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Grayscale Drops Bombshell Report: Crypto Bull Run Progresses To ‘Middle’ Phase, Future Outlook Detailed

The cryptocurrency market has witnessed a significant surge after a prolonged bear market and the intensified crypto winter caused by the collapse of crypto exchanges and firms during 2022 and part of 2023. 

Notably, Bitcoin and other major cryptocurrencies have experienced substantial price surges, accompanied by renewed interest from institutional investors entering the market through recently approved spot Bitcoin exchange-traded funds (ETFs). 

Adding to the industry’s positive outlook, asset manager and Bitcoin ETF issuer, Grayscale, believes that the current state of the market indicates that the industry is in the “middle” stages of a crypto bull run. 

Grayscale recently released a comprehensive report detailing their key findings and insights into what lies ahead. A closer analysis of the report by market expert Miles Deutscher sheds light on the factors contributing to this assessment.

On-Chain Metrics And Institutional Demand

Grayscale’s report starts by highlighting several key signals indicating that the market is currently in the middle of a bull run. These include Bitcoin’s price surpassing its all-time high before the Halving event, the total crypto market cap reaching its previous peak, and the growing attention from traditional finance (TradFi) towards meme coins.

To understand how long this rally might sustain, Grayscale emphasizes two specific price drivers: spot Bitcoin ETF inflows and strong on-chain fundamentals.

Grayscale notes that nearly $12 billion has flowed into Bitcoin ETFs in just three months, indicating significant “pent-up” retail demand. Moreover, ETF inflows have consistently exceeded BTC issuance, creating upward price pressure due to the demand-supply imbalance.

Grayscale’s research focuses on three critical on-chain metrics: stablecoin inflows, decentralized finance (DeFi) total value locked (TVL), and BTC outflows from exchanges.

According to Deutscher, the increase in stablecoin supply on centralized exchanges (CEXs) and decentralized exchanges (DEXs) by approximately 6% between February and March suggests enhanced liquidity, making more capital readily available for trading.

Crypto

Furthermore, for the analyst, the doubling of the total value locked into DeFi since 2023 represents growing user engagement, increased liquidity, and improved user experience within the DeFi ecosystem.

The outflows from exchanges, which currently account for about 12% of BTC’s circulating supply (the lowest in five years), indicate rising investor confidence in BTC’s value and a preference for holding rather than selling.

Based on these catalysts, Grayscale asserts that the market is in the “mid-phase” of the bull run, likening it to the “5th inning” in baseball. 

Promising Outlook For Crypto Industry

Several key metrics support Grayscale’s analysis, including the Net Unrealized Profit/Loss (NUPL) ratio, which indicates that investors who bought BTC at lower prices continue to hold despite rising prices. 

According to Deutscher, the Market Value Realized Value (MVRV) Z-Score, currently at 3, implies that there is still room for growth in this cycle. Additionally, the ColinTalksCrypto Bitcoin Bull Run Index (CBBI), which integrates multiple ratios, currently stands at 79/100, suggesting that the market is approaching historical cycle peaks with some upward momentum remaining. 

Furthermore, retail interest has yet to fully return this cycle, as evidenced by lower cryptocurrency YouTube subscription rates and reduced Google Trends interest for “crypto” compared to the previous cycle.

Crypto

Ultimately, Grayscale retains a “cautiously optimistic” stance regarding the future of this bull cycle, given the promising signals and analysis outlined in their report.

Crypto

Featured image from Shutterstock, chart from TradingView.com 

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United States Dominates Global Crypto Market With Massive $9.3 Billion In Profits

In a recent report by market intelligence firm Chainalysis, it has been revealed that global crypto gains in 2023 amounted to a staggering $37.6 billion. This profit surge reflects improved asset prices and market sentiment compared to 2022. 

Although this figure falls short of the $159.7 billion gains witnessed during the 2021 bull market, it signifies a significant recovery from the estimated losses of $127.1 billion experienced in 2022.

