TL;DR

• BTC is up & ETH is up

• BTC over-performed ETH this week 

• Bitcoin dominance is up

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

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BTC & ETH Market Update 📈

Crypto is up this week, with BTC up by 9.5% and ETH up by 4.0%:

Bitcoin dominance has increased over the week, starting from 54.4% to a high of 55.12% and ending at 54.5%. 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 has once again captured market attention by crossing the $100,000 milestone, trading at $102,048 after a strong 7% weekly gain.

This rally has been driven by a combination of favorable macroeconomic factors, robust market activity, and bullish sentiment from institutional players. Notably, a $500 million influx of stablecoins into Binance after encouraging Consumer Price Index (CPI) data highlights a shift in investor confidence.

The CPI data came in lower than anticipated, fueling optimism that inflationary pressures might be easing. This development coincides with increased speculative activity, as evidenced by Binance’s BTC reserves shrinking by over 63,000 since mid-August.

The inflows largely funded Bitcoin purchases, signaling robust demand and strengthening its position above the psychological $100K level.

Technical indicators further reinforce the bullish narrative. The Taker Buy/Sell Ratio has risen to 1.116, indicating that buyers are firmly in control. Meanwhile, the Funding Rate recently reached a monthly high of 0.0247, reflecting heightened long positions and positive market sentiment.

Bitcoin’s Stock-to-Flow Ratio, a widely watched scarcity metric, has also improved, suggesting strong accumulation behavior among long-term holders. These metrics collectively paint a picture of a market that remains firmly on the offensive.

Despite the optimistic outlook, some analysts caution that a near-term correction could test the $98,900 support level. This level has served as a critical area of buying interest and is likely to provide a foundation for further upside should a pullback occur.

On the upside, Bitcoin could target $105,000 if current momentum persists, with many speculating that regulatory clarity and institutional adoption could further bolster its price.

Broader financial market trends provide additional context to Bitcoin’s rally. The Federal Reserve’s recent decision to hold interest rates steady has spurred investor appetite for risk assets, as lower borrowing costs support speculative investments.

However, concerns about a slowing economy remain. The U.S. six-month Treasury yield has declined to its lowest level since late 2022, reflecting a flight to safety among cautious investors. Meanwhile, the U.S. dollar has strengthened, underscoring global concerns about economic stability and reinforcing Bitcoin’s appeal as a hedge.

Regulatory developments are also pivotal in shaping Bitcoin’s trajectory. The repeal of SAB 121 guidance, allowing banks to classify custodial crypto holdings as off-balance-sheet items, marks a significant step toward mainstream adoption.

Similarly, easing restrictions on retirement investments could unlock substantial capital inflows, creating a more favorable environment for Bitcoin within traditional financial systems.

Another key factor is the growing recognition of Bitcoin as a strategic reserve asset. While the idea of direct government purchases remains speculative, efforts to limit the sale of existing holdings could reduce market supply and strengthen its long-term value proposition.

Institutional participation, underpinned by a more favorable regulatory environment, could accelerate this shift, solidifying Bitcoin’s status as "digital gold."

As the broader macroeconomic and regulatory landscape evolves, Bitcoin’s ability to sustain its position above $100,000 will depend on continued investor confidence and demand.

While volatility is likely to persist, the fundamental drivers supporting Bitcoin’s ascent suggest that the market may be entering a new phase of maturity and adoption.

Ethereum (ETH) has faced an 11% correction over the past 30 days, trading near $3,515 after a recent 5.5% daily surge.

Key resistance at $3,500 remains pivotal, with analysts forecasting a potential rally to $4,100 if ETH breaks above $3,550 and holds. The Relative Strength Index (RSI) indicates room for further upside, remaining below the overbought zone.

Futures open interest has surged to an all-time high of 9 million ETH, reflecting increased institutional participation. A balanced funding rate suggests neutral market sentiment, leaving space for bullish moves.

Broader financial markets, bolstered by softer inflation data, anticipate Federal Reserve rate cuts in 2025, creating a favorable backdrop for risk-on assets like cryptocurrencies. Significant whale activity, including over $1 billion in ETH purchases, adds to the optimism.

With improving sentiment, growing institutional interest, and macroeconomic tailwinds, Ethereum’s outlook remains positive, setting the stage for potential gains in the weeks ahead.

Ethereum (ETHUSD) Analysis:

As of January 17, 2025, Ethereum is trading at $3,368.71, following a recent breakout above resistance at $3,300. Despite breaching the medium-term rising trend channel, the price remains supported by prior bullish momentum from an inverse head and shoulders formation. Immediate support lies near $3,153, while resistance is expected around $3,500. Negative volume balance suggests caution in the short term.

Bitcoin (BTCUSD) Analysis:

As of January 17, 2025, Bitcoin (BTC) is trading at $101,415. In the short term, support is at $99,000, with resistance breached, suggesting potential further gains. Medium-term analysis shows strong support at $92,000, with no resistance, aligning with a bullish trend. Long-term momentum remains positive, with support at $72,000 and no resistance, indicating sustained upward movement.

Expected Trading Ranges:

• Ethereum (ETH): Support at $3,153; Resistance at $3,500.

• Bitcoin (BTC): Support at $99,000; Resistance at $105,000.

Market Outlook:

Bitcoin maintains a robust technical outlook across all timeframes, supported by rising trends and strong investor sentiment. Short-term volatility may introduce challenges, but long-term projections favor continued upward momentum.

Investors should monitor support levels at $99,000, $92,000, and $72,000 while leveraging the lack of significant resistance for potential gains.

Ethereum shows mixed momentum, with recent resistance breakouts hinting at potential upside but negative volume balance and declining trend channel strength tempering optimism. Investors should watch for further confirmation of directional trends.

BTC/ETH ratio has seen an increase:

Over the past six days, the BTC to ETH rate has shown a general increase, rising from 28.96 ETH on Jan 12, 2025, to 30.92 ETH on Jan 18, 2025, reflecting an overall upward trend. Despite minor daily fluctuations, including a notable decline on Jan 15 (-2.42%), the overall movement indicates growth, with a total increase of approximately 6.8% during this period.

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Hot Coin: KAS 🔥

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

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

What is the project about?

Kaspa is a blockchain platform that combines a proof-of-work consensus mechanism with a blockDAG architecture, allowing multiple blocks to coexist in parallel.

This innovative structure addresses the high orphan rate found in traditional blockchains. Drawing inspiration from Bitcoin, Kaspa maintains core principles such as the PoW mining method, a deflationary economic model, and decentralized decision-making processes.

By implementing the GHOSTDAG protocol, Kaspa ensures secure operation, high block rates, and rapid confirmation times, positioning itself as a robust and scalable solution in the blockchain space.

Why is the project exciting now?

There are four main reasons why we feature this project in this week’s newsletter:

• Innovative Consensus Mechanism

• Scalability and High Block Rates

• Unique Monetary Policy

• 100 Million Block Milestone

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