Bitcoin and Ethereum attempting to break key resistance levels

ETH has outperformed BTC over the past seven days, shown by the ETHBTC ratio surging towards 2021 highs. ETH increased by 7% over the past seven days and has, similarly to BTC, been challenging a key resistance level at $2k. The upcoming merge has led to elevated trading activity for ETH, especially in the options market, where the open interest surpassed BTC’s for the first time in history. Crypto market participants continue watching big macro announcements like hawks. Last Wednesday, the July CPI came in at 8.5%. The stock and crypto markets rallied following the 0.2% lower than expected CPI release. Still, we have recently seen a decline in BTC’s correlation with the stock market. The crypto market sentiment is currently at a four-month high, as indicated by the Fear and Greed Index, and traders are increasingly comfortable getting exposure to smaller coins. Meme coins have been making a comeback, with Shiba Inu and Dogecoin surging by 33% and 26% over the past seven days. Ethereum continues stealing market share With half of August behind us, all indexes have seen positive returns. The Small Cap Index is the best performer with an 8% increase. Large Caps (+6%) and Mid Caps (+6%) follow closely behind, while bitcoin (+3%) has seen the least gains. Ethereum keeps outperforming the rest of the crypto market as traders are bullish on the smart contract platform’s upcoming transition to proof-of-stake. After increasing by 7% over the past seven days in an otherwise relatively flat crypto market, Ethereum managed to increase its market share by 0.9 percentage points. After several weeks of outperformance, Ethereum’s market share has increased from a bottom of 14.3% in the middle of June to 20.1% now. BTC’s market share plummeted from 47.5% to 40.1% during the same period. It’s evident that traders favor ETH over BTC right now. Ethereum also keeps stealing market share from other smart contract platforms in terms of total value locked on DeFi applications. Currently, 59% of the total value locked in DeFi is on Ethereum, indicating that DeFi participants are confident the merge will go as planned. The crypto market sentiment reaches a four-month high Optimism hasn’t been higher in the crypto market since early April, as indicated by the Fear and Greed Index. The index currently sits at 44, a massive improvement from the low of 6 in June. Even though the market sentiment has vastly improved, the market is still careful in declaring a roaring bull market just yet, as Fear and Greed levels below 50 indicate fearfulness. The bitcoin price has soared by 40% since this bear market’s bottom. Seeing such a high gain without the Fear and Greed Index visiting the greedy territory is highly unusual and indicates that market participants are skeptical that this bull market will last. Binance volume dominance sees further growth The bitcoin spot volume has increased over the last week, with Binance’s market dominance surging. In the last 7 days, Binance has accounted for nearly 90% of the bitcoin spot volume. While the removal of fees may attract wash trading to the platform, it’s also natural that active traders seek to trade bitcoin on Binance, given the reduced costs. While the fee removal on Binance has caused trading volumes to grow, the bitcoin trading volumes overall remain in a lull. Both derivatives and other spot venues see declining volumes, and the overall tendency seems to be a dampened activity in the market. Bitcoin continues to trade with little volatility The bitcoin price has stayed within the $23k to $25k range over the past seven days in one of its least volatile seven-day periods over the past year. Both the 7-day and the 30-day volatilities are sitting at remarkably low levels of 1.9% and 2.9%. Bitcoin’s seven-day volatility has not stabilized at such low levels since late March, and such low volatility environments tend to be short-lived in bitcoin, don’t be surprised if the market awakes from its temporary slumber shortly. This was our spot market update, but lots are happening in the derivatives markets as well! Click here to read our weekly crypto derivatives update.