Sharp Surge In Crypto Gains

The report suggests that despite similar growth rates in crypto asset prices in 2021 and 2023, the total gains for the latter year were lower. According to Chainalysis, this discrepancy could potentially be attributed to investors’ decreased inclination to convert their crypto assets into cash. 

The analysis further suggests that investors in 2023 seem to have anticipated further price increases, as crypto asset prices did not exceed previous all-time highs (ATHs) during the year, unlike in 2021.

Crypto

Cryptocurrency gains remained relatively consistent throughout 2023, except for two consecutive months of losses in August and September, as seen in the image above. However, gains surged sharply thereafter, with November and December eclipsing all previous months.

United States Leads

Leading the pack in cryptocurrency gains was the United States, with an estimated $9.36 billion in profits in 2023. The United Kingdom secured the second position with an estimated $1.39 billion in crypto gains. 

Notably, several upper and lower-middle-income countries, particularly in Asia, such as Vietnam, China, Indonesia, and India, achieved significant gains, each surpassing $1 billion and ranking within the top six countries worldwide. 

Crypto

Chainalysis had previously observed strong cryptocurrency adoption in these income categories, particularly in “lower-middle-income” countries, which demonstrated resilience even during the recent bear market. The gains estimates indicate that investors in these countries have reaped substantial benefits from embracing the asset class.

Ultimately, the Chainalysis report suggests that the positive trends observed in 2023 have carried over into 2024, with prominent cryptocurrencies such as Bitcoin (BTC) hitting all-time highs of $73,700 following the approval of Bitcoin exchange-traded funds (ETFs) and increased institutional adoption. 

If these trends persist, the firm believes that it is conceivable that gains in 2024 will align more closely with those witnessed in 2021. 

Crypto

As of this writing, the total crypto market cap valuation stands at $2.5 trillion, a sharp drop of over 4% in the last 24 hours alone, and down from Thursday’s two-year high of $2.7 trillion. Bitcoin, on the other hand, is trading at $68,400 after dropping as low as $65,500 but has quickly regained its current trading price, limiting losses to 4% over the past 24 hours.

Featured image from Shutterstock, chart from TradingView.com 

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Crypto Sentiment Index Stays Bullish Despite Corrections, Report Reveals Positive Outlook

In a recent blog post, ETC Group’s Head of Research, Andre Dragosh, provided a comprehensive analysis of the current state of the crypto market. Dragosh’s findings shed light on the market’s performance dynamics, profit-taking activity, and derivative trends.

High-Risk Appetite In Crypto Market

According to Dragosh’s analysis, crypto assets showcased their resilience as they outperformed traditional assets like equities, supported by a significant repricing in monetary policy expectations and short futures liquidations at the beginning of last week. 

However, this outperformance encountered some limitations in the short term due to stronger-than-expected US jobs data, which began to dampen the recent rally. The US non-farm payroll growth and unemployment rate surpassed consensus estimates, leading to a reversal in US Treasury yields and a decrease in overall risk appetite across traditional financial markets.

Notably, altcoin outperformance gained momentum during the period, with Avalanche (AVAX) and Cardano (ADA) returning over 50% each. Among the top 10 crypto assets, Avalanche, Cardano, and Polkadot (DOT) stood out as the relative outperformers. 

According to Dragosh, this surge in altcoin outperformance compared to Bitcoin (BTC) indicates a “high-risk appetite” within the crypto market. On the other hand, on-chain data for Bitcoin suggests that investors are increasingly taking profits, evidenced by the rising number of coins in profit being sent to exchanges.

Crypto

ETC Group’s in-house Crypto Asset Sentiment Index remained relatively elevated compared to the previous week, indicating positive market sentiment. However, major reversals to the downside were observed in the Crypto Dispersion Index and the BTC 25-delta 1-month option skew. 

The Crypto Fear & Greed Index continued to reside in “Greed” territory, reflecting ongoing market optimism. Although ETC Group’s Cross Asset Risk Appetite (CARA) measure declined slightly, it remained in positive territory, signaling a decrease in risk appetite in traditional financial markets.

