TL;DR

• BTC is up & ETH is up

• BTC under-performed ETH this week 

• Bitcoin dominance is down

• The hot coin we look at this week is $VIRTUAL

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BTC & ETH Market Update 📈

Crypto is down this week, with BTC down by 3.9% and ETH down by 8.0%:

Bitcoin dominance has decreased over the week, starting from 54.45% to a high of 54.48% and ending at 53.14%. Investor sentiment, regulatory changes, technological advancements, and the overall growth of the cryptocurrency sector shape Bitcoin's market dominance. Its reputation as "digital gold" also enhances its position, making it a key player in the market.

It’s going to be interesting to see whether this trend will continue in the short term, as capital in crypto tends to flow initially to BTC and then further out on the risk-curve, starting with altcoins like ETH and then into mid- or low-cap coins.

Bitcoin is experiencing a correction after nearing $97,000, currently trading around $94,000. This pullback reflects broader risk-off sentiment in global markets and could represent a consolidation phase, though further downside risks persist.

Technically, Bitcoin faces resistance at the 50-day SMA near $96,740, with overbought signals from the stochastic RSI suggesting potential for more declines. Key support lies at the 200-period EMA around $92,500; a drop below could push prices to $90,000 or even $80,000, a level increasingly seen as a buying zone.

Macroeconomic pressures are weighing heavily on risk assets. The Federal Reserve’s hawkish stance on interest rates amid persistent inflation has strengthened the U.S. dollar, pressuring Bitcoin. Meanwhile, global growth concerns, particularly in China, and U.S. job market uncertainty add to investor caution.

ETF outflows highlight waning institutional demand. BlackRock’s iShares Bitcoin Trust saw record outflows of $333 million on January 2, marking a clear shift in sentiment. This trend underscores reduced confidence in ETFs as a primary driver of Bitcoin’s price.

Despite these challenges, Bitcoin’s fundamentals remain strong. The network hashrate hit a record 1,000 EH/s, signaling miners’ confidence in its long-term prospects. Analysts suggest a decisive move above $98,000 could reignite bullish momentum.

In the current environment, traders are advised to monitor key levels and remain cautious amid market volatility. Many view the $80,000 zone as a strategic entry point for the next upward cycle, balancing short-term risks with long-term potential.

Ethereum (ETH) rose 3.40% today, nearing $3,500, as Bitcoin dominance dropped below 58%, signaling renewed interest in altcoins. The move aligns with broader market optimism, fueled by speculation of a potential Federal Reserve pause on interest rate hikes as inflation cools. Stock market gains added to the positive sentiment.

Technically, Ethereum is forming a bullish ascending triangle, with key resistance at $3,500. A daily close above this level and the 50-day, 100-day, and 200-day EMAs could push ETH toward $3,850 or $4,000. Rising funding rates and declining exchange reserves highlight strong demand from both spot and futures markets, reinforcing bullish momentum.

Ethereum (ETHUSD) Analysis:

As of January 3, 2025, Ethereum is trading at $3,455.71, having met the objective at $3,366 following a breakout from a double top formation. The price is currently within a rising trend channel, signaling continued optimism. Immediate support is at $3,300, while resistance is at $4,000. However, the negative volume balance could indicate a potential trend reversal.

Bitcoin (BTCUSD) Analysis:

As of January 3, 2025, Bitcoin (BTC) is trading at $96,754. The short-term outlook is negative, with Bitcoin testing resistance at $98,000. A breakthrough could signal an upward move, but volume trends indicate potential weakness. In the medium term, Bitcoin remains in a rising trend channel, with support at $70,000 and resistance at $106,000. The price objective of $84,547 has been reached, but the trend shows potential for consolidation or slight upside. The long-term trend remains positive, with support at $72,000, suggesting continued upward momentum.

Expected Trading Ranges:

• Ethereum (ETH): Support at $3,366; Resistance at $4,000.

• Bitcoin (BTC): Support at $92,364; Resistance at $98,207.

Market Outlook:

Bitcoin (BTC) shows mixed short-term signals with potential resistance at $98,000. Medium and long-term trends remain positive, supported by strong levels at $70,000 and $72,000. Investors should monitor key levels for possible price movements.

Ethereum shows strong bullish momentum, but a negative volume balance suggests caution. Support at $3,300 and resistance at $4,000 indicate potential short-term volatility. Investors should watch for signs of trend reversal.

BTC/ETH ratio has seen a decrease:

In the last 6 days, the BTC to ETH rate has generally decreased. The rate dropped from 28.18 ETH on January 1, 2025, to 27.29 ETH on January 4, 2025, with fluctuations in between, including a slight 0.28% increase on January 4. Overall, the trend shows a reduction in Bitcoin's value relative to Ethereum over this period, with the rate experiencing daily declines, except for minor increases.

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Hot Coin: VIRTUAL 🔥

In this week’s newsletter, we dive into Virtuals Protocol’s token with the ticker: $VIRTUAL.

The price action and volume have been growing consistently and don’t seem to stop any time soon:

What is the project about?

Virtuals Protocol is building the co-ownership layer for AI agents in gaming and entertainment.

These AI agents are productive, revenue-generating assets with advanced capabilities, such as autonomous planning, multimodal communication, and interacting with virtual and real-world environments.

By tokenizing these agents on the blockchain, Virtuals Protocol enables decentralized co-ownership, opening new opportunities for creators, gamers, and AI enthusiasts.

Users can deploy AI agents seamlessly across platforms like Roblox and TikTok, while contributors to AI fine-tuning and datasets earn ongoing rewards through on-chain provenance.

Virtuals Protocol is democratizing access to the future of AI-powered entertainment and gaming economies.

Why is the project exciting now?

There are four main reasons why we feature this project in this week’s newsletter and look at it as an attractive buy right now:

• Co-Ownership of AI Agents

• Accessible and Inclusive Participation

• Cross-Platform Engagement and Utility

• Rewards for Contribution and Use

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