Recent significant price corrections in Bitcoin and Ethereum have attracted market attention. 10x Research’s analysis indicates that multiple factors are influencing this, including a fragile market structure, the implementation of technological upgrades, changes in ETF fund flows, and the potential topping out of altcoins and meme coins.
In the recent market, Bitcoin and Ethereum have experienced significant price corrections, which have caught the attention of market participants. According to a recent report by 10x Research, there are multiple factors at play, including issues with the market structure, the implementation of technological upgrades, changes in ETF fund flows, and overall market sentiment fluctuations. The report predicts that Bitcoin may fall to $63,000 before recovering and that altcoins and meme coins may have reached a short-term peak.
Firstly, in terms of market structure, 10x Research emphasizes the fragility of the Bitcoin market structure, highlighting a phenomenon called “externality.” This refers to a situation where Bitcoin’s price reaches new highs and falls below the previous day’s low within the same trading day. This price behavior demonstrates extreme volatility and uncertainty in the market, suggesting the possibility of a deeper and longer correction. 10x Research analysts are concerned about Bitcoin’s future returns, believing that it will become more volatile and unpredictable.
Despite net inflows in Bitcoin spot ETFs, 10x Research’s report points out that Bitcoin has been unable to sustain its upward momentum during most of the US trading sessions. Instead, its price has only risen in the few hours before the opening of US ETFs, mainly due to the confidence derived from continued purchases by BlackRock clients. 10x Research also notes that Bitcoin did not rebound during the European trading session last night, which is the first time in a while. The previous buying pressure from ETF pre-purchases seems to have disappeared, and with poor recent ETF inflow performance, there are concerns about the sustainability of ETF fund flows. This lack of market confidence has led to a sharp sell-off of Bitcoin during the Asian trading session.
On the other hand, Ethereum’s recent surge has been primarily driven by expectations of the London hard fork upgrade. However, it is now facing a test of its fundamental profitability. Despite benefiting from the DeFi summer and NFT boom, its current valuation seems to be disconnected from its fundamentals. Additionally, the London upgrade is expected to primarily benefit layer-two blockchains, and unless transaction volume increases significantly, it may dilute Ethereum’s returns.
As for the prospects of Ethereum ETF approval, the report suggests less optimism, estimating the likelihood of approval at only 30%. This uncertainty may drag down Bitcoin during the sell-off caused by the implementation of the London upgrade.
In addition to potentially dragging down Bitcoin, meme coins closely associated with Ethereum may have already reached a short-term peak, especially coins like Shiba (SHIB), which have seen explosive trading volume in the past 2-3 weeks. However, the decline in trading volume of Korean meme coins suggests that the meme coin frenzy of last week may have reached its peak, indicating an upcoming market adjustment.
Furthermore, recent inflation data and cautious attitudes towards interest rate cuts by central bank officials have further dampened market sentiment.