Market Trends Are Born in Despair, Grow in Doubt, Mature in Anticipation, and Shatter in Hope.
(Previous Context:
Bitcoin Soars, Warning of “Great Liquidation,” Analyst: Excessive Open Interest and High Risk Borrowing Rate on the Whole Network
)
(Background:
Bitcoin Surges Past $69,000! Bitwise CEO: Seven Positive Factors Drive BTC to $100,000
)
Table of Contents
Significant Inflows into Bitcoin Spot ETF
Stablecoin Market Cap Approaching Historic Highs
BTC Unrealized Profits Indicate Majority of Players in Profit
Bitcoin Long-Term Holders Continue to Buy
Overall Bitcoin Open Interest Reaches Record High
Conclusion
Although the market is not as optimistic as most people think, it is also not as pessimistic as some believe. No one expected the cryptocurrency market, which started its downturn in March of this year, to last for six months. At one point, some investors couldn’t help but curse and criticize exchanges, while others prepared for a prolonged 18-month battle as predicted by some ancient OGs. Some whale accounts even tweeted about giving up on the cryptocurrency industry and encouraged more people to invest in the stock market.
Will there be an altcoin season? Whenever the market is skeptical, it usually indicates the bottom range of the market. History has always responded with a resounding “yes.”
History is often surprisingly similar. In 2023, the market remained quiet in the middle of the year, only to take off in October of last year. This year is no different. Interestingly, some funds appeared to be smart and smelled something in advance, allowing them to quickly position themselves. As a result, the market experienced a significant climb in September. After a brief pullback at the beginning of October, the self-fulfilling prophecy of “October Rise” came true once again. The market has climbed from around $52,000 to $68,000, just $6,000 away from its all-time high. Even some previously despised altcoins have seen significant gains from their lows, with some even tripling or quadrupling in value.
After waiting for half a year, is the bull market finally here?
The data from the Bitcoin Spot ETF represents the actual amount of purchasing power from off-exchange transactions. Unlike personal trading, it represents those who are willing to pay fees to have someone else purchase BTC on their behalf. Looking at the historical chart, when the net inflows are large, it often indicates a larger buying force and a rise in Bitcoin prices. Conversely, when the net outflows are large, it indicates a price decline.
Since the official launch of the Spot ETF, the total net inflows have reached $20.66 billion. It is worth noting that from October 1st to the present, there have been 6 days of net outflows but 7 days of net inflows, and the net inflow amounts have been significant. On October 14th, there was a net inflow of over $555 million, and on October 16th and 17th, there were net inflows of over $450 million each. On October 15th, there was a net inflow of over $370 million.
Although the number of net inflows and outflows is roughly equal, the outflow amounts are small compared to the significantly larger inflow amounts.
Even the Ethereum Spot ETF, which has been unpopular, has seen rare net inflows of $48.41 million since October.
The purchasing power of off-exchange funds remains strong.
The total market cap of stablecoins reflects the inflow of funds. Although the market has experienced fluctuations and funds have entered and exited over the past few years, it is difficult to be pessimistic when looking at the bigger picture.
The total market cap of stablecoins reached a historic high of $186.3 billion in mid-2022. It then gradually declined but remained above $120 billion. Fast forward to October 2023, the inflow of funds has been accelerating, and the total market cap of stablecoins has already surpassed $172.3 billion, approaching its all-time high.
BTC Unrealized Profits/Losses is an indicator that measures the profitability/loss of players on the Bitcoin chain. The colors in the chart range from red, orange, light yellow, gray-white, to light blue. The bottom blue color represents most people experiencing losses, while the top red color indicates most players being in profit.
When the line chart is in the light blue area, it often indicates the bottom range of Bitcoin prices because those experiencing losses are continuously selling and exiting the market. When the line chart is in the yellow or red area, it often indicates the top range of Bitcoin prices because many profit-taking positions choose to sell and exit, resulting in the top of the cycle. This is a cyclical pattern.
Looking at the chart, the market has climbed from the light blue area back to the yellow area. According to data from IntoTheBlock, 95% of BTC addresses have realized profits, indicating a significant improvement in market sentiment.
Historically, this level often indicates a strong bullish trend, but it may also represent potential over-expansion.
Long-Term Holder quantity primarily shows the total supply of BTC held by long-term holders. Long-term holders refer to addresses holding BTC for more than 155 days.
The chart shows that whenever BTC prices reach their peaks, the number of addresses held by long-term holders decreases. This is because smart funds tend to take profits at the price peak. After the price decline, they start accumulating BTC again and sell when the price reaches a high point. This cycle repeats.
The chart shows that starting from the end of July this year, these long-term holders have started buying again, as evidenced by the steep upward trend on the right side of the chart. Clearly, these smart funds have a positive outlook for the future market.
It is worth mentioning that according to data from CryptoQuant, new whale addresses are accumulating BTC at an almost frenzied pace. Founder Ki Young Ju stated that such hoarding behavior has not been seen in the BTC market before. Some believe that the surge in new whale addresses is mainly due to the ETF inflows, but recent accumulation behavior suggests that these new whale addresses have almost no correlation with ETFs.
Today, according to data from Coinglass, the total open interest of Bitcoin futures contracts has surpassed $39.7 billion, reaching a historic high.
Contract data often represents the market’s perspective on future trends. It tends to lag behind the performance of Bitcoin spot prices, which is why when the market is unanimously bullish in the short term, it is also prone to retracements, chip cleansing, and leveraging.
It is worth noting that over the past six months, the open interest of Bitcoin futures contracts has consistently remained at a relatively high level. This data marks a new high, breaking the record of over $38 billion at the beginning of this year. The optimistic sentiment in the market has become evident.
On a macro level, the Federal Reserve of the United States will be cutting interest rates in November and December, and liquidity funds from around the world will continue to flow into risk assets, providing more liquidity to the cryptocurrency market. On-chain indicators also suggest a market recovery and capital inflows.
“Market trends are born in despair, grow in doubt, mature in anticipation, and shatter in hope.”
Perhaps, after waiting for nearly half a year, the new cryptocurrency market bull run is about to begin.
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