Matrixport: Buying Bitcoin, Awaiting the Bottom, Greed Index Yet to Reach Low Point
Matrixport analyst Markus Thielen stated that Q1 will be a challenging quarter. The Bitcoin Greed and Fear Index has not yet reached the level for contrarian buying, and BTC may pull back to 38K. However, Thielen remains optimistic about ETH as the next potential candidate for a rise.
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Q1 will be a challenging quarter
Bitcoin Greed and Fear Index has not yet reached buying levels
Expect BTC to pull back to 38K
Exercise caution with crypto-related stocks, but attractiveness is gradually emerging
Currently in a consolidation phase, the bull market will continue
Focus on the rise of ETH
Matrixport expects challenges for trading in the first quarter of this year. Trading volume in Korea has dropped to the lowest level since early October, and Dogecoin has become the most active token in Korean trading. This indicates that even creative cryptocurrency investors have exhausted fresh ideas about where funds are going.
Looking at the top 88 tokens by market capitalization, only 24% have risen this year, while Bitcoin has fallen by 2% and ETH has risen by 8%.
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Matrixport’s Bitcoin Greed and Fear Index (G&F index) has not yet reached buying levels. In the past 18 months, readings below 20% have been triggered twice (indicated by the red circles):
November 25, 2022, Bitcoin trading price was 17,000
September 6, 2023, Bitcoin trading price was 26,500
Both turned out to be excellent buying opportunities.
Since the Bitcoin Greed and Fear Index has not yet reached buying levels, Thielen maintains his view that it needs more time and expects Bitcoin to pull back to 38K, or even the range of 36K to 38K, which will be a painful trading range.
Currently, Bitcoin’s 30-day realized volatility is over 52%, a few percentage points higher than implied volatility (46-48%). Matrixport expects it to drop to 30% in the next two months. This is why straddle options trading may be a winning strategy, even if it is not as exciting as riding high-beta altcoins in a bull market.
Note: Straddle options: Buying or selling both call and put options with the same strike price and expiration date. Selling options at this time can fetch higher premiums due to the expected decline in volatility.
The rise in the fourth quarter of last year was often driven by Oridinals, which is why Matrixport was bullish on Bitcoin mining companies and upcoming Bitcoin ETFs. However, recent lower network fees have also made Matrixport cautious about mining machines (issued a sell report at the end of December). However, they are gradually becoming attractive compared to discounts on BTC. According to their estimates, the fair values of the following crypto stocks relative to BTC are:
Marathon -40%
MicroStrategy -6%
Coinbase -34%
Riot -56%.
Thielen believes that the fifth bull market of this year will continue, and cryptocurrencies are currently in a consolidation period. The stock market is reaching new historical highs. Uncertainty about US interest rate cuts has emerged again, with the 10-year Treasury bond yield rising to 4.20%. He expects this to be a temporary headwind, with things being resolved by March at the latest.
Thielen remains bullish on ETH as its revenue is much better than that of Bitcoin. From early to mid-December, Ethereum generated fees of $86-88 million per week, which has now dropped to $53 million (-38%), while Bitcoin fees have dropped from $97-102 million to only $26 million (-74%).
ETH gas fees have also dropped from 61 Gwei before and after the ETF approval to 13 Gwei, down from 78 Gwei in mid-December. This indicates that network activity is not congested, as transaction volumes are below average levels. This is in contrast to BTC, where the number of transactions and tokens sent by ETH is relatively higher, especially when fees are still low.
Currently, ETH has dropped to the breakthrough level of 2,400/2,440. If 2,400 fails to provide sufficient support, the price may fall to 2,200. However, based on his prediction last week, ETH is expected to rise to $3,000 soon.
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Matrixport analyst: Short-term bearish on BTC; ETH will soon rise to $3,000
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BTC
ETH
G&F index
Markus Thielen
Matrixport
straddles
Further reading
Bitcoin falls to 41K, down 15% since ETF listing, support seen at 38K
Matrixport analyst: Short-term bearish on BTC; ETH will soon rise to $3,000
