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Matrixport: Buy Bitcoin and wait, greed index has not reached a low point yet.

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Matrixport: Buy Bitcoin and wait, greed index has not reached a low point yet.

Matrixport analyst Markus Thielen suggests that Q1 will be a challenging quarter, as the Bitcoin greed and fear index has not reached the level for contrarian buying. BTC may experience a pullback to 38K, but Thielen remains optimistic about ETH as the next potential candidate for an upward trend.

Q1 Will Be a Challenging Quarter

Matrixport expects challenges in trading during the first quarter of this year. Trading volumes in Korea have dropped to the lowest levels since October, and Dogecoin has become the most active token in Korean trading. This indicates that even creative cryptocurrency investors have exhausted fresh ideas for fund allocation.

Looking at the top 88 tokens by market capitalization, only 24% have seen an increase this year, with Bitcoin down 2% and ETH up 8%.

Bitcoin Greed and Fear Index Still Below Buying Levels

Matrixport's Bitcoin Greed and Fear (G&F) Index is still below buying levels. In the past 18 months, two readings below 20% have been triggered at the marked red circles:

  • November 25, 2022, Bitcoin trading price at 17,000
  • September 6, 2023, Bitcoin trading price at 26,500

Both turned out to be excellent buying opportunities.

Expecting BTC to Retreat to 38K

As the Bitcoin Greed and Fear Index is still below buying levels, Thielen maintains his view that it's necessary to wait a bit longer and expects Bitcoin to pull back to 38K, possibly even in the range of 36K to 38K, which will be a painful trading range.

Currently, Bitcoin's 30-day realized volatility is over 52%, a few percentage points higher than the implied volatility of 46-48%. Maxtrixport expects it to drop to 30% in the next two months. This is why straddle options trading can be a winning strategy, even though it may not be as exciting as riding high-beta altcoins during a bull market.

Note: Straddle options refer to simultaneously buying or selling call and put options with the same strike price and expiration date. Selling options at this time can generate higher premiums due to the expected decrease in volatility.

Exercise Caution with Cryptocurrency-related Stocks, but Attractiveness is Gradually Emerging

The rise in the fourth quarter of last year was often driven by Oridinals, which is why Matrixport was bullish on Bitcoin mining companies and upcoming Bitcoin ETFs. However, the recent lower network fees have made Matrixport cautious about mining machines and issued a sell report at the end of December. Nevertheless, they are gradually becoming attractive compared to BTC's discount. According to their estimation, the fair value of the following cryptocurrency stocks relative to BTC is:

  • Marathon -40%
  • MicroStrategy -6%
  • Coinbase -34%
  • Riot -56%.

Currently Consolidating, Bull Market Will Continue

Thielen believes that the fifth bull market of this year will continue, and cryptocurrencies are currently in a consolidation phase. The stock market is reaching new historic highs. Uncertainty about the US interest rate cut has resurfaced, with the 10-year Treasury yield rising to 4.20%. He expects this to be a temporary headwind, with things likely to be resolved by March at the latest.

Focus on ETH's Rise

Thielen remains optimistic about the rise of ETH because Ethereum's revenue is much better than Bitcoin's revenue. From early to mid-December, Ethereum's weekly fees generated ranged from 86 to 88 million USD, but it has now dropped to 53 million USD (-38%), while Bitcoin fees have dropped from 97 to 102 million USD to only 26 million USD (-74%).

ETH gas fees have also dropped from 61 Gwei before and after the ETF approval to 13 Gwei, down from 78 Gwei in mid-December. This indicates that network activity is not congested as transaction volumes are below average. This is in contrast to BTC, where the number of transactions and tokens sent is relatively high, especially when fees are still low.

Currently, ETH has retraced to the breakout level of 2,400/2,440, and if 2,400 fails to provide sufficient support, the price may drop to 2,200. However, based on his prediction last week, ETH is expected to quickly rise to $3,000.

Matrixport Analyst: Short-term Bearish on BTC; ETH Will Rise to $3,000 Soon

Thielen TG Group: t.me/tenxresearch

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