The good start to the year for the cryptocurrency market invites more and more optimism from investors and industry enthusiasts. And it can be summarized through three metrics that account for the current panorama.
The first, and perhaps most basic, is total market capitalization, which encompasses the tens of thousands of cryptocurrencies in existence today. Its increase has been notable, beyond the specific cases of outstanding coins and tokens.
Between January 1 and this Tuesday the 17th, the total market capitalization has risen just over 24%. Right now, at the time of writing this article, the global cryptocurrency accumulates some 988,000 million dollars of capital, after opening the year below 800,000 million dollars, according to data from CoinMarketCap.
While the full market is in the green, public sentiment changed dramatically in a matter of days from fear to a kind of neutrality, as reflected by the fear and greed index now. Data from alternative.me shows that the index now sits at 51 on a scale from 0 (extreme fear) to 100 (greed).
Finally, we find the contrast between the behavior of bitcoin (BTC) and the rest of the main cryptocurrencies: there is a lot of balance in the indicator called “altcoin season index”.
Over the last month, that index points to quite parity, with its number at 49. That is, half of the top 50 altcoins by capitalization have outperformed BTC in 30 days.
If the index were above 75, we would be looking at an “altcoin month”. And if it went below 25, it would be “bitcoin month”. At the moment there is no clear dominance between one and the other, although this behavior does show a change in trend with respect to the "season", a period of 90 days; or the last year.
It Will Be A Cycle Of Good Tactics
Despite the fact that the market has started the year on the right foot, there is still no consensus that the worst is over for bitcoin (BTC). This is why analysts are still exploring the possibility that the bear market is truly over.
Little by little, some indicators have been appearing that could indicate that the end of this bearish period is coming, according to the analysis firm Glassnode stated in its most recent bulletin, published this Wednesday, January 18.
First, they agree with other analysts that the cryptocurrency is reaching its floor in the market. Glassnode came to that conclusion through a floor detection model based on “realized price” or the average price BTC has moved.
According to this indicator, a scenario similar to that of previous market floors is glimpsed: mainly, in the 2015 and 2019 cycles.
Additionally, they identified an increase in the profits of Bitcoin miners through the commissions paid for transactions. This, they allege, reflects a growing demand for space on the network. That is to say: greater interest of users in trading bitcoin.
The next indicator outlined in the report points to "a robust bear market floor," in the words of analysts. Basically, it is a sample of a high volume of coins moving at low prices. “This reflects both a ousting of sellers (capitulation) and an equal and opposite influx of new accumulation demand,” Glassnode states.
Finally, and perhaps the most determining of the indicators presented by Glassnode, is the “cycle change detector”. At this point, as with the realized compounding case, the picture looks like the 2015 and 2019 market cycles: signaling the cycle shift towards a new bull market.