Performance dispersion among digital assets decreased compared to the previous week but remained relatively high. This implies that correlations among crypto assets have decreased, and investments are driven by coin-specific factors, highlighting the importance of diversification among digital assets.

Short-Term Holders Cash In

The market remains in a strong profit environment, with a significant percentage of BTC and ETH addresses in profit. According to Dragosh, profit-taking activity, particularly among short-term holders, has increased as Bitcoin approaches recent highs, leading to higher selling pressure. 

Long-term holders have also increased their transfers of profitable coins to exchanges, potentially hindering short-term price increases. However, it is worth noting that there is no evidence of older coins being spent, which would indicate a larger price correction.

On the other hand, aggregate open interest in BTC futures and perpetual remained stable, with notable futures short liquidations recorded. BTC option open interest saw a significant increase, accompanied by relative put-buying and an increase in the put-call open interest ratio. 

The 25-delta BTC option skews also increased, indicating higher demand for puts compared to calls. However, overall at-the-money (ATM) implied volatilities did not change significantly.

Crypto

At the time of writing, BTC has lost its $42,000 support line, trading at $41,600, down 5% in the last 24 hours.

Featured image from Shutterstock, chart from TradingView.com 

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Crypto Market Drops To Extreme Fear As Bitcoin Struggles To Hold $19,000

The crypto market sentiment has been on the decline over the last year and it has come in tandem with the decline in bitcoin price. Bitcoin, which moves the entirety of the crypto market most times, has had a tough go of it in recent times. Now, as the pioneer cryptocurrency continues to struggle to hold a good value in the market, sentiment has plunged towards 3-month lows.

Market In Extreme Fear

The crypto market is now entering what is one of the longest fear trends in recent history. Over the last six months, there has not been any significant recovery in market sentiment. The last time that the crypto market had come close to completely exiting the fear territory was back in August when there was some recovery in the market.

During this time, the price of bitcoin had seen a run-up that put it above $25,000. However, it had stopped just short of entering the green territory and has remained down since then. 

For three months now, market sentiment has remained muted and has not seen any positive movement. The score for last week came out to 22 which put the market firmly in the extreme fear territory, also following the same theme for the month of September.

Crypto market sentiment

Market sentiment in extreme fear | Source: alternative.com

It was expected that the market would see some recovery in the month of October but there hasn’t been much green in the market since then. The present score for the market sentiment is 20, which shows even more decline in investor sentiment. 

Bitcoin Carries The Market

Bitcoin has dominated the crypto market since its inception, even though the dominance is now lower than what it used to be. Nevertheless, the bitcoin price movement still determines the market direction most of the time and sets the tone for investor sentiment. Given this, for the crypto market to finally leave the fear territory, there would need to be a surge in the price of bitcoin.

However, one thing that comes with negative investor sentiment is the refusal to put money into the market. People are more likely to invest when prices are going up instead of down even though the latter is a better time to get into the market. 

Bitcoin price chart from TradingView.com

BTC fails to reclaim $20,000 | Source: BTCUSD on TradingView.com

Bitcoin’s current price does not spark confidence in the hearts of investors, hence the reluctance for investors to want to purchase cryptocurrencies. To do so, the price of the digital asset would have to cross $20,000 once more, which is currently not in the cards given that the cryptocurrency is trading below its 50-day moving average.

Bears are already mounting significant resistance at $19,600, and given the constant sell pressure on BTC, it is likely that the price of bitcoin will revisit $19,000 before testing the resistance at $19,600. But a successful test of this resistance level will see BTC aiming for the next significant resistance at $20,200.

Featured image from Genetic Engineering and Biotechnology News, chart from TradingView.com

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Why Crypto Market Sentiment May Present A Unique Buying Opportunity

The crypto market sentiment has not shown any significant recovery during the last couple of months. There have been points where it looked as if the worst was over but the market had declined into the extreme fear territory once more. However, instead of the doom and gloom that usually follows markets such as this, there may be a unique opportunity for investors looking to buy at favorable prices.

A Good Time To Buy

Historically, there have been times when buying cryptocurrencies has been more favorable than others. One of those has been times when the market has spent a long stretch in the extreme fear territory and there is low momentum in the market.

