Multi-dimensional interpretation of the current encryption market, "echo bubble" is about to appear?

PANews

特邀专栏作者

2023-01-20 05:30

This article is about 1412 words, reading the full article takes about 3 minutes

Analysis and interpretation from technical analysis, on-chain data and exchange/derivatives market

Original source:Andrew Kang Tweets

Original compilation: PANews

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

From a technical analyst perspective, the crypto market has just given everyone with technical considerations in trading/investing a reason to start looking for long-term exposure. Both Bitcoin and Ethereum have broken diagonal trendlines and moving averages, weekly trading momentum has also come to crossover points, and key price support levels have bounced off.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

On-chain metrics for Bitcoin and Ethereum on exchanges (falling below pre-bull market levels) and a reduction in miner selling pressure suggest that the crypto market is entering a supply crunch.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

A major driver of the bearish momentum in 2022 is miners adopting over-leveraged financial strategies, which eventually lead to them all becoming "forced sellers" - having to sell the BTC they mined, and even their inventory. Recently, the Bitcoin network hash rate has begun to trend reverse, suggesting that miner health has stabilized after some major capitulations.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

Today, miners no longer worry about the "luxury" transaction fees of the bull market, which also reflects the bottoming process of the previous bear market cycle.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

The current supply-issued BTCUSD value is also in the bottom region relative to the 365-day moving average of the BTCUSD value, suggesting resilience among miners who were able to withstand the previous sharp drop in revenue.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

The total holder base of Bitcoin and Ethereum has suffered greatly in previous bear cycles, but for now, the indicator is actually very resilient and has not been underwater recently.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

Historically, the largest/longest rallies in the cryptocurrency market have typically followed periods of low volatility. As it turns out, the current crypto market is experiencing historically low volatility levels.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

The current state of crypto derivatives also provides room for a market rally, given that leveraged bulls have yet to push the market higher. Take the futures basis index as an example, which is currently close to 0, very similar to the situation before the last bull market.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

It should be noted that for a long time in the past, the public's lack of interest in encryption technology has remained, and related searches and transaction volumes have dropped to 2020 levels.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

Even so, the recent recovery in NFT trading activity has become another catalyst leading the crypto market rally. Increased NFT activity leads to increased on-chain activity, which is expected to increase further as interest in NFTs is reignited.

The 2022 bear market has been suppressed for too long, and the "echo bubble" of the crypto market rebound is about to appear?

Not only that, but the rebound in the NFT market may lead to an accelerated burning of ETH, exacerbating the impact of Ethereum supply after shifting from PoW (Proof of Work) to PoS (Proof of Stake).