Space Recap | Sentiment Bottoms Out, Liquidity Tightens: How to Identify the “True Bottom Signal”?

The current crypto market is suffering from a lack of buying interest due to depressed sentiment, and tightening liquidity is causing asset prices to constantly test psychological barriers. The mainstream narratives that have worked in the past are no longer effective. At this juncture, every market participant is preoccupied with a core question: Where is the bottom? More importantly, how can we identify the signals that herald a true turning point amidst the chaos and noise?

It is against this backdrop that SunPump hosted its latest SunFlash session, titled "Sentiment Bottoms Out, Liquidity Tightens: How to Determine the 'True Bottom Signal'?", engaging in an in-depth discussion. Unlike "historical bottoms," which can only be clearly defined in hindsight, this event aimed to return to the market itself, dissecting the "constituent elements of a bottom" from multiple dimensions such as market behavior, fund flows, and on-chain data. The goal was to provide listeners with a more calm and objective cognitive framework, enabling them to gain greater insight into future market turning points.

Bottom signal analysis: The market is collectively "numb," but a sentiment low is only a necessary condition.

When discussing the "ice point of market sentiment," several guests unanimously corrected a common misconception: the real market ice point is not always accompanied by intense panic and "bloodshed," but rather by an extreme "numbness" and "apathy."

Guest commentator "Bull Demon King" pointed out that unlike the market in early October, when complaints and arguments still lingered, the current market has entered a state of "numbness." He believes that when investors lose their responsiveness to market fluctuations, no longer care about rises and falls, and even feel "it doesn't matter whether I do it or not" regarding trading itself, that's a true reflection of the bottoming out of sentiment. This state means that selling pressure in the market has been largely released, leaving behind mostly long-term fixed-amount investments or "never sell" holdings, providing fertile ground for bottom formation. However, he also cautiously stated that the emotional low point is just a key signal; a true reversal still requires improved liquidity and a new market narrative to reignite enthusiasm.

Guest speaker Yuna corroborated the existence of a market bottom from a data perspective. She pointed out that BTC spot market depth is thinner than in July, order density has sharply decreased, and the market exhibits typical characteristics of "volume-less cooling." She clearly stated that a sentiment bottom is a "necessary condition" for the formation of a bottom, but not a "sufficient condition." She divided sentiment bottoms into two scenarios: one is "the silence before accelerated decline," where the market is fragile and can collapse at any moment; the other is the true "silence during the bottoming period," characterized by converging volatility and sluggish trading volume . Considering the current situation of continuous contraction of on-chain funds and low community activity, she judged that the market is more inclined towards the second scenario, but ultimately confirming the bottom requires a comprehensive judgment across three dimensions: sentiment, funds, and structure.

Mr. Potato proposed a multi-dimensional judgment framework from the perspective of behavioral finance: quantitative indicators (such as the rise-fall ratio and the rate of price reversals), behavioral characteristics (investors shifting from fear to indifference, with trading activity dropping to below 20% of the historical average), and cyclical positioning. He emphasized that emotional lows are often "opportunities for contrarian trading," but caution is needed as they can evolve into "a continuation of the downtrend." A true bottom must meet the triple verification of emotional lows, improved liquidity, and price stabilization.

Liquidity Inflection Point: Leading Signals from Stablecoins, Order Book Structures, and On-Chain Funding

When the discussion turned to "Which indicators can best reflect a turning point in a cycle of liquidity tightening?", the guests reached a high degree of consensus: price is a lagging indicator, and the real leading signals are hidden in the behavior of funds, among which stablecoins are recognized as the most important "weathervane".

Yuna points out that the stabilization and even sporadic inflow of USDT and USDC's total market capitalization is the earliest signal that off-exchange funds are preparing to enter the market. She reviews history, noting that whether it's the rebound after 2020 or other cycles, the almost unchanging rule is that "stablecoins stop falling first, and then prices follow." When discussing stablecoins as a core liquidity carrier, the TRON network, with its TRC20-USDT holding a dominant market position with more than half of the total USDT supply, combined with its high-frequency on-chain activities, fast transfer speeds, and low transaction fees, makes it an excellent window for observing liquidity. Changes in the market capitalization and flow direction of stablecoins within its network are an indispensable element in judging shifts in overall market liquidity .

Besides stablecoins, Yuna also considers on-chain fund behavior as a key indicator. She points out that when funds gradually shift from panic outflows to slow accumulation, a direct bullish signal is released. Another important observation dimension is the order book structure of exchanges. She emphasizes that the true market bottom is often reflected in the "order book" rather than the "price": when selling pressure significantly weakens, and although buying pressure has not returned on a large scale, deep buy orders have begun to thicken, it means that the market has entered a state of "unable to sell," at which point funds have been secretly building a bottom.

She concluded that when stablecoins stop falling, exchange selling pressure dries up, and on-chain funds begin to accumulate simultaneously, even if prices are still trading sideways, the true bottom of the market is forming.

In this in-depth discussion about bottom signals, the keywords repeatedly mentioned by the guests were "stablecoins" and "on-chain activity." Looking at the entire crypto ecosystem, the TRON network has become one of the core infrastructures for observing and even carrying this crucial liquidity . Its resilience, especially during market downturns, is particularly noteworthy. Leveraging its stable technology characteristics of high throughput, low fees, and fast settlement, TRON has built a highly efficient stablecoin transmission layer, handling massive flows of stable assets such as USDT.

Meanwhile, the TRON ecosystem has also demonstrated a remarkable diversified development trend, continuously improving its layout in innovative fields such as DeFi, AI infrastructure and Meme. This comprehensive ecosystem construction not only enhances the network's own antifragility, but also promotes the large-scale practical application of blockchain technology globally, accumulating indispensable basic momentum for the next round of market recovery.

When the market discusses whether liquidity has bottomed out, observing the market capitalization changes, on-chain inflows and outflows, and daily transaction activity of stablecoins on the TRON network provides an extremely clear and low-noise observation dimension. Changes in its on-chain data often reflect the true movements of retail and institutional funds globally: whether it's panic selling or quiet, deliberate positioning.

Therefore, identifying market bottoms requires not only attention to macroeconomic indicators and sentiment cycles, but also a keen understanding of the "fundamental pulse" of core public chains like TRON. It's not just an ecosystem platform, but also a mirror reflecting the ebb and flow of market liquidity. When liquidity truly begins to recover, an efficient, active, and resilient underlying network will undoubtedly become the primary battleground for capital convergence and value recovery, laying a solid foundation for the start of the next cycle.