The cryptocurrency market is showing signs of a potential shift in risk appetite, according to an article by Sidhartha Shukla and Ryan Weeks published by Bloomberg News on April 5, 2024. The article points out that the price ratio between Bitcoin, the world’s largest digital asset, and Ethereum, the second-largest cryptocurrency, has apparently reached its highest level since April 2021, suggesting that investors may be favoring the more established Bitcoin over its smaller rival.
The Bitcoin-to-Ethereum ratio, which recently surpassed 20, could be an early indication that the fear of missing out (FOMO) in the crypto market is transforming into genuine fear, as per the Bloomberg article. Bloomberg also mentions that QCP Capital, a crypto asset trading company, noted in a report that if Ethereum is considered a proxy for sentiment toward smaller tokens, this pattern might signal a waning risk appetite among investors.
On Thursday, Bitcoin hit an all-time high of $73,794, driven by a surge of inflows into spot US exchange-traded funds (ETFs) that launched in January, according to Bloomberg. However, the token has since pulled back approximately 9% as ETF demand has cooled. In comparison, various altcoins have experienced an even more significant decline of around 20% over the same period, as reported by Bloomberg News.
Bloomberg went on to say that the potential top in Bitcoin, coupled with investors’ diminishing appetite for cryptocurrencies, could have implications beyond the crypto market. Strategists at Stifel Nicolaus & Co., including Barry Bannister, suggested in a note that a weakening crypto market might signal a weaker stock market.
As crypto traders await the four-yearly Bitcoin halving event (expected around April 20), which reduces the new supply of the BTC, doubts have emerged about whether the halving will live up to its reputation as a bullish development. The halving has historically been associated with price increases, but the current market sentiment has cast uncertainty on its potential impact, Bloomberg reported.
At the time of writing (10:30 a.m. UTC on April 5), Bitcoin and Ethereum are trading at around $66,822 (up 0.6%) and $3,269 (down 2.4%), respectively.
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