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Ethereum Gaining Ground on Bitcoin: Taker Buy-Sell Ratio and Cost Basis Trends Point to Stronger Sentiment

9 hours ago
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Current market trends indicate that Ethereum ($ETH) is experiencing a surge in investor interest as sentiment pivots away from Bitcoin ($BTC) in the near term.

Primary metrics like the taker buy-sell ratio and cost basis distribution (CBD) are now painting a more favorable picture for Ethereum relative to Bitcoin. These developments are not going unnoticed by analysts and investors, especially because Ethereum’s price itself is undergoing what looks like a period of bullish buildup, even as Bitcoin continues to contend with waning demand.

Traditionally, when the taker buy-sell ratio for Bitcoin starts to decline while Ethereum’s rises, this indicates a trend reversal in which Ethereum starts to outperform Bitcoin. And that is precisely what we are witnessing now in the crypto market. Bitcoin’s buy-sell ratio has been dropping for some time, and this, of course, reflects diminishing buying momentum and a forecast that is less rosy in the short run for Bitcoin. At the same time, Ethereum’s ratio is rising, which points to quite the opposite scenario for Ethereum—that is, it is enjoying a nice upsurge in buying interest and investor sentiment.

This shifting market dynamic indicates that an increasing number of investors are turning to Ethereum, probably because of the recent updates to the network and its rising popularity in areas like DeFi, non-fungible tokens, and layer-2 solutions. With Bitcoin’s supremacy in the market starting to wane, Ethereum is definitely the next contender to capture the spotlight, especially as institutional appetite for blockchain alternative assets continues to swell.

Accumulation Zones Indicate Long-Term Conviction in Ethereum

This burgeoning Ethereum momentum is most evident in the cost basis distribution (CBD) for Ethereum. The CBD for Ethereum is trending down across multiple cost bases, signaling that investors have been stocking up on Ethereum as its price has dipped. This accumulation behavior is even more remarkable when you consider that most of the time, when we’re seeing price decreases, those decreases are accompanied by an increase in trading volume. And volume is usually associated with price discovery or some discernible reason for buyers or sellers to be trading.

Ethereum’s main support area is roughly around $2,632, which is where about 786,660 ETH is stashed. That’s an important price level that has become a sort of threshold for Ethereum, where you’re seeing buyers come in and trying to step it up. Conversely, the primary resistance level is at about $3,149, where roughly 1.22 million ETH is held. Accumulation and resistance zones at those price points are pretty much dictating the Ethereum price with say a 90 to 95 percent chance of hitting one of those thresholds when you’re looking at short to medium price action.

Accumulating at lower prices is a trend we’ve seen with other assets, like Maker ($MKR), where investors have displayed countermarket behavior by lowering their cost basis and holding through dips. For Ethereum, this is a similar play. If Ethereum investors were to behave in a countermarket fashion, that would mean they are accumulating at lower prices. If we see these same investors holding through dips and not panicking, then what we have here is a strong long-term play with a potentially not-so-volatility-prone asset.

Ethereum’s Spot ETF Inflows Signal Positive Market Sentiment

Shows that Ethereum is moving on a path toward significant global adoption. Performance in the ETF space is just one of many signaling mechanisms moving Ethereum this way. This ETF space performance, meanwhile, is in stark contrast to what’s happening with the Bitcoin ETF. Inflows to the Bitcoin ETF space have really dried up; they’re down about 36% over the past month. So, while something seems to be going on with the Bitcoin ETF in terms of maybe senderial performance, the Ethereum ETF is not just outpacing it at this point. Both are obviously still kind of small in the grand scheme, but Ethereum ETF inflows are up; Bitcoin ETF inflows are down.

The inflows from the Ethereum spot ETF are not only a sign of growing interest from institutions but also point toward a broader trend of Ethereum being seen as an investment vehicle. More and more capital is flowing into Ethereum-based financial products, which is further solidifying the idea that the Ethereum market is confident in the potential of the protocol and the assets that are based on it.

The Altseason Dilemma: Ethereum’s Critical Support Level

Yet, as analyst Ali Martinez sounds the alarm, the market could take a hit if Ethereum can’t hold its necessary support at $2,600. Martinez predicts that a dip under this level would call into question the long-awaited “Altseason” that has certain alternative cryptocurrencies, including Ethereum, doing well enough to make many people think they’ll outperform Bitcoin. That makes any retreating altcoin right now sound especially ominous when you consider Ethereum’s plummeting price could lead to a significantly larger retreat throughout the altcoin market.

As Altseason risks being interrupted, the attention is focused on Ethereum to keep its price above the $2,600 level. The $2,600 level is a key point for Ethereum’s price action and will probably play a large role in deciding if the altcoin market extends its rise or if it hits the brakes.

Ethereum’s Potential to Outperform Bitcoin in the Short Term

Even though Bitcoin is presently in a cooling-off phase, Ethereum is showing a surge of bullish energy that could take it past Bitcoin in short-term performance. Part of this is coming from the bullishness indicators, like rising taker buy-sell ratios, that we were discussing before. But there’s a lot more to it.

Bitcoin is still finding it hard to maintain reasonable buy-sell ratios and is losing investor interest, while Ethereum is attracting more and more attention and appearing as a viable investment option.

Currently, Ethereum has a strong support base around $2,632, and almost every day, it seems to be attracting even more institutional interest. I say it’s appearing as a viable option because in the short to medium term, Ethereum looks like it could keep pushing upward. So, is this a potential bull run for Ethereum?

To sum up, although the overall market is uncertain, Ethereum is not. Ethereum has a growing accumulation trend and a surging investor class that seems confident in its potential. At the same time, however, we must acknowledge that a downleg in the broader crypto market would not be good for Ethereum and could cut short its rally. At present, Ethereum has a critical level of support; if it holds here, we think the next obvious target for the ether-Bitcoin price ratio is at least a lower-high in the near term, if not a breakout to levels not seen since mid-2022.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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Source: https://nulltx.com/ethereum-gaining-ground-on-bitcoin-taker-buy-sell-ratio-and-cost-basis-trends-point-to-stronger-sentiment/