Corrections in Bitcoin and Ethereum turned out to be less deep than in the previous uptrend, which allows us to assume a certain level of investor support and capital inflow. Glassnode came to these conclusions.
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The digital asset market continues to post impressive performance, with $BTC and $ETH appreciating meaningfully against USD and gold.#Bitcoin dominance also continues to rise, outpacing traditional and digital assets.
Read more in our latest analysis👇 pic.twitter.com/yIRh1WRtFA
— glassnode (@glassnode) November 1, 2023
Global uncertainty may have drawn many investors away from TradFi – since the start of the year, major cryptocurrencies have proven to be a more effective means of preserving capital than the key precious metal. Relative to gold, Bitcoin grew by 93%, Ethereum by 23%.
Data: Glassnode.
The relative strength of digital assets can also be observed by assessing the depth of corrections using the example of Ethereum, experts pointed out. In their opinion, the rate of the second cryptocurrency by capitalization set a cyclical low in June 2022 after the collapse of 3AC, Celsius and Terra.
Since then, the deepest correction in ETH/USD was -44% (amid the collapse of FTX). Ethereum is currently trading -26% below its 2023 high, well above the -60% or larger drawdowns seen in previous cycles.
Data: Glassnode.
The indicator for Bitcoin in 2023 was only -20.1%. The 2016-17 bull market saw regular corrections exceeding -25%, while the 2019 pullback exceeded 62%, experts recalled.
Data: Glassnode.
Analysts have suggested using the BTC/ETH ratio as an indicator of the transition between high risk appetite and interest in capital preservation.
The graph below shows the decline in the metric. A similar situation was observed in May-July 2022, when the ratio reached the current level of 0.052.
Data: Glassnode.
Analysts compared Ethereum’s MVRV with its 180D-MA. They demonstrated that the market is currently in a state of uncertainty, since the first indicator has not yet exceeded the second.
If this were to happen, experts could see a transition to the initial phase of recovery – investor profitability becomes increasingly important and is often a signal of a rising market. In their opinion, the Ethereum market has not yet recovered from the “hangover” of 2022.
Data: Glassnode.
Analysts reviewed the previously proposed altcoin season indicator, but supplemented it with a new filter. According to it, the “risk appetite” mode arises subject to an increase in the total capitalization of altcoins (the total market value of cryptocurrencies excluding Bitcoin, Ethereum and stablecoins).
The analysis recorded compliance with all criteria from October 20, shortly before the digital gold rate jumped to $35,000.
Data: Glassnode.
During this period, the daily growth in the capitalization of cryptocurrencies excluding Bitcoin, Ethereum and stablecoins reached 21.3%. There have only been six days in history when the value was even higher.
“This highlights the ‘waterfall effect’ of investor capital, as the growing dominance of Bitcoin tends to cause altcoins to skyrocket in value relative to fiat currencies,” – the experts explained.
Data: Glassnode.
Analysts recalled the increase in Bitcoin dominance from a low at the end of 2022 of 38% to 53%. The trend can be expressed through the growth of capitalization of digital gold and altcoins – the first metric grew by 110%, the second by 37%.
“Crypto assets with the exception of stablecoins and Bitcoin are superior to fiat currencies and TradFi instruments like gold. At the same time, digital gold is the leader by a wide margin.”the experts concluded.
Data: Glassnode.
Earlier, analysts noted the interest of asset managers in Ethereum.
Let us remind you that the head of research at Standard Chartered, Jeffrey Kendrick, predicted an increase in the price of the second largest cryptocurrency by capitalization to $8,000 by the end of 2026.
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2023-11-02 12:57:01
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