Investors are often wary of putting money into digital assets at times like this, causing the price of the assets to decline. However, this can present a buying opportunity because of the low prices and the reduced volume needed to move the market. 

Total market cap drops to $851 billion | Source: Crypto Total Market Cap on TradingView.com

An example of this happening is back in mid-2020 before the bull run had begun. The crypto market had spent the better part of March and April in the extreme fear region. What would follow was a market rally that would eventually see bitcoin break above $10,000, a more than 100% increase from its March 2021 lows below $4,000.

Crypto Market May See A Recovery

Currently, the crypto market is succumbing to the pressure of the CPI data release and the FOMC meeting. These are historical events that have always had an impact on the macro markets and bitcoin’s high correlation with the stock market has seen it decline during this time too. However, there could be a turn in the tide coming.

The Fed has been increasing interest rates for a while now due to high inflation rates. Naturally, this cannot go on for long and there will eventually be a reversal. When this happens, risk assets will react positively and cryptocurrencies such as bitcoin are expected to do well in such a market.

“Rich Dad Poor Dad” author Robert Kiyosaki forecasted that this change would come about in early 2023 and that the dollar would decline in value. An event like this would trigger a flee to safety in digital assets such as bitcoin, which Kiyosaki has urged investors to purchase.

Featured image from Finance Monthly, chart from TradingView.com

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Crypto Market Remains Extremely Fearful As Bitcoin Struggles At $20,000

The crypto market has found itself at odds since the price of bitcoin had fallen to $20,000. This remains an important technical level for the digital asset because it is right above its previous cycle peak. As such, investors across the space watch with bated breaths to see if bitcoin will be able to hold this level. This has, in turn, led to a decline in investor sentiment during this time, causing the Fear & Greed Index to plunge low.

Crypto Index Sits At 25 

The Crypto Fear & Greed Index is an indicator that draws from a number of metrics to give an aggregate score to represent how investors are feeling toward the market. It ranks these across four categories, and presently, investor sentiment falls in the lowest of these.

In its most recent update, the Fear & Greed index places the market in the extreme fear territory with a score of 25. This is after the index had hit its lowest of 20 in more than a month, signifying some rise in positive sentiment in the last day.

However, the present score is not so good for the crypto market. With a sentiment like this, investors are wary of putting any money into the market, causing panic and leaving the playing ground to the sellers. This works to push the prices of digital assets in the space even further down.

Bitcoin Struggles With $20,000

The $20,000 mark has been one of the hardest levels to maintain for bitcoin. Volatility always seems to shoot up whenever bitcoin is at this point, leading to erratic movements in price. This way, the digital asset continues to move above and below $20,000.

Nevertheless, bulls continue to put up a fight at this level because there is no significant support below this level except at $17,600. This cycle’s low, which had plummeted below the previous cycle peak, puts bitcoin in a perilous position.

Historical data puts bitcoin at least 80% down from its all-time high for the bottom of the bear market to be in. If the market follows this trend, then $17,600 may not be the bottom for the market. Bitcoin is only about 70% down from its all-time high as it currently stands. An 80% drawdown would put it around $15,000.

However, it is important to keep in mind that bitcoin has broken different historical trends during this cycle. An example is that its price has never fallen below its previous cycle peak, so an extension to this deviation could see bitcoin shake off the expected 80% drawdown.

Featured image from CNBC, chart from TradingView.com

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Market Sentiment Holds Steady As Bitcoin Aims For $24,000

Bitcoin has been holding steady over the weekend. The cryptocurrency had been able to beat the $24,000 mark last week but had retraced downward not long after. However, this retracement has not had too much of a negative impact on the sentiment toward the digital asset. As bitcoin has started upwards once more, the market sentiment has been incredibly strong. 

Bitcoin Goes For $24,000

The opening of the new week saw bitcoin start below $24,000 in the early hours of Monday. This quickly changed with a rally on a 6-hour basis that saw bitcoin add more than $500 to its value. This helped it reclaim this coveted point once more, putting it firmly above its 50-day moving average.

