Market Wrap: Bitcoin Outperforms as Traders Prepare for Next Leg Higher

Bitcoin’s rally faded on Tuesday, suggesting that buyers took some profits at around the $68,500 all-time price high.

The cryptocurrency is up about 5% over the past week, compared with a 3% rise in ether over the same period.

Despite a short-term pullback, some analysts are maintaining upward price targets for both BTC and ETH over the next month.

“There is a positive sentiment that often engulfs the crypto markets toward year’s end,” Galina Likhitskaya, vice president at smart contract audit company HashEx, wrote in an email to CoinDesk. Likhitskaya has a price target around $80,000 for BTC by the end of the year, and a $5,500 target for ETH during the same period. ETH is currently at $4,777.

“Analysts are suggesting $75,000 as a target on the upside, but if the price takes a turn downwards the price could fall to the 50-day moving average at around $56,000,” Jonas Luethy, a trader at the U.K.-based digital asset broker GlobalBlock, wrote in an email to CoinDesk.

“Bitcoin is oversold versus ether, and likely to see short-term outperformance as cryptocurrencies digest their gains in a consolidation phase,” Katie Stockton, managing partner at Fairlead Strategies, wrote in a research report.

“The uptick to multi-day highs in BTC/ETH likely signals a switch to better relative outperformance in bitcoin to ethereum, but more is needed to confirm this move,” Mark Newton, head of technical strategy at FundStrat wrote in a research report.

Overall, analysts agree that BTC’s breakout to an all-time high could signal the start of a final leg higher this quarter. However, cryptocurrencies could see a “more pronounced consolidation into next year,” Newton wrote.

The number of open contracts on the Chicago Mercantile Exchange (CME) is down 32% from its Oct. 25 peak, which could indicate reduced institutional presence in the bitcoin futures market at the moment, according to Arcane Research.

The surge in bitcoin futures open interest, or total number of outstanding derivative contracts, over the past month coincided with the launch of the first bitcoin futures-based exchange-traded fund (ETF) introduced by ProShares, trading under the ticker BITO. “Now, the open interest has declined substantially, particularly when subtracting the BITO contribution,” Arcane wrote in a research report.

Some analysts expect recent market hype surrounding ETFs to fade, at least until a spot bitcoin ETF is approved sometime next year.

So far, BITO has lagged behind BTC’s price rally since inception. The ETF launch contributed to bitcoin’s previous all-time price high around $66,900 on Oct. 20.

Digital asset products saw inflows totaling $174 million last week, bringing year-to-date (YTD) inflows to $8.9 billion. This is a significant increase from the $6.7 billion pumped into digital assets in 2020.

Total assets under management (AUM) have also reached an all-time high of $80 billion, with bitcoin and ether leading the chart with roughly $53 billion and $20 billion, respectively.

Inflows in bitcoin-focused funds totaled $95 million last week, with a year-to-date record of $6.4 billion invested in the largest cryptocurrency by market capitalization. Meanwhile, funds focused on ether saw inflows of $31 million last week.

Most digital assets in the CoinDesk 20 ended the day higher.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

Notable losers:

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