Cryptocurrency analytics firm Alphractal has observed a shift in market sentiment, noting a decrease in risk appetite for major digital assets such as Bitcoin (BTC) and Ethereum (ETH).
In its most recent report, the firm has raised concerns about Ethereum’s high volatility. Alphractal’s proprietary Normalized Risk Metric (NRM) for Ethereum is currently at 0.38, a level that has historically been associated with heightened market turbulence. The firm points to previous instances in 2019 and 2020 where similar NRM levels preceded significant price fluctuations, both positive surges and deep corrections.
To illustrate, the NRM scale functions as follows:
Close to 1: Indicates high risk and overbought conditions.
Close to 0: Suggests potential buying opportunities.
In light of the present situation, Ethereum may enter a period of substantial price fluctuations, presenting both opportunities and risks for traders and long-term investors, as stated by the analytics firm.
Alphractal has also evaluated the broader market sentiment using its Alpha Crypto Sentiment Gauge, which consolidates various sentiment indicators such as Twitter discussions and news coverage. According to the firm, the metric is currently in a Bearish territory, indicating heightened caution among investors.
Should historical patterns repeat, Ethereum’s current NRM reading may indicate a forthcoming period of intense volatility, according to the analytics firm.
*This is not investment advice.
