It’s the million-dollar question: when will the market return to normal?
The past four months have been disastrous as some altcoins have seen a correction of more than seventy-eight percent.
However, the reversal seems around the corner.
In this longread I’ll discuss some of the key features of this reasoning and I’ll dive into my thesis overall, as I’ve been going all-in myself.
Germany was done selling through which the selling pressure has been reduced and, to be honest, Bitcoin has quite nicely absorbed this selloff as Bitcoin is currently still consolidating around $65,000.
Mt. Gox has already sent out 66% of the outstanding BTC to clients so that potential sell pressure has been absorbed by the markets as well. The actual news item marked, potentially, the cycle low of the correction as since then Bitcoin’s price has rallied by close to 20%.
The inflow in the ETF is super positive. Yesterday, more than $400 million of inflow was generated which is a continuation of the strength from institutions through which the sell pressure is quickly getting absorbed by the big guys.
BlackRock provided multiple signals that they’re fully adopting a positive sentiment on crypto. Last week, they provided a case where Bitcoin is a hedge against global uncertainty, while this week the CEO of BlackRock, Larry Fink, became super positive about Bitcoin and confirmed that he was bearish five years ago. People can change their mindset.
During the previous heavy correction to $55K, miners have hit the same level of capitulation as they did during the FTX crash. At the same moment, the sentiment has changed towards a super negative sentiment, which provides additional confirmation of the price levels to be adjusted towards an upwards trending rather than downwards trending market.
A lot of things have been happening and I’m not even discussing the lower CPI rates, the VP of Trump, and all those things, but the markets are quickly adjusting towards a climate that’s more neutral for risk-on assets.
An additional layer is the heavy negative sentiment surrounding ‘low floating, high FDV’ coins which have been getting hammered like no tomorrow in the past months, and perhaps that was due to happen.
I think that this sentiment is quickly going to change. In the past week, we’ve seen multiple altcoins starting to show strength on the horizon and acting strongly in a reversal. As a matter of fact, Bitcoin has been doing well, however, altcoins have been providing a higher return than Bitcoin as their BTC pairs have been doing better.
Additionally, since the middle of May, the moment that the Ethereum ETF got approved, Ethereum has been outperforming Bitcoin by 20%. That’s a signal of strength and as Ethereum ecosystem tokens have been yielding the best return from the previous week, it seems very likely that this trend is going to continue.
Finally, the seasonality of altcoins continues to happen. In the past three years, the markets have seen a case where the first half of the year has been bearish for altcoins, while the second half of the year is the bullish year for altcoins.
Given the current state of sentiment and the heavy capitulation on miners, while the Ethereum ETF is on the horizon, it’s a very likely case that we’re reversing already. The sentiment is always later than what the price movements are doing and this is a primary example of such a case.
I think the markets, are based on what I’ve seen at ETH.CC, is going to fire insanely in the coming years and these price levels are a gift to be given by the markets. I don’t think that the prices are going to stay this low for such a long period, as markets are U-turning very fast quite often.
#ETH_ETF_Approval_23July #Mt_Gox_BTC_Dip #BinanceTurns7 #SOFR_Spike
