Cryptocurrency analytics firm Alphractal has indicated a shift in market sentiment, noting a decline in risk appetite for major digital assets such as Bitcoin (BTC) and Ethereum (ETH).
In its latest report, the firm warns that Ethereum in particular is showing signs of high volatility.
Alphractal’s proprietary Normalized Risk Metric (NRM) for Ethereum currently stands at 0.38, a level that has historically been associated with increased market turbulence. The firm points to past examples in 2019 and 2020 where similar NRM levels preceded strong price swings, both bullish surges and deep corrections.
For example, the NRM scale works like this:
- Close to 1: High risk and overbought conditions.
- Close to 0: Potential buying opportunities.
Considering the current situation, Ethereum could enter a period of aggressive price fluctuations, posing both opportunities and risks for traders and long-term investors, according to the analytics firm.
Alphractal also assessed broader market sentiment using its Alpha Crypto Sentiment Gauge, which aggregates multiple sentiment indicators including Twitter discussions and news coverage. According to the firm, the metric is currently positioned in Bearish territory, indicating increased caution among investors.
If historical patterns repeat, Ethereum’s current NRM reading could herald a period of intense volatility, according to the analytics firm.
*This is not investment advice.
