF. However, the recent low network fees have also made Matrixport cautious about miners (it issued a sell report at the end of December), but the discount relative to BTC has also begun to become attractive. According to its speculation, the following crypto stocks The fair value relative to BTC is:
- Marathon -40%
- MicroStrategy -6%
- Coinbase -34%
- Riot -56%.
It is just consolidation at present and the bull market will continue
Thielen believes that the fifth bull market of the year will continue and that cryptocurrencies are currently only in a consolidation period. The stock market is hitting all-time highs. Uncertainty about U.S. interest rate cuts has resurfaced, with the 10-year Treasury yield rising back to 4.20%. He expects this to be only a temporary headwind and that the matter will be resolved by March at the latest.
Pay attention to the rise of ETH
Thielen remains bullish on ETH’s rise as Ethereum’s revenue is much better than Bitcoin’s. Ethereum generated weekly fees of $86-88 million in early to mid-December, which have now fallen to $53 million (-38%), while Bitcoin fees dropped from $97-102 million to just $26 million ( -74%).
ETH gas fees have also dropped from 61 Gwei before and after ETF approval to 13 Gwei, and from 78 Gwei in mid-December. This suggests that network activity is not congested as transaction volumes are below average. This is in contrast to BTC, where the number of transactions and tokens sent by ETH is relatively high, especially as fees remain low.
ETH has now fallen back to the breakout level of 2,400/2,440. If 2,400 fails to provide sufficient support, the price may fall back to 2,200. However, according to his prediction last week, ETH should soon rise to $3,000.
( Matrixport Analyst: Short-term BTC; ETH will soon rise to $3,000 )
