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 $VIRTUAL

Latest & Greatest 📰

Before we dive into the market update, make sure to check the latest and greatest news across crypto:

Make sure to follow us on X for continuous updates about all things Crypto, Blockchain and Web3.

BTC & ETH Market Update 📈

Crypto is down this week, with BTC down by 4.6% and ETH down by 11.4%:

Bitcoin dominance has increased over the week, starting from 52.79% to a high of 56.04% 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’s correction deepened this week, falling 11% from its $108,360 peak to a low of $92,777 before stabilizing near $95,000.

Key support lies between $88,000 and $90,000, with further declines potentially targeting the 50-week EMA at $66,600 or the 0.786 Fibonacci retracement at $57,000. A recovery above $102,000 could reverse the bearish outlook, signaling a move toward $114,650.

Technical indicators remain mixed. Weekly RSI shows bearish divergence, resembling patterns from past major corrections, while an ascending triangle on shorter timeframes suggests potential upside if resistance at $102,000 is breached.

Spot selling pressure has surged, with realized losses hitting $28.9 million in the past five days, a level that often precedes market bottoms.

Broader market conditions add pressure. The Federal Reserve’s latest rate cut, coupled with forecasts for fewer reductions in 2025, has disrupted financial markets.

Stocks tumbled, with the S&P 500 and Russell 2000 experiencing sharp drops. Rising bond yields and a stronger U.S. dollar have dampened appetite for speculative assets like Bitcoin.

Analysts are divided. Some see the pullback as a healthy reset, predicting a bounce from $94,000, while others warn of further declines to $85,000.

A daily close above $95,000 is critical to restoring bullish momentum. Bitcoin’s next move will hinge on maintaining key support levels and broader macroeconomic signals.

Ethereum's (ETH) price has dropped significantly after failing to maintain the critical $3,500 support level, confirming a double-top pattern that could see the price decline further toward $3,000.

The loss of support triggered a cascade of liquidations, with over $299 million in positions wiped out, including $270 million in long positions, as futures traders turned bearish for the first time since early November.

Additionally, Ethereum's spot ETF market saw significant outflows on December 19, totaling $60.47 million, driven largely by Grayscale’s ETHE fund, which experienced its first-ever withdrawals.

This trend of investor de-risking is compounded by profit-taking from early holders and short-term speculators, as indicated by a rise in dormant coin circulation. Notably, the Ethereum Foundation’s sale of 100 ETH on December 17 coincided with the price drop, marking a successful top sale.

These factors, combined with a bearish crossover on the four-hour chart, have pushed ETH into oversold conditions, although a relief bounce remains possible in the short term.

Ethereum (ETH.CPT) Analysis:

As of December 20, 2024, Ethereum is trading at $3,395.41, having recently broken down through the support level at $3,670. The price is currently within a horizontal trend channel, signaling continued movement in the same direction. Immediate support is at $3,366, while resistance is at $4,000.

Bitcoin (BTCUSD) Analysis:

As of December 20, 2024, Bitcoin (BTC) is trading at $97,227. The short-term outlook is neutral, with support at $93,000 and resistance at $100,000. A break through either of these levels could signal the next directional move. In the medium term, Bitcoin has strong support at $70,000, and the price objective of $84,547 has been met, indicating potential consolidation or slight upward movement. The long-term trend remains bullish, with support at $71,000 and no immediate resistance, suggesting continued upward momentum.

Expected Trading Ranges:

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

• Bitcoin (BTC): Support at $93,000; Resistance at $100,000.

Market Outlook:

Bitcoin (BTC) is currently in a neutral short-term position, with potential for consolidation between $93,000 and $100,000. The medium-term outlook remains stable, with strong support at $70,000 and resistance at $106,000. Long-term trends remain bullish, with support at $71,000 and no immediate resistance.

Ethereum's outlook: The double top formation and low volume at price peaks are key bearish signals, indicating a potential further decline. Increased volume at price bottoms suggests weakness in the upward movement, raising the probability of a breakdown.

BTC/ETH ratio has seen an increase:

The BTC to ETH conversion rate has experienced a moderate increase over the past week. Starting from 26.23 ETH per Bitcoin on December 14, the rate gradually rose to 28.21 ETH on December 20. This represents an increase of approximately 7.5% during this period, with minor fluctuations along the way. Despite some daily variations, the overall trend has been upward, indicating Bitcoin's relative strength over Ethereum.

For deeper insights and updates on Bitcoin and Ethereum, make sure to subscribe to our Premium Newsletter.

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

Subscribe to WAGMI Premium to read the rest.