Market Analysis According to Dr. Dragosch
In a blog post dated 11 December 2023, Dr. André Dragosch, Head of Research at ETC Group, provided a detailed analysis of the current state of the cryptocurrency market.
Cryptoassets Outshining Traditional Assets
Dr. Dragosch mentioned that the past week has seen cryptoassets outperform traditional assets such as equities due to a notable shift in monetary policy expectations and futures liquidations.
US Jobs Data and Traditional Markets
Unexpectedly strong US jobs data last Thursday led to a reversal in US Treasury yields, precipitating a decrease in overall risk appetite across traditional financial markets.
Bitcoin Rally Pauses and Altcoin Performance
Bitcoin experienced a pause in its rally, but altcoin performance surged significantly, with Avalanche and Cardano reporting over 50% returns last week.
Analysis on Market Sentiment
Dr. Dragosch noted that their in-house Cryptoasset Sentiment Index remained relatively high, with several other indicators still above their short-term trend.
Risk Appetite and Fund Movements
The indicators showed a reduced appetite for risk in traditional financial markets, and the first week of net outflows from cryptoasset ETPs occurred since early October.
Analysis of On-Chain Data
Dr. Dragosch also observes on-chain data and notes that a significant portion of BTC and ETH addresses are in profit, with a significant increase in profit-taking activity especially among short-term BTC holders.
Derivatives Market Analysis
Dr. Dragosch also made observations in the derivatives market, noting a significant increase in BTC option open interest and a rise in put-buying activity.
Current Bitcoin Trading and Price
At the time of writing, Bitcoin is trading at $41,812, down 4.47% in the past 24-hour period.
Hot Take: Implications of Dr. Dragosch’s Analysis
Dr. Dragosch’s recent findings show that while the cryptocurrency market outperformed traditional assets due to a variety of economic indicators and market sentiment, strong US jobs data and risk appetite in traditional financial markets have tempered this trend. The surge in altcoin performance, specifically for Avalanche and Cardano, suggests that crypto investors may be looking beyond Bitcoin. On-chain data indicates that a significant portion of BTC and ETH addresses are in profit, while an increase in put-buying activity in the derivatives market may indicate a growing demand for downside protection among option traders.
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