To know when the cryptocurrency market is starting to recover, you need to monitor a set of factors that reflect the market’s direction. Here’s a detailed explanation:
1. Price movements and technical indicators
Steady price rise: If you notice a gradual and sustained rise in the prices of major cryptocurrencies like Bitcoin and Ethereum.
Breaking through key resistance levels: Prices breaking through key resistance levels indicates a positive turn in the market.
Positive technical indicators:
Relative Strength Index (RSI) above 50 indicates buying momentum.
Short-term moving averages (such as MA50) crossed with long-term averages (such as MA200) to the upside.
2. Increase trading volume
The increase in daily trading volume reflects increased interest from investors in the market.
Increase inflows to trading platforms and exchanges.
3. Improve market sentiment
Fear & Greed Index is moving from fear to neutral or greed.
Positive news such as institutional accreditation, new partnerships, or supportive regulatory changes.
4. Macroeconomic factors
Stable interest rates: If central banks start to hold or lower interest rates, this may increase investor interest in digital assets.
Weakness of the dollar: If the strength of the US dollar declines, this could lead to increased investment in cryptocurrencies as an alternative.
5. Industry Developments
Launching new technologies or projects based on blockchain technology.
Increased use cases for cryptocurrencies (such as payments or decentralized finance).
6. On-Chain Data
Increased movement of large wallets (whales): If large wallets start buying cryptocurrencies.
Increase in active addresses: Increase in the number of new users in the market.
Decrease inflow of coins to exchanges: If coins are being withdrawn from exchanges to wallets, this may indicate investor confidence.
7. Listen to the market
Track market analysis platforms like Glassnode or Santiment to get accurate data on market activity.
Read economic analysis from experts in the field.
In short, when you see a combination of these factors improving over time, it indicates that the market may be on its way to recovery.