The crypto market has in recent weeks been uncharacteristically steady, according to cryptocurrency analyst Mads Eberhardt at Steno Research.
Yet the expert expects that will soon change with the crypto market seeing an increase in volatility, primarily marked by an overall upward trend.
“Over the past week, we have seen a positive turn in the net flow of Bitcoin spot ETFs although it has not reached the heights seen in early March,” says Eberhardt. “Coupled with decreasing exchange balances, these signs suggest a positive trend.”
On the other hand, however, an observed recent rise in the futures market's interest in Bitcoin and Ethereum, especially with Ethereum reaching a new peak last week, makes Eberhardt cautious. But he still thinks the market might go up, although this trend suggests a more volatile near future for cryptocurrency.
“The market correction that occurred a few weeks ago effectively cleared out significant excess leverage, leading to a notable reduction in open interest, particularly in Bitcoin and Ethereum futures. Remarkably, within just a few weeks, open interest rebounded to its pre-correction levels,” Eberhardt highlights.
“This resurgence is largely fueled by speculation on the long side, as evidenced by the shift in the funding rate towards even more positive territory. This indicates that investors holding long positions are prepared to pay a substantial premium to those on the short side to keep their positions open.”