Crypto Market Bottomed? On-Chain Says Yes, Macro Says Pain Ahead
• The crypto market suffered a major downturn in June 2022, with Bitcoin reaching an all-time low of $15,500.
• Since then, Bitcoin has recovered and returned to around $23,000 but the market remains unstable.
• CryptoSlate analyzed on-chain and macro data to determine whether the crypto bottom is in or if more volatility is yet to come.
The crypto market suffered a major downturn in June 2022, with Bitcoin hitting an all-time low of $15,500 before recovering back to around $23,000 by the end of January 2023. While the market remains unstable due to ongoing bankruptcy proceedings for large companies such as FTX and Celsius and macroeconomic uncertainty from an incoming recession, CryptoSlate analyzed on-chain and macro data to determine whether the crypto bottom is in or if more volatility is yet to come.
Whales are Accumulating
Net position change in addresses holding over 1,000 BTC indicates a strong cycle bottom as these whales have historically accumulated Bitcoin during extreme price volatility. During the Terra collapse in June 2022 whales scooped up almost 100,000 BTC within weeks and have recently begun accumulating again at the end of January 2023.
Long-Term Holder Supply is Increasing
The supply held by long-term holders (LTHs) has been increasing since November 2022 according to analysis from CoinMetrics indicating that investors are holding onto their coins for longer periods of time rather than selling them off immediately when prices dip down. This suggests that LTHs believe bitcoin will recover despite short term fluctuations which could be seen as a sign of a potential market bottom being set.
Perpetual Funding Rates are no Longer Negative
Perpetual funding rates measure how much interest traders must pay each day to borrow funds from one another while trading futures contracts which tend to go negative when there is high demand for shorts (i.e., betting against Bitcoin). Since late December 22nd 2022 perpetual funding rates have been consistently positive which may indicate that there is less bearish sentiment among traders.
Total Supply In Profit Growing
Since November 2020 total supply held by profitable addresses (addresses whose holdings are worth more than when they were purchased) has steadily increased throughout 2021 despite recent drops due likely due to new investors entering the space who bought at higher prices and thus need time for their investments break even again before becoming profitable again. This suggests that people remain confident about long term prospects even after short term drops and could indicate a potential bottom being set at current levels