TL;DR

• BTC is down & ETH is down

• BTC over-performed ETH this week 

• Bitcoin dominance is down

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

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BTC & ETH Market Update 📈

Crypto is down this week, with BTC up by 2.6% and ETH down by 0.6%:

Bitcoin dominance has increased over the week, starting from 55.5% to a high of 56.57% and ending at 55.4%. 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 is trading just below its all-time high, maintaining strong momentum above $100K despite minor corrections. 

Over the past week, BTC has consolidated within a tight range, fluctuating between $103,600 and $106,400, as traders anticipate a breakout toward $110K. Institutional demand remains a driving force, with U.S. Bitcoin ETFs now holding 1,163,377 BTC, or 5.87% of the total supply.

The sustained accumulation suggests long-term investor confidence, even as retail participation declines. While minor outflows occurred after BTC crossed $100K, overall sentiment remains bullish.

Futures markets indicate a balanced demand between longs and shorts, keeping perpetual funding rates near zero. This absence of excessive leverage suggests that the current rally is built on steady demand rather than speculative euphoria.

The Chicago Mercantile Exchange (CME) now commands 85% of the monthly Bitcoin futures market, reflecting increased institutional interest.

Open interest in CME’s BTC futures has reached $18.6 billion, offering a regulated gateway for hedge funds and investment banks. Meanwhile, spot Bitcoin ETFs have amassed over $120 billion in assets under management, further strengthening market liquidity and price discovery.

Technical indicators point to a crucial moment for Bitcoin’s price trajectory. BTC has maintained a 4-hour uptrend since Monday, signaling sustained bullish pressure. Analysts emphasize the importance of holding $103,600 as short-term support, as a break below this level could lead to consolidation between $100K and the all-time high.

Conversely, a push beyond $106,400 could trigger a surge past ATH, likely sparking a wave of new buying momentum. The 25% delta skew metric, which measures options market sentiment, currently sits at -5%, reflecting moderate optimism without excessive greed.

The broader macroeconomic landscape also plays a role in shaping Bitcoin’s price action. The U.S. Federal Reserve’s optimistic outlook on economic growth has provided support for risk assets, including cryptocurrencies.

However, investors remain cautious about geopolitical and economic uncertainties. U.S. President Trump’s proposed 25% tariffs on Canada, Mexico, and China could impact global trade, potentially influencing investor sentiment.

Additionally, concerns over slowing revenue growth in major tech firms, particularly Apple, have fueled uncertainty in equity markets. The rise of China’s DeepSeek AI model has also raised questions about future capital expenditures in the U.S. tech sector.

Despite these uncertainties, Bitcoin’s ability to hold key levels suggests underlying strength. Institutional investors continue to increase their exposure through ETFs, and the futures market remains stable, avoiding the leverage-driven volatility seen in previous cycles.

The recent $500 million investment in BTC by Norway’s sovereign wealth fund highlights the growing mainstream acceptance of Bitcoin as a store of value.

If Bitcoin clears its all-time high, it could enter a price discovery phase, with $110K as the next psychological target. However, failure to sustain $100K may lead to a period of sideways trading before the next leg of the bull cycle.

Traders are closely monitoring whether BTC can maintain its current uptrend, as the next few days could determine the direction of the market. The lack of excessive bullish sentiment in derivatives suggests a more sustainable rally, but macroeconomic factors could introduce unexpected volatility.

Bitcoin remains in a strong position, with institutional adoption providing a solid foundation for future growth.

Ethereum ended January down 3.5%, trading around $3,250, lagging behind Bitcoin and altcoins like Solana and XRP. Despite this underperformance, analysts see strong potential for a February recovery, driven by key technical factors and institutional accumulation.

The recent pullback saw ETH form liquidity lows near $3,000 before rebounding above $3,400. While the price has yet to break its recent higher low at $3,430, analysts suggest a confirmed breakout could set the stage for a rally toward $4,000 and beyond. Ethereum has also broken out of a falling wedge pattern, a historically bullish signal.

