Recent price corrections in Bitcoin and Ethereum have attracted market attention. According to analysis by 10x Research, multiple factors have influenced this, including the fragile market structure, the implementation of technological upgrades, changes in ETF fund flows, and the potential topping out of altcoins and meme coins.
The report predicts that Bitcoin may fall to $63,000 before recovering, and highlights the following reasons:
Firstly, in terms of market structure, 10x Research emphasizes the vulnerability of the Bitcoin market, noting that Bitcoin experienced an “outside day” where the price reached a new high but also fell below the previous day’s low within the same trading day. This extreme price behavior indicates market volatility and uncertainty, suggesting the possibility of a deeper and longer correction. 10x Research analysts are concerned about the future returns of Bitcoin, believing that it will become more volatile and unpredictable.
Although Bitcoin spot ETF inflows continue to be positive, the report points out that Bitcoin has failed to maintain its upward momentum during most of the US trading sessions. Instead, its price only rose in the few hours before the opening of US ETFs, mainly due to the confidence of BlackRock clients who continue to make purchases.
10x Research also notes that Bitcoin failed to rebound during the European trading session last night, which is the first time in a while. The pre-purchase of ETF by buyers seems to have disappeared, and with recent poor ETF inflows, there are concerns about the sustainability of ETF fund flows. Despite relatively low selling from Grayscale, the lack of market confidence has led to a sharp sell-off of Bitcoin during the Asian trading session.
On the other hand, Ethereum’s recent rise is mainly driven by expectations of the DenCun upgrade, but now it faces a test of its fundamental profitability. Although it has benefited from the DeFi summer and NFT boom, its current valuation seems to be detached from fundamentals. In addition, the DenCun upgrade is expected to primarily benefit layer 2 blockchains, which may dilute Ethereum’s profits unless transaction volume surges.
As for the prospects of Ethereum ETF approval, the report suggests that it is not very optimistic, estimating the probability of approval at only 30%. This uncertainty may drag down Bitcoin during the sell-off caused by the DenCun upgrade.
In addition to potentially dragging down Bitcoin, meme coins closely related to Ethereum may have reached a short-term peak, especially meme coins like Shiba (SHIB), which have seen explosive trading growth in the past 2-3 weeks. However, the decline in trading volume of Korean meme coins suggests that the meme coin frenzy of the past week may have reached its peak and indicates an upcoming market adjustment.
Furthermore, recent inflation data and cautious attitudes towards interest rate cuts from central bank officials have further impacted market sentiment.