TL;DR

• BTC is down & ETH is down

• BTC over-performed ETH this week 

• Bitcoin dominance is up

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

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BTC & ETH Market Update 📈

Crypto is down this week, with BTC down by 3.7% and ETH down by 9.5%:

Bitcoin dominance has increased over the week, starting from 53.2% to a high of 54.49% and ending at 54.4%. 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 recently dropped to $92,000, its lowest since December 2024, amid a broader market correction. The dip was driven by economic data and uncertainty around the Federal Reserve’s rate decisions. Despite concerns, key on-chain metrics suggest the worst may be over, signaling a potential recovery.

The Spent Output Profit Ratio (SOPR) dropped to 0.98, indicating short-term holders are selling at a loss. Historically, SOPR values below 1 have signaled market bottoms, followed by price rebounds. A similar drop preceded Bitcoin’s 62% rally in 2024, reinforcing the idea that the recent dip could be a buying opportunity.

Additionally, the entity-adjusted dormancy flow, which tracks market capitalization and dormancy value, fell below 250,000. This level has historically marked strong buy zones, with previous dips leading to bull markets, such as Bitcoin’s rise to $69,000 in 2021.

Long-term holders (LTHs) have slowed their profit-taking. The current rate of LTH distribution has peaked, which often signals a shift to accumulation and a potential bottom. This reduction in selling pressure supports a more stable market outlook.

The broader financial market also plays a role. The Federal Reserve’s rate decisions and strong stock market performance have helped maintain risk-on sentiment, benefiting Bitcoin. Speculation about U.S. government Bitcoin sales has been largely dismissed, reducing market fears.

Investor sentiment has shifted from “greed” to “neutral,” according to the Crypto Fear & Greed Index. Historically, this shift has preceded price recoveries. Institutional investors have continued buying Bitcoin, with over 34,000 BTC accumulated since December, reflecting long-term confidence in Bitcoin’s value.

While a drop below $90,000 remains possible, these indicators suggest a potential V-shaped recovery. With key on-chain signals and sustained institutional interest, Bitcoin could regain its momentum and target levels above $100,000 in the coming months.

Ethereum’s price correction to $2.8K amid broader market turbulence has positioned the asset near critical support levels. Following a 20% decline from $4K, the $2.8K zone serves as a key support within a bullish flag pattern, with analysts projecting a potential rally toward $6K or even $7K if this level holds. A drop below $2.8K, however, could lead to further declines.

Short-term activity around $3K indicates a potential reversal, with increased trading volumes and active addresses hinting at renewed investor interest. Despite a rise in exchange outflows, signaling profit-taking, 76% of Ethereum holders remain profitable, bolstering long-term confidence.

This correction aligns with broader macroeconomic uncertainties, including Federal Reserve rate decisions and stock market volatility. Tightening monetary policies have weighed on risk assets, but Ethereum’s network fundamentals and adoption rates suggest resilience. The upcoming weeks will test its ability to rebound and reclaim bullish momentum.

Ethereum (ETHUSD) Analysis:

As of January 10, 2025, Ethereum is trading at $3,254.38, having recently broken the support level at $3,300. This indicates a potential decline in the short term. The volume balance is negative, reinforcing the weakness in the price action. However, positive RSI divergence suggests a possible upward reaction. Immediate support is at $3,200, while resistance is at $3,500.

Bitcoin (BTCUSD) Analysis:

As of January 10, 2025, Bitcoin (BTC) is trading at $93,846. The short-term outlook is bearish, with support at $92,354 and resistance at $98,000. A break below support could signal further decline. In the medium term, Bitcoin shows neutral development, with support at $70,000 and resistance at $106,000, indicating potential consolidation. The long-term trend remains positive, with support at $72,000 and no immediate resistance, suggesting continued upward momentum.

Expected Trading Ranges:

• Ethereum (ETH): Support at $3,200; Resistance at $3,500.

• Bitcoin (BTC): Support at $92,354; Resistance at $98,000.

Market Outlook:

Bitcoin’s recent drop to $92,000 suggests a potential bottom, supported by key metrics like SOPR and dormancy flow indicating recovery. Institutional buying and reduced selling from long-term holders add confidence. While a dip below $90,000 is possible, a V-shaped recovery toward $100,000 or higher is expected in the near term.

Ethereum faces short-term weakness after breaking key support levels. While the negative volume balance suggests further downside potential, positive RSI divergence could lead to a temporary rebound. Investors should monitor $3,200 for support and $3,500 for resistance in the near term.

BTC/ETH ratio has seen an increase:

In the last six days, the BTC to ETH conversion rate has generally increased. Starting from 26.83 ETH per BTC on Jan 4, 2025, it rose to 28.97 ETH on Jan 10, 2025, marking a 1.95% increase overall. While there were fluctuations, including slight daily changes, the overall trend has been positive, with most of the days showing an upward movement in the rate.

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Hot Coin: WAGMI 🔥

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

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

What is the project about?

WAGMI is revolutionizing content creation in the crypto space with its AI agent and $WAGMI token.

The AI agent will take on an increasingly central role in producing content across various platforms, including X, newsletters, podcasts, and YouTube. It will begin as a co-pilot, supporting human creators, and gradually lead content production as its capabilities grow.

The $WAGMI token, launched on Base, empowers the community by providing equal opportunities for all holders, with profits reinvested into acquiring more tokens. This model aligns long-term growth with community interests, positioning WAGMI for sustained success.

WAGMI is reshaping how crypto content is created, managed, and shared, offering a scalable and community-driven ecosystem.

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:

• AI-Powered Content Creation

• Scalability

• Diversified Revenue Streams

• Rewards for Contribution and Use

Subscribe to WAGMI Premium to read the rest.