Market Risk Appetite Rising, Bitcoin and Ethereum Still Have Room for Further Upside

Bitcoin and Ethereum continue to show strength amid rising market risk appetite. Analysts note that the recent performance of equities like the Russell 2000 over the Nasdaq points to a classic risk-on rotation. This has led to continued capital flows into high-beta crypto assets. Bitcoin and Ethereum are currently in a bullish continuation pattern and have potential for further upside.

Recent inflows into Bitcoin and Ethereum ETFs have fueled optimism in the market. Bitcoin spot ETFs recorded $753 million in inflows on January 14, the highest in over three months. This was driven by softer-than-expected core inflation data from the U.S. and growing institutional interest in crypto assets. Fidelity’s FBTC led with $351 million in inflows, followed closely by Bitwise and BlackRock products.

Ethereum ETFs also posted strong inflows, with cumulative net inflows reaching $12.57 billion. Ethereum spot ETFs received $130 million in net inflows on Tuesday, led by BlackRock’s ETHA ETF. The inflows suggest growing confidence in Ethereum's fundamentals and staking dynamics.

Why Did This Happen?

The rise in risk appetite is driven by several macroeconomic and institutional factors. The U.S. Bureau of Labor Statistics reported softer-than-expected core inflation, which eased concerns about aggressive monetary tightening. This led to a broader risk-on move across asset classes, including equities and cryptocurrencies.

Institutional adoption is also playing a key role. MicroStrategy’s recent Bitcoin purchase of $1.25 billion signaled renewed corporate confidence in the asset. Additionally, the launch of new spot ETFs has provided a regulated entry point for institutional capital into the crypto market.

How Did Markets React?

Bitcoin and Ethereum prices have responded positively to the inflows. Bitcoin has held above $95,000, with technical indicators suggesting a potential test of the $100,000 level. The Moving Average Convergence Divergence (MACD) remains in a buy signal, reinforcing bullish sentiment.

Ethereum is trading above $3,100 and shows signs of building momentum. The RSI is rising, indicating increasing bullish pressure. The Ethereum validator entry queue has also reached a multi-year high, suggesting growing staking interest.

However, the market structure bill in the U.S. has introduced some uncertainty. The Senate Banking Committee postponed discussion of the bill after Coinbase withdrew its support. Bitcoin dipped below $96,000 as a result. The delay reflects ongoing tensions between regulators and industry participants over issues like stablecoin rewards and DeFi restrictions.

What Are Analysts Watching Next?

Analysts are closely monitoring ETF inflows and macroeconomic data for further clues about market direction. Bitcoin spot ETFs have attracted over $57 billion in cumulative inflows, with net assets reaching $123 billion. Continued inflows would reinforce the bullish outlook for Bitcoin and Ethereum.

Technical indicators also suggest that Bitcoin is in a consolidation phase. A close above the 100-day EMA at $95,987 would confirm the short-term bullish trend. Traders are watching for a breakout above $100,000 as a key inflection point.

Ethereum’s next target is the $3,300 level, followed by the 200-day EMA at $3,470. Staking dynamics and validator participation will continue to influence Ethereum’s price action. The Ethereum validator entry queue has reached 2.34 million ETH, its highest level since 2023.

The market will also be watching for clarity on the digital asset market structure bill. A resolution in the Senate could either boost or weigh on crypto prices, depending on the final terms of the legislation.

Overall, the market remains cautiously optimistic about the short-term prospects for Bitcoin and Ethereum. ETF inflows, rising institutional adoption, and favorable technical indicators suggest that the bullish trend could continue in the near term.