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Ethereum’s Price Influenced by Derivatives Markets: A Glassnode Analysis

According to a comprehensive analysis by Glassnode, Ethereum’s pricing dynamics appear to be more significantly impacted by derivative markets—financial instruments that project future trends—and off-chain activities rather than direct buying and selling, which is a prominent factor for Bitcoin.

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Key Differences Between Bitcoin and Ethereum

Experts have focused on a crucial indicator known as the Cost Basis Distribution (CBD). This metric reveals the historical purchase price levels of a cryptocurrency, indicating where investors might respond by selling or buying again if prices revisit those levels.

• Bitcoin: During the rapid price surge in July, Bitcoin experienced a “gap” at certain price levels as it climbed rapidly. However, these levels were subsequently filled by new trades, highlighting continued robust demand in the spot market—direct purchases of BTC.
• Ethereum: Although Ethereum also witnessed price increases that created gaps, these were not filled when prices slowed down. This suggests that Ethereum’s price is more closely tied to external trading markets like derivatives, leading to more volatile and unpredictable movements.

Implications for Investors

In summary:

• Bitcoin: There is still substantial demand for direct purchases, indicating strong market fundamentals.
• Ethereum: The cryptocurrency seems more affected by speculation and complex financial instruments, implying a higher risk of sudden price fluctuations.

Additional Market Updates

Bitcoin, following its recent decline, is approaching a critical price level that reflects the average amount new investors have paid in approximately the last five months. Historically, when Bitcoin dips below this level, it often precedes a short-term weakness phase.

Meanwhile, Ethereum has decreased to $4,370, a 5% drop within a week.

Source: Trading View

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