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The broader cryptocurrency market entered deep correction on Wednesday, January 27. Bitcoin (BTC) and Ethereum (ETH) entered sharp corrections turning the overall market sentiment negative with the overall market cap dropping below $900 billion.
On a 24-hour chart Bitcoin again tested levels below $30,000 although it recovered again and is currently trading at $31,653 levels. However, the continuous downward pressure on the BTC price over the last 15 days has left investors confused about whether if we are heading for another major correction in the coming days.
Similar has been the case for Ethereum (ETH). Despite hitting its all-time high above $1450, ETH has failed to keep the momentum going. In fact, any price correction in BTC has led to simultaneous profit-booking in ETH as well. Here’s what investors should be doing at the given time.
Bitcoin (BTC) On-Chain Fundamentals Improve, Whales Addresses Rise
Well, to be honest, big industry players and whales have continued to build their positions in Bitcoin over the last two weeks of price correction. Public listed companies like MicroStrategy and Marathon Patent Group has built up huge positions during the recent correction.
The two companies have accumulated a good quantity which is supposedly going to cold storage resulting in a BTC supply shortage. On Wednesday, Canadian investment giant Ninepoint Partners launched their Bitcoin Trust Fund despite past regulatory hurdles around Bitcoin ETF.
Data from Santimnet shows that since June 2020, we have another Bitcoin “mega-whale” with over 100K+ Bitcoins. On the other hand, Bitcoin (BTC) addresses with 1000+ BTC continues to grow in numbers.
?? For the first time since June 24th, #Bitcoin has a 2nd whale address with 100k+ $BTC tokens held, with this development emerging 4 hours ago on @santimentfeed's data. There are also now 233 new addresses with 1,000+ $BTC in them, a clear #AllTimeHigh. https://t.co/I6xhR4mEcv pic.twitter.com/U5XNrQrfed
— Santiment (@santimentfeed) January 28, 2021
These improving fundamentals and institutional participation suggest that retails players could start accumulating a few quantities from now. Yes, after the mega rally earlier this month, Bitcoin (BTC) price volatility is likely to continue and we might see further dips. Taking the staggered buying approach rather than going all-in at once shall be a prudent approach.
Also, if you’re some one waiting to hold for a period of 5 years, any dip here is a good level to buy. Over the last decade, BTC has given 200% compounding returns on yearly basis beating any other asset class by a huge margin. If you do your math, you know what you can gain from here onwards. Worried about the regulatory action?
To your surprise, it is turning out that lawmakers and traditional institutions are slowly warming up to BTC. Miami Mayor Francis Suarez is willing to turn the city into a crypto innovation hub. Interestingly, the Bitcoin (BTC) whitepaper is now up on the official website of the Miami Municipal Corporation. Patrick McHenry, representative of Carolina’s 10th District from the U.S. Congress has praised the Maimi Mayor.
Impressed by what you are doing in Miami, Mayor @FrancisSuarez. I hope more policymakers will join us to support American innovation. https://t.co/FfWTKVyIa1
— Patrick McHenry (@PatrickMcHenry) January 27, 2021
Similar seems to be the situation in Asia! Bank of Singapore recently stated that crypto-assets have the potential to partially replace Gold in the future.
Ethereum (ETH) Undergoing Fundamental Transformation With DeFi
Yes, Ethereum (ETH) has been volatile while failing to sustain new highs! However, if we see, it has been forming strong support at around $1100 levels. Even at $1100, ETH price is 50% up year-to-date. Just like Bitcoin, ETH fundamentals are getting stronger.
The ETH supply at the exchanges has hit a 26-month low leading to a supply squeeze. Also, there’s huge institutional interest around the launch of CME Ether Futures in the next ten days.
?? #Ethereum dropped to a low of $1,215 earlier today, but exchange supply metrics continue to paint a bullish picture. The ratio of $ETH tokens on exchanges, as well as tokens held by the top 10 whale exchange addresse,s now sit at a 26-month low. ?? https://t.co/Riti75WFHO pic.twitter.com/kbDQqeYNMk
— Santiment (@santimentfeed) January 28, 2021
Market analysts are bullish on Ethereum (ETH), based on the growth of the Crypto DeFi market. CoinShares chief strategy officer Meltem Demirors recently stated that Ethereum is undergoing some fundamental structural changes. She added:
“We have seen quite a material run up, and when it comes to new applications, products and services that are being built many of them are being built on top of the Ethereum network”.
Fundstrat analyst has already given a 7x target for ETH from the current levels.