A few days ago, Glassnode, a data analysis platform, released the On Chain NewsweekThe CapitalWaterfallIt is pointed out that the current market may have emerged from the bear market recovery stage and is entering an upward trend. The price correction of Bitcoin and Ethereum in this trend is significantly smaller than before, indicating that funds from external investors are pouring in
A few days ago, Glassnode, a data analysis platform, released the On Chain NewsweekThe CapitalWaterfallIt is pointed out that the current market may have emerged from the bear market recovery stage and is entering an upward trend. The price correction of Bitcoin and Ethereum in this trend is significantly smaller than before, indicating that funds from external investors are pouring in.
Bitcoin and Ethereum have performed significantly better than gold prices this year
The report first points out that as the two major mainstream currencies in the current market, Bitcoin (BTC) and Ethereum (ETH) have shown relatively strong price performance compared to gold, which is widely recognized as a means of storing value, under the continuous growth of macroeconomic uncertainty.
Obviously, BTC prices have increased by 93% relative to gold, while ETH has increased by 39%. Meanwhile, both prices are closely related, but the upward momentum of BTC is even stronger.
Digital assets fluctuate more than traditional assets
Additionally, as is well known, the volatility of BTC and ETH prices is significantly greater than that of gold.
Gold (black), BTC (orange), ETH (blue)
Bitcoin is more resilient than Ethereum
Furthermore, Glassnode also compared the relative strength of BTC and ETH prices by observing their deepest pullback in this year's upward trend.
The report sets two low points for Ethereum after the FTX collapse in November last year, with the price falling 44% from its previous relative high and the current price falling 26%.
Data shows that this is much smaller than the previous upward trend of over 60% in 2017 and 2020.
Bitcoin also performed well, with only 20.1% of the deepest pullback in 2023, which is more resilient compared to the 36% and 62.6% upward trends in 2017 and 2020.
Will the ETH-BTC exchange rate rise?
Subsequently, the report utilized the retracement of the ETH/BTC exchange rate to observe the current market liquidity situation.
It can be seen that during the recovery of bear markets in the past, the value of Ethereum relative to Bitcoin will decline, which means that market funds will flow back to Bitcoin.
The above figure shows that the previous two drops exceeded 50% and continued for over 300 days; The current decline is 38% and has been ongoing for over 470 days.
Period of relatively weak ETH/BTC ratio (blue area)
In addition, the report charts a period of relative weakness in the ETH/BTC exchange rate, indicating that the current ratio level of approximately 0.052 is the same as last July.
Most Ethereum holders are making profits
After conducting in-depth research on the price of Ethereum, the report was released at approximately $1800, while the average market holding cost was around $1475. Even if it is far below the profit level of the bull market, it already represents that most of the current Ethereum holders are in a profitable state.
In addition, the report also examines the profitability of investors through the MVRV ratio.
ETHMVRV ratio (blue), MVRV180 day MA (orange)
The report explains that when the MVRV ratio (blue) is higher than its long-term average (orange), it indicates that investors' profits are increasing and is usually a signal of market growth.
However, the above chart clearly indicates that even though Ethereum has performed well this year, according to this indicator, the market has not shown any clear bullish signals and seems to be digesting the bearish sentiment of 2022, while there is still a cautious atmosphere of uncertainty in the overall market.
Changes in investor confidence
Furthermore, the report also uses its' investor confidence in trends' indicator to evaluate the changing trends in Ethereum investor sentiment.
Consumer's cost (orange line), holder's cost (blue line)
In short, when the consumer's cost (Spending cost basis) is significantly lower than the holder's cost (Hodging cost basis), it indicates that market sentiment is relatively negative, and vice versa, it is positive; When the two cost bases are not significantly different, market sentiment is in a transitional state.
Based on this indicator, the report believes that the market is currently in a transitional zone, showing positive emotions, but the magnitude is relatively small.
Is the market about to explode?
Altreason is about to start?
Finally, the frenzy of competing currencies (Altsea) has always been one of the signals of a bull market, and the report defines two prerequisites for this:
- The overall market atmosphere is characterized by the inflow of risk capital into BTC, ETH, and stable currency
- The overall market value of competitive currencies needs to show positive growth momentum
As for how to determine whether there is a positive momentum in the market value of competitive currencies, this report uses the overall market value of competitive currencies to break through the 30 day SMA as the basis for a positive signal, pointing out that the current competitive currency market may enter a growth period.
The orange area is the signal generation area
Market value growth of competitive currency
Recently, there has been a significant increase in the total market value of competing currencies, which may lead to an increase in the prices of various competing currencies due to the increase in Bitcoin market share.
At the same time, the percentage change in the market value of competitive currencies has only experienced significant changes in the past two years (pink dashed line), and this signal has recently reappeared, the last time it appeared was in October last year.
In addition, the market value of Bitcoin increased by 110% in 2023, while the market value of competing currencies was relatively much lower, at only 37%.
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