Crypto trading firm QCP Capital, based in Singapore, cautions about a possible downward price adjustment for Ethereum (ETH), despite its recent climb above the $4,000 mark. The firm connects this forecast with a noticeable shift in market sentiment, where the anticipation for a spot Ethereum ETF’s near-term approval appears to be waning. Yet, QCP Capital holds a cautiously positive view on ETH’s enduring value, citing market trends and network improvements as reasons for potential price growth.
Market Sentiment Suggests Ethereum Price Dip
QCP Capital, through their Telegram channel, conveyed that Ethereum might encounter an imminent price dip. The altcoin, having reached a zenith unseen in years, is seeing its market sentiment turn due to negative risk reversals. Analysts at the firm surmise this is tied to dimming expectations for a spot Ethereum ETF getting the green light soon.
Major network upgrades typically don’t immediately affect market prices, especially in bearish or stagnant periods. Nevertheless, QCP Capital analysts believe the current market conditions may prompt a rise in Ethereum prices, potentially driven by the anticipated Dencun network update or buoyant capital entry into Layer 2 solutions.
Despite the likelihood of a near-term correction, QCP Capital’s outlook on Ethereum’s future prospects remains optimistic. Current market indicators imply that traders are bracing for short-term price drops, as evidenced by a rise in the demand for ETH put options, and the negative skew in both one-month and 60-day put-call ratios.
Risks of Excessive Market Leverage
Alongside the warning of a price correction, QCP Capital also points to the dangers of high leverage within the market. Past events have shown that excessive leverage can precipitate severe market downturns, like the notable crash in May 2021 and a 10% fall in Bitcoin‘s value this past January. Traders should remain vigilant for a potential correction that could ripple throughout ETH and the broader cryptocurrency market.