Now, the 50-day MA has always been an important technical level for bitcoin. It was one indication of the crash that rocked the market two months ago and the bear market trend that ensured. Since the digital asset has now beat this point, it has now converted the bearish indicators to bullish ones. It has also resulted in a reversal of the selling pressure in the market. Now, as buy pressure mounts, the value of bitcoin is expected to grow.

The recent recovery has now adequately moved the support level for bitcoin. The recent move shows that there is now significant support for BTC at $23,500, which served as a bounce-off point. Resistance for bitcoin now sits at $24,500, a level that bitcoin has been unable to beat since the crash.

BTC price exceeds $24,000 | Source: BTCUSD on TradingView.com
Sentiment Remains Positive

Crypto market sentiment has not been the best in recent months, but there have been some remarkable recovery over this time. When the market crash happened back in June, sentiment had plunged far into the extreme fear territory, keeping investors from actually making any meaningful moves in the market.

However, with the turn in the price of bitcoin, the market sentiment has begun to change. It had grown into the fear territory and is currently sitting at a score of 30 on the Fear & Greed Index. This shows steady sentiment in the market, which is starting to skew more into the positive.

With this return of faith in the market has come more investments. Exchange outflows for last week show that investors are starting to accumulate the coin, especially among smaller investors, with the number of addresses holding at least 1 BTC reaching a new all-time high of 892,803 on Monday.

The market sentiment still has a long way to go to move completely out of the fear territory. However, if bitcoin is able to make its mark and break through $25,000, sentiment is expected to turn bullish very quickly.

Featured image from Coindesk, chart from TradingView.com

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When Will The Extended Stretch Of Extreme Fear In Crypto End?

Data shows the crypto market almost escaped from the extreme fear territory earlier in the week, but the sentiment has once again slumped down during the last few days.

Crypto Fear And Greed Index Continues To Point At “Extreme Fear”

As per the latest weekly report from Arcane Research, the current streak of extreme fear, which happens to be the longest ever, couldn’t be broken this week.

The “fear and greed index” is an indicator that measures the general investor sentiment in the crypto market.

The metric uses a numeric scale that runs from zero to hundred for displaying this sentiment. All values of the index greater than fifty imply greed, while those below the threshold suggest fear.

Related Reading | How NFTs Forecasted A Crypto Recovery, Nansen Report Claims

Values of more than 75 and less than 25 towards each end of the range indicate sentiments of “extreme greed” and “extreme fear,” respectively.

Now, here is a chart that shows the trend in the crypto fear and greed index over the last year:

The value of the indicator seems to have slumped back down after a rise | Source: Arcane Research’s The Weekly Update – Week 27, 2022

As you can see in the above graph, the crypto fear and greed had a value of 16 two days ago, when the report came out. According to alternative.me, the value is 18 today, slightly more than that.

Nonetheless, both values are firmly inside the extreme fear territory, which means the current record streak of bottom sentiment has continued for 70 days now.

During the past week, the indicator’s value did look to be catching some upwards momentum as it briefly climbed to 24 on the weekend, which is just at the edge of the extreme fear region.

Related Reading | Negative CPI Report Causes Bitcoin Market Cap To Lose $15 Billion In 10 Minutes

However, this improvement in the sentiment didn’t last too long and the index once again dropped back down, before the longest extreme fear run in the history of the crypto market could be broken.

Though, the report notes that the index may be overstating the fearfulness due to the special conditions right now. The fear and greed index’s value depends on two major factors, the volatility and the trading volume. Binance removing trading fees from its platform has certainly influenced these two metric’s values and hence the index as well.

For the crypto market to escape from this stretch of extreme fear, positive news and price action will be needed to make investors more optimistic.

BTC Price

At the time of writing, Bitcoin’s price floats around $19.7k, down 3% in the past week.

Looks like the value of the crypto has declined over the last few days | Source: BTCUSD on TradingView
Featured image from Pierre Borthiry on Unsplash.com, charts from TradingView.com, Arcane Research