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Following the spot listing of Bitcoin ETFs, the cryptocurrency market suffered a sharp correction, with the market cap falling from $1.82 trillion to $1.66 trillion. As Bitcoin's dominance fell below 50%, altcoins like Ethereum saw a surge.
The price of bitcoin has fluctuated sideways about $42,500 this week, with traders attempting to buy below $40,000. However, analysts believe that the short-term effects of the establishment of a Bitcoin ETF will soon come to an end.
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Why Today's Crypto Market Is Down
Volumes of trading in all cryptocurrencies decreased as a result of volatility, earnings season, and macro issues. Strong US currency pushing up Bitcoin prices. The US dollar index (DXY), which was trading at 101 in early January, now trades above 103.50.
Nonetheless, recent macrodata and Coinglass data show that the pressure to sell Bitcoin is progressively decreasing. Over $100 million was liquidated in the cryptocurrency market in the last day, with 75% of long positions and 25% of short positions. Ethereum saw a $20 million liquidation and Bitcoin recorded a $22 million liquidation. The trend is shifting, though, as short liquidations have increased during the past 12 hours.
The volatility level of Bitcoin has reached a new low in the last month, with notable drops in both key terms RV and IV and a sharp drop in short-term IV to below 45%.
The impact of the spot Bitcoin ETF is essentially over in the short term, based on data from futures and options. Traders find the financing rate appealing, and buying will soon begin. In the recent four hours, there has been a rise in both BTC futures and options open interests (OI). The total open interest in Bitcoin futures, which includes CME, Binance, and Coinbase, has increased by 0.35% to $18.31 billion. This indicates that the market is rebounding.
On the other hand, Ethereum's open interest (OI) decreased by more than 2% in the previous day, amounting to a total of $8.85 billion. But prices are starting to rise again for Solana and XRP OI, suggesting that a recovery is possible.
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Bitcoin and Cryptocurrencies Seem Exciting
For the upcoming 12 to 18 months, the cyclical nature of Bitcoin's risk-adjusted returns appears positive, according to well-known analyst Crypto Birb. If past trends hold true, he believes it is extremely bullish to hold Bitcoin after the fourth halving until 2026.
Leading trader and expert Michael van de Poppe stated, "People have a negative outlook and are bearish on Bitcoin." Be not like that. Purchase the dip and hang onto it.
Right now, the price of Bitcoin is $42,745. $42,189 is the 24-hour low and $42,880 is the 24-hour high. The amount of activity is still modest in front of Friday's expiration. As Bitcoin continues to rise, other cryptocurrencies will experience a decline, with Ethereum's open interest showing the first signs of decreasing.