The path forward for these three major tokens is becoming increasingly difficult to predict.
Regarding large caps cryptocurrencies are concerned, Bitcoin (BTC -1.94%), Ethereum (ETH -2.50%)And Dogecoin (DOGE -4.98%) remain three of the most closely watched digital assets by investors, especially after the post-election rally these particular tokens experienced. Each of these three major crypto projects has seen significant gains over the past three weeks, although some selling pressure began to build today for these top 10 projects. As of 3 p.m. ET, Bitcoin, Ethereum, and Dogecoin are down 3.1%, 5.1%, and 5.6%, respectively, over the past 24 hours.
Now, it’s worth keeping Bitcoin’s outperformance against Ethereum and Dogecoin in context. This recent surge in Bitcoin drove the world’s largest cryptocurrency to new all-time highs last week (nearly surpassing the key price level of $100,000 per token, before giving up some of those gains in recent days) . Today’s decline puts the crypto world leader around $93,000 per token at the time of writing, with Ethereum and Dogecoin still 32% and 48% off their all-time highs, respectively.
Today let’s take a look at what’s driving the current selling pressure for these important crypto indicators.
Selling pressure coming from all sides
The decline of Bitcoin today appears to have triggered a larger sell-off in many digital assets. Indeed, whatever direction Bitcoin tends to take in the near term, most other speculative assets in this space tend to follow, and today is no different.
Recent reports that spot Bitcoin ETFs saw their third largest single-day outflow yesterday suggest that institutional money that may have flowed into the asset earlier this year is looking to take some profits off the table. Retail investors also appear to be following suit, with a number of prominent crypto experts pointing out that selling activity akin to profit-taking is noticeable on a number of major exchanges.
Interestingly, Ethereum has also seen net outflows over the past week (according to CoinGlass data).)which suggests that a number of investors may be reconsidering their position sizes and risk management following the incredible rally of these two major tokens. Additionally, with liquidation data being relatively balanced for Bitcoin but tilted towards leveraged short bets on Ethereum and Dogecoin, there may be indications that short-term selling pressures could ease as these positions unravel.
Today’s price action for Dogecoin should come as no surprise, given the high level of correlation typically seen between this speculative meme token and Bitcoin and Ethereum. Although various political catalysts have supported Dogecoin’s recent rally (Trump’s victory, and by extension Elon Musk’s proliferation in the political sphere, propelled Dogecoin higher after the election), it is also true that Dogecoin generally trades with much greater volatility than Bitcoin and Ethereum. . This means that in days like today, investors need to prepare for outsized bearish moves, which we are seeing once again.
What to think of the current decline
As mentioned, there is some interesting liquidation data that suggests that (at least for Ethereum and Dogecoin) the current selling pressure could perhaps be coming to an end. As leveraged short bets become increasingly closed off, new capital looking to bet on the directional movements of these volatile assets may be reset, meaning the ultimate direction in which each of these three tokens is heading is uncertain at the moment.
We’ll have to see how the net inflow/outflow data comes in for the spot ETFs in the coming days, and I’ll be paying close attention to liquidation activity as well as various usage metrics for these three networks over time. time. For now, it appears that the speculative frenzy in crypto assets is running out of steam, at least in the short term. But with strong election-related tailwinds still supporting this sector, investors looking for entry points may view this more recent decline as a buying opportunity. So I wouldn’t be surprised to see another rally coming out of this consolidation. phase.