A major catalyst behind the renewed optimism is the SEC’s approval of Bitwise’s dual Bitcoin-Ethereum ETF, accelerating the process from 240 days to just 40. This follows strong inflows into spot ETH ETFs, with BlackRock’s ETHA leading at $79.9 million. However, the Grayscale Ethereum Trust continues to see outflows, losing $40.3 million.

Another key driver is World Liberty Financial (WLFI), a DeFi protocol linked to Donald Trump, which has been aggressively accumulating ETH since November.

With 63,219 ETH purchased—worth $200 million—analysts believe WLFI’s buying pressure could propel ETH toward $4,500 in February. Historical trends also support this outlook, as Ethereum has averaged a 17% gain in February over the past eight years.

Despite these bullish factors, Ethereum continues to underperform against Solana, whose lower fees and faster transactions are attracting retail adoption. The SOL/ETH pair has surged over 1,000% since December 2022, underscoring Ethereum’s struggle to reclaim its 2021 highs.

Analysts emphasize that ETH must hold above $2,100 to maintain its bullish structure. If this support holds, February could mark the beginning of a strong rally, potentially pushing ETH past $4,000 and into price discovery.

Ethereum (ETHUSD) Analysis:

As of January 31, 2025, Ethereum is trading at $3,217.61, approaching key resistance at $3,340. The price remains within a horizontal trend channel, indicating continued consolidation. While the inverse head and shoulders breakout at $2,607 has met its $3,153 target, a breakout above $3,340 could signal further gains. However, weak volume balance and high volatility suggest a potential pullback.

Bitcoin (BTCUSD) Analysis:

As of January 31, 2025, Bitcoin (BTC) is trading at $104,002, down 1.29% for the day. The short-term outlook remains weak positive, with support at $102,000 and resistance at $106,000. A breakout from this range could determine the next move. In the medium term, Bitcoin continues in an upward trend, but negative volume balance suggests weakening momentum. The long-term trend remains strongly bullish, with support at $72,000 and no major resistance, indicating potential for further gains.

Expected Trading Ranges:

• Ethereum (ETH): Support at $3,153; Resistance at $3,340.

• Bitcoin (BTC): Support at $102,000; Resistance at $106,000 (Short-term).

Market Outlook:

Bitcoin’s market shows mixed signals. Strong institutional inflows support bullish momentum, but macroeconomic risks and on-chain indicators suggest a potential correction below $100K. A breakout above $110K remains possible, but caution is advised as market conditions stabilize.

Ethereum (ETH) is poised for a recovery, driven by institutional inflows and strong support from ETFs. Analysts expect ETH to reach $4,500 by February, with a breakout above $3,430 potentially triggering further gains into Q2 2025.

BTC/ETH ratio has seen an increase:

In the last 6 days, the BTC to ETH conversion rate has generally decreased. The rate dropped from 33.27 ETH per BTC on Jan 29 to 31.09 ETH on Feb 1, with fluctuations in between, including a slight increase on Jan 28. The overall trend indicates a downward shift of about 6.18% over this period, with notable decreases on Jan 31 and Feb 1.

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Hot Coin: $XCN🔥

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

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

What is the project about?

Onyxcoin (XCN) is a decentralized digital asset on the Ethereum blockchain, serving as the governance and utility token for the Onyx Protocol.

Designed for decentralized finance (DeFi), the Onyx Protocol enables peer-to-peer lending and borrowing of various digital assets, including ETH, ERC-20 tokens, and NFTs like ERC-721 and ERC-1155. Users can supply or borrow assets through a unified balance, secured by non-custodial smart contracts.

By allowing NFTs as collateral, Onyxcoin (XCN) expands borrowing capabilities, reinforcing its role in decentralized finance and digital asset liquidity.

Why is the project exciting now?

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

• Onyx XCN Ledger & Upcoming Whitepaper

• New Exchange Listings & Leverage Trading

• Potential Binance Listing & Market Expansion

• Strengthened Governance with HTX & Justin Sun

Subscribe to WAGMI Premium to read the rest.