Figuring out the end of a season in the crypto markets is always a daunting task that easily finds those who made the wrong assumption and has a hard time locating those who saw the wringing on the wall correctly. That is why the job of predicting market movements on a macro scale is usually left to the market indicators as a more objective and unbiased source. At the present moment, those are aligning into a structure that seems to be showcasing a possible end to the ongoing bear market – a market that many even labeled as the onset of a new Crypto Winter.
That echoed the situation from 2018 when the big push-up from 2017 ended with over a year of very little positive developments in terms of market cap and crypto token prices. Now, it seems that the current negative market situation might be fast-changing and changing for the better, at least when it comes to these long-term indicators. Most analysts agree that only the start of the fall will show these to be either true or false, but even at the present moment, all of them are painting a picture that gives some important insight into the current state of the cryptosphere.
One of the parameters that the analysts are looking for is the number of stationary coins. These are cryptocurrency tokens that have been stationary for at least a year. The research process took into consideration the tokens that have been dormant from July 2021 or even longer. Now, these coins showcase that the accumulation is nearly done.
That has so far signaled the end of the bear market periods. What is more, the bitcoin tokens might be already moving into further accumulation and the repeat of the HODL methodology, which did not react to the recent drop in the crypto prices. Instead, the HODL principle follower took the same opportunity to amass even more tokens. But, when the accumulation is done, the market will see a reaction and so far, that defined the start of the rise of the crypto prices across the board.
Outflow from Exchanges
Another clue for the possible reversal of the present bear market lies in the outflow of cryptocurrencies from digital exchanges. Glassnode, a famous analytics firm that examines the on-chain data shows that there is an ongoing trend of bitcoin tokens leaving exchanges. That means that those who purchase them are storing them in their cold wallets where they will spend a prolonged amount of time, most likely months before their owners decide to sell them off once more.
The number of coins currently on the exchange wallets is just above 12 percent. In times of volatility, like during the crash of March 2020, that number is nearly 5 percent lower as everyone, from esports players to whale investors, began unloading their holdings. In terms of token count, the BTC coins present on the exchanges now number 2.4 million. In March 2020, that number was 3.1 million. This trend, on a smaller scale, began showing itself earlier in July, but these sets of data almost certainly corroborate it.
When financial factors on a macro scale are taken into consideration, there is not as much reason to be optimistic as the on-chain data would otherwise suggest. The growth in the US economy is slowing down and inflation across the world remains strong. Many would be tempted to associate that with the possibility that finally, individuals and institutions are perceiving bitcoin and other digital currencies as a source of possible hedge against the same inflation. However, once more, that seems to be wishful thinking even in the best-case scenario.
An additional element to that idea is the fact that companies like Tesla clearly sold off a lot of their crypto holdings despite the otherwise clear logic of keeping hold of them during market turbulence. Instead, they did just the opposite and offloaded, in the case of Tesla Motors, around 75 percent of their crypto coffers. Other institutions likely did something similar, although with less media attention. But, the same did not sway the markets and they kept hold of their upwards momentum. Presently, the same seems to be gaining momentum, again as the on-chain indicators point out.
There is no denying that as the summer in the northern hemisphere is winding down, financial and economic issues are gaining prominence. In the EU, the state of the energy crisis is only heating up as the potential for the homes of northern Europe to stay cold rises. In the US, analysts and the government are butting horns over the notion of inflation and recession, but also whether or not the country is already in a state of recession. Yet, the crypto markets are moving up. This might seem like an anomaly, but there is a presence for this very situation. Back in March 2020, the crypto market did crash along with all of the rest stocks, bonds, and other financial instruments. That happened on the account of the COVID-19 pandemic getting into its deadly global shape.
But, several months later, the cryptosphere began its recovery while the pandemic was still raging. Here likes the possible explanation for the ongoing crypto recovery and a possible entry into a new pre-bull run. Even though things on the macroeconomic plan seem bad, they are fathomable. The issues that the EU and the US are facing are now clear and concise. In the summer of 2020, when the pandemic was still taking place, a way out was still perceivable. Presently, the war in Ukraine seems to be in a state of familiarity, no matter its human and material costs. The energy crisis will not go anywhere, but some gas will keep flowing. The US will likely enter a recession, but it has been a long time coming. Like the pandemic two years ago, these are all factors that crypto investors can work with, no matter how unappealing they are in the real world.