THE KING'S AWAKENING
Bitcoin worked out the scenario hypothesized in the previous analysis, even exceeding our expectations. In fact after the breakout of the $40K region, buyers placed an irrepressible follow through, arriving this morning on the local high at $45400.
At the moment the main cryptocurrency is facing a slight pullback and is trading at around $44000.
Market capitalization returned to $2000 billion and BTC dominance 41.9%, but notably the Greed Fear Index is back to neutral at 48.
The magnitude of the momentum that characterized the last week was indeed significant, with the weekly chart indicating a clear reversal setup. This price action has undoubtedly surprised many market players who were waiting to position themselves and now much of this liquidity will be forced to "chase".
Bitcoin has conquered all resistances encountered on its way thanks to the massive purchases recorded since last Friday, reaching the levels of early January.
Ether is safely back above $3000 and the market capitalization is testing the holding of the $2 trillion threshold. The Greed Fear Index signals neutral sentiment in the market, also approaching early year levels.
After the recent rally, Bitcoin needs to consolidate above $45K to preserve the short-term technical structure and continue the uptrend, although after a leap forward of almost $10000 a pullback would be more than natural due to early profit-taking. In this context, a drop on the 41K region is not at all to be ruled out in order to collect the liquidity cut off by the sudden rally, followed by a consolidation phase, thus making the current technical structure would undoubtedly be more sustainable.
Let's now take a look at the metrics and charts published yesterday by Glassnode, to which I will add my own comments and some thoughts on what has happened in the last few days.
THE GLASSNODE'S METRICS
This week, Glassnode asks if the rise of these days is due to some short squeeze in derivatives (given the high level of leverage, there was this possibility)
The answer is negative (I omit the charts for brevity, you can find them at link), so this rise is much more interesting than the previous one, since it happened in the spot market (real coin market).
As shown in the chart above, the rise was caused by new traders who entered the spot market (last peak on the right).
The transactions made by these new players in the market have reversed the trend of prevalent loss-making sales of "young" coins (i.e. traders), causing, for the first time in 3 months, a prevalence of profitable sales.
The yellow curve has in fact broken upwards the horizontal continuous line, which marks the border beyond which profits are greater than losses.
In the past, twice these upward breaks have anticipated new bull markets (blue dashed rectangles in the center and on the left of the chart).
This indicator gives us an even clearer signal of bull market anticipation. It is the ratio between price variation and capital flow in the market (blue curve).
As we can see, since November this value has remained on the rise despite the fall in prices (black curve), forming a "bullish divergence" indicated by the converging green and red dotted lines.
The current rise then created an acceleration of the gradient (blue dashed area on the right).
The upward break of the yellow curve by the blue curve would give the definitive signal of the beginning of bull market.
The "Mayer Multiple" is an oversold/overbought indicator.
This indicator, like the one seen last week, has also reached an all-time low of oversold.
Overall, the demand for coins by traders is still too low to develop a solid bull market. In fact, all of the coins freed up in recent sell-offs continue to be accumulated largely by holders, not traders (although demand from the latter is increasing).
However, the move to prices that make trading more profitable, and therefore more interesting, should be monitored to see if it will give rise to real bull market dynamics.
THE WORLD IS CHANGING
The news of the day is definitely the announcement of the entry into the crypto market of KPMG, a top 3 global accounting firm, which stated in a press release that it has invested in Bitcoin and Ethereum through its Canadian division.
The note from Benji Thomas, CEO of KPMG, states that "cryptocurrencies are a maturing asset class and investors, including hedge funds, asset management firms, major insurance companies and pension funds, are increasingly opening up to the sector, while traditional financial services such as banks, financial advisors and brokers are exploring products and services in the crypto market.
And now think about those who sold below $40K, giving targets at $18000!
The world is changing as well as economic and social dynamics: privacy and decentralization play a central role, centralized companies like Facebook and PayPal, which can arbitrarily block an account at any time and require countless audits and certifications to comply with various legislations, have less and less appeal. Who is more interested in them, when there is a truly free, decentralized and intermediary-free market like crypto? More and more people are realizing this.
12 years ago Forex was the preferred market of those willing to take risks in exchange for great returns, a powerful and fast growing industry. Today, a large part of the user base of Forex and brokerage firms has switched to the cryptocurrency market. The reasons are obvious: Those who are willing to take risks for high profits, no longer need the intermediation of a broker or a trading center.
They are no longer needed with the emergence of decentralized crypto protocols.
WEB.3.0 IS COMING!
Those who don't get it will be left behind, whether it's an individual or a business. Bitcoin, Decentralized finance, cryptocurrencies, Smart contracts, NFT, metaverse: these are the keywords of the future. Anyone who doesn't take action to expand their skills in this area will, in a couple of years, find themselves in the position of someone who doesn't know how to use the Internet and email today.
And in terms of financial opportunities, they will feel they are hopelessly behind the rest of the world.
Thanks for reading.
SOURCES
Charts and metrics by GLASSNODE