KEYTAKEAWAYS
- Santiment: ETH Profitable Addresses Hit New Low, Market Turns Bearish
- SEC Delays Decision on BlackRock’s Ethereum ETF Options
- Federal Reserve Cuts Balance Sheet by $2 Trillion
CONTENT
SANTIMENT: ETH PROFITABLE ADDRESSES HIT 4-MONTH LOW, MARKET SENTIMENT TURNS BEARISH
On February 8, crypto research firm Santiment reported that Ethereum’s market value has dropped 36% from its local high seven weeks ago. This decline has significantly reduced the number of profitable ETH addresses. Based on daily closing data, the percentage of profitable ETH addresses has hit a 4-month low, while the number of profitable tokens is at a 3-month low.
As the second-largest cryptocurrency, ETH has been underperforming compared to other major coins, and overall market sentiment is turning negative. Santiment pointed out that fear, uncertainty, and doubt (FUD) are dominating the market, with retail investors continuing to sell. However, if the market stabilizes, Ethereum could see a surprising rebound.
Analysis
Ethereum’s recent drop has hurt many investors, especially those who were optimistic about the ETH spot ETF. However, from another perspective, increased fear often means that selling pressure is being released, which could indicate a potential market bottom. Historically, ETH has often rebounded strongly after major declines.
Additionally, Ethereum still has long-term strengths in Layer 2 development, staking, and institutional interest. In the short term, volatility may continue, but if the overall crypto market stabilizes, ETH could experience an oversold bounce. For long-term holders, this kind of sharp decline might be a good time to watch for potential buying opportunities.
SEC DELAYS DECISION ON BLACKROCK’S ETHEREUM ETF OPTIONS TO APRIL 9
On February 8, the U.S. Securities and Exchange Commission (SEC) announced that it is postponing its decision on BlackRock’s Ethereum ETF options. The new deadline is April 9. In its statement, the SEC said:” The Commission believes it is appropriate to take more time to consider the proposed rule change and the issues it raises.”
Analysis:
Compared to spot ETFs, ETF options provide more trading tools, increase market liquidity, and attract more institutional investors. If approved, Ethereum ETF options would allow traders to use leverage and hedging strategies, deepening the market but also increasing short-term volatility.
Looking at Bitcoin’s experience, the launch of BTC spot ETFs led to a rise in Bitcoin options trading, boosting market activity. Similarly, approval of ETH ETF options could have a significant impact on Ethereum’s price and sentiment. In the short term, the delay creates more uncertainty, but in the long run, it is another step toward integrating crypto with traditional finance.
FEDERAL RESERVE REDUCES BALANCE SHEET BY NEARLY $2 TRILLION
On February 8, the U.S. Federal Reserve released its semiannual monetary policy report, confirming its continued reduction of U.S. Treasury and agency securities. Since June 2024, it has cut holdings by $297 billion, with total reductions reaching nearly $2 trillion. The Fed also signaled that balance sheet reductions may slow or stop once reserves reach a sufficient level.
Analysis: Market Impact
Balance sheet reduction (QT) drains liquidity from the market, putting pressure on stocks, bonds, and crypto. However, the Fed is now slowing QT, which could ease financial conditions. If tightening ends soon, asset prices may stabilize or rebound.
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