Cryptocurrency analytics firm Alphractal has reported a change in market sentiment, noting a decrease in risk appetite for major digital assets such as Bitcoin (BTC) and Ethereum (ETH).
In its latest report, the firm has warned that Ethereum, in particular, is exhibiting signs of high volatility.
Alphractal’s proprietary Normalized Risk Metric (NRM) for Ethereum is currently at 0.38, a level that has historically been associated with increased market turbulence. The firm refers to past instances in 2019 and 2020 where similar NRM levels preceded significant price fluctuations, including both bullish surges and deep corrections.
As an illustration, the NRM scale operates as follows:
Close to 1: High risk and overbought conditions.
Close to 0: Potential buying opportunities.
Taking the current situation into account, the analytics firm suggests that Ethereum may enter a period of aggressive price fluctuations, presenting both opportunities and risks for traders and long-term investors.
Alphractal has also evaluated the broader market sentiment using its Alpha Crypto Sentiment Gauge, which aggregates various sentiment indicators including Twitter discussions and news coverage. According to the firm, the metric currently indicates a bearish sentiment, signaling increased caution among investors.
If historical patterns repeat, Ethereum’s current NRM reading could signify a period of significant volatility, according to the analytics firm.
*This is not investment advice.