Cryptocurrency Analysis
Bitcoin experienced a notable rebound of approximately $3,000 following a steep decline, meeting expectations as fear and panic reached their peak. Observing this turnaround closely, on-chain analyst Ki Young Ju seeks to understand the current state of cryptocurrencies by examining ten distinct metrics.
At the time of writing, the price of Bitcoin (BTC) was hovering near the $93,000 mark, showing some recovery following the opening of the US stock market. Many analysts had anticipated a bottoming out and potential reversal at these levels, albeit in the short term. Ki Young Ju provides insights into the present state of both futures and spot markets, helping to clarify recent developments.
Futures Market
The average order size in the futures market indicates that major players, or whales, are withdrawing, leaving individual investors more dominant than before. InterExchange Flow (IFP) data shows a collapse in the BTC flow from spot to futures exchanges, signaling a move away from days when whales secured long positions with BTC as collateral, previously fueling price increases. Traders continue to profit significantly from ETFs and institutional inflows. While open positions in the futures market remain above last year’s levels, the overall funding rate stays neutral, countering the perception of extreme pessimism in the futures market.
Spot Markets
The Coinbase Premium has reached its lowest point in nine months, possibly due to institutional sales linked to ETFs. Although negativity is on the rise, investor interest in the US has historically rebounded. For the third consecutive week, ETF weekly flow remains negative. Strategy mNAV stands at 1.23, indicating difficulty in raising capital to acquire more BTC in the short term, similar to ETHZilla’s recent need to sell due to negative mNAV. Caution is advised to prevent similar strains spreading among reserve companies.
On-Chain
The increase in Bitcoin’s realized market value has paused for three days now. Market capitalization is growing slower than realized cap, confirming a strong selling pressure on-chain. The PnL Index turned short on November 8; whales are taking profits. If the cycle theory holds, the bottom of the cycle should be around 56K, with the realized price approximately at that level.
Cryptocurrency Predictions
After reviewing the metrics, Ki Young Ju shares his forecasts, believing short-term conditions remain weak. The analyst notes weakening dollar liquidity, tightening in funding markets, and cooling BTC inflows contributing to a negative outlook. However, persistent net outflows do not imply a market collapse.
The on-chain analyst does not expect consistent outflows in the next six months. He also mentions that any interest rate cuts or relaxed monetary policies could reverse market sentiment, directing liquidity back to ETFs. Greater adoption of stablecoins and reverse ICO waves by public companies might shift traditional assets towards DEXs.
The cryptocurrency ecosystem could reorganize around assets previously handled in the TradFi sector. While Bitcoin would benefit significantly, altcoins with weak narratives or lacking real performance might lose liquidity.