The cryptocurrency market is showing signs of a possible shift in risk appetite, according to an article by Sidhartha Shukla and Ryan Weeks published by Bloomberg News on April 5, 2024. The article notes that the price relationship between Bitcoin, the world's largest digital asset, and Ethereum, the second-largest cryptocurrency, has apparently hit its highest level since April 2021, suggesting that investors may be favoring the more established Bitcoin over its smaller rival.
The Bitcoin-Ethereum ratio, which recently surpassed 20, could be an early indication that fear of missing out (FOMO) in the cryptocurrency market is transforming into genuine fear, according to the Bloomberg article. Bloomberg also mentions that QCP Capital, a crypto asset trading firm, noted in a report that if Ethereum is considered as an indicator of sentiment towards smaller tokens, this pattern could indicate a decline in risk appetite among investors.
On Thursday, Bitcoin hit an all-time high of $73,794, driven by a surge in inflows into U.S. spot exchange-traded funds (ETFs) that launched in January, according to Bloomberg. However, the token has since retreated by approximately 9% as ETF demand has cooled. In comparison, several altcoins have seen an even more significant drop, of around 20% over the same period, as reported by Bloomberg News.
Bloomberg went on to say that Bitcoin's peak potential, coupled with lower investor appetite for cryptocurrencies, could have implications beyond the cryptocurrency market. Strategists at Stifel Nicolaus & Co., including Barry Bannister, suggested in a note that a weakened crypto market could indicate a weaker stock market.
As cryptocurrency traders await the every four-year Bitcoin halving event (expected around April 20), which reduces the new supply of BTC, questions have been raised about whether the halving will live up to its reputation as a bullish development. Halving has historically been associated with price increases, but current market sentiment has raised uncertainty about its potential impact, Bloomberg reported.
At the time of writing (10:30 am UTC on April 5), Bitcoin and Ethereum are trading at around $66,822 (up 0.6%) and $3,269 (down 2.4%). ), respectively.
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