Market Alert: Ethereum Faces Potential Downfall As Dencun Upgrade Looms – Here’s Why
March 13 2024 - 10:00PM
NEWSBTC
Ethereum (ETH) is poised for a notable improvement with the
impending Dencun upgrade to enhance the network’s scalability.
However, amidst this anticipation, QCP Capital, a seasoned crypto
asset trading firm, has shed light on an emerging trend that might
influence Ethereum’s price trajectory. The firm’s analysis reveals
a shift in “risk reversals” for Ethereum, turning negative for
upcoming expiries. This shift indicates growing concerns among
investors about a potential decrease in ETH’s price, as a negative
risk reversal often suggests a market leaning towards protective
measures against a downturn. Related Reading: These Are The
Ethereum Altcoins Witnessing High Whale Interest Market Leverage
And Correction Concerns Notably, this trend towards negative risk
reversals has been attributed to an increased interest in put
options, which serve as a hedge against potential losses for those
speculating on price increases. Moreover, the broader altcoin
market participants are similarly hedging their investments in
Ethereum, aiming to mitigate risks associated with their altcoin
holdings. QCP Capital’s insights into the market dynamics also
highlight an underlying nervousness about Ethereum’s price
stability, especially in light of the considerable leverage within
the market. The firm cautions about the potential for a market
correction, albeit with an expectation of strong buying interest in
the event of any price dips. QCP noted in the report: Altcoin
speculators might also be buying ETH puts as a proxy to hedge
altcoin downside. This makes us wary of a possible correction given
the amount of leverage in the market. However, we think that the
market will buy any dip aggressively. Additionally, Ethereum’s
spot-forward spreads have decreased slightly, contrasting with
Bitcoin’s sustained high spreads. Commenting on the implication for
investors, QCP Capital stated: A sharp drop in spot price is likely
to drag the forward spreads lower as leverage longs get taken out.
Ethereum Performance And Outlook Despite the cautionary signals,
Ethereum continues to perform “robustly” in the crypto market,
closely trailing Bitcoin regarding price movements. Currently
trading above $4,000, Ethereum has witnessed a modest increase of
0.6% over the past 24 hours. Moreover, data from IntoTheBlock (ITB)
reveals an encouraging statistic: over 94% of ETH addresses are
presently profitable, suggesting a strong holding pattern among
investors and a reduced likelihood of selling pressure. This
scenario could potentially set the stage for a price uptick.
Related Reading: Ethereum Wallets Overflow: Over 90% Addresses In
Profit, Ether To Retest ATH However, it’s important to note that
Ethereum’s growth trajectory, while positive, has not mirrored the
notable surge Bitcoin experienced following the approval of its
spot Exchange-Traded Fund, indicating a more measured pace of
appreciation for ETH. Featured image from Unsplash, Chart from
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