Original author: 0xAnn
Original compilation: Baize Research Institute
1. Rapid rise – really fast
When altcoins started to surge higher, Bitcoin had not even established itself in the new price range. It started with large-cap altcoins like Chainlink (LINK) and Solana (SOL). But within a week, we saw low market caps and memecoins also rally – something that usually happens later in a bull market. My Binance homepage and DEX filter list are filled with names like ORDI, MEME, and TIA.
Some people say that the bull market is getting shorter and shorter. But what I saw was that it was also pure despair. Its like if the coin doesnt rise now you will lose the opportunity.
Why is there such a motivation? I also see older coins like MBL or FIL rising as well. I remember that at the end of 2019 and the beginning of 2020, before the collapse of the new crown epidemic (3.12 black swan), there was a similar market to now. Looking back at that period, we can definitely call it a bull market trap. So is now another bull trap? Or is this just bear PTSD?
2. Ethereum underperforms
Ethereum continues to disappoint in terms of price. Im trying to find out why this is happening.
In 2019-2020, Ethereum’s rise marked the beginning of a bull market. Today, Ethereum seems to be transitioning from a major asset to a laggard.
Calculate the currency income from October 1 to November 14, 2023, and the results are as follows.
Bitcoin (BTC): 30%
Solana (SOL): 120%
Cosmos (ATOM): 22%
Avalanche (AVAX): 69%
Fantom (FTM): 50%
Near Protocol (NEAR): 43%
Then, here are the gains for Ethereum.
Ethereum (ETH): 18%
Even compared to ATOM, which usually lags behind, Ethereum is still at a disadvantage. What’s more, ETH also looks pathetic compared to newer memecoins or newcomers like Celestia’s TIA.
Why the poor performance? I attribute that to staking. Since the Shanghai upgrade, more ETH has been staked. Of course, staking prevents ETH from becoming an unstable asset relative to the rest of the cryptocurrency market. However, enthusiasts like to think of staking as a reduction in supply, so the price “could” be higher. However, what is happening is exactly the opposite.
When people continue to exchange ETH for altcoins that are on the rise, it means that ETH is constantly being sold off. In addition to this sell-off, there are currently no new buyers. Current Crypto investors are too experienced to bet on ETH during the wild meme season.
During the last bull run, when ETH outperformed BTC, it marked the end of the bull run. Traders are no longer betting on other altcoins and are moving their profits to safer assets like ETH, often staking and DeFi mining.
3. Beware of Solana VC holders
As expected, the rally sucked the VCs out of their hole, and then they suddenly announced that they were not giving up on cryptocurrencies all this time.
Interestingly, it didn’t take long for them to “market” their assets.
Solana is by far the most well-known VC coin, and a large portion of the token allocation is aimed at internal investors. It’s no surprise then that they want prices back in the hundreds of dollars. Im pretty sure these VCs still hold those shares.
Let’s not forget the most important holder of them all, FTX/Alameda. According to the Solana Foundation, FTX/Alameda’s SOL tokens will be gradually unlocked by 2028.
4. Watch out for people who are “dumping”
Parties are taking advantage of the rally to sell their assets. This includes project development teams, OGs like Vitalik, and troubled exchanges like FTX.
The first sell-off in a bull market often ends up being a mistake. But the worst-case scenario is that youre forced to buy at a higher price and get stuck.
However, for some, this is a rational decision, for example for some projects that desperately need funds to continue operating. Just be aware: 1. You will not be their exit liquidity, 2. The sale cannot be because they no longer believe in the project and are looking to phase out.
The second point is important because I see tokens from previously famous projects being dumped constantly by development teams.
When the metaverse concept was still hot, SandBox was a very famous project.
Vitalik stated that he has never sold ETH for personal purposes since 2018. However, he often sells ETH at skyrocketing prices, which is kind of interesting.
Some token unlocks are a bit controversial, such as dYdX.
5. Stablecoin inflows – will the rally continue?
I heard news on Twitter about massive stablecoin inflows, so I had to check it out myself to confirm it.
The rise in the market value of stablecoins can often be used as an indicator of whether the bull market can officially start.
With DeFillama, I do see stablecoin inflows, and it looks like it could be big, 3 billion. However, if we zoom out, this is still nothing compared to the outflows the market suffered last year.
Heres the chart for the past three months.
This is what it looks like after zooming in.
While my conclusion is that I dont believe it, its still a good start. I expect that the chart will continue to move upward (uptrend).
This 3 billion stablecoin increment is likely to come from existing cryptocurrency enthusiasts - those who have been sitting on the sidelines waiting to deploy funds. That’s not enough, the inflow we really need is from outsiders in the crypto market. This is also what people hope a spot Bitcoin ETF will attract.
6. Follow Bitcoin ETF news
Browsing news about ETFs, such as CNBCs, can lead to some conclusions.
The ETF is expected to be approved in early 2024, which could be delayed.
Traditional asset managers will still recommend that clients invest only 1-5% of their overall portfolio in cryptocurrency investments. That means we cant expect them to go on a buying spree.
At the same time, advisors are warning about Bitcoins volatility.
In short, we cannot expect TradFi funds to rush.
As for the end of the crypto market bull run, we all know that people will try to get ahead of ETF announcements and take profits before they go public. The passage of the ETF was like a sell-off news event. Kind of like DOGE during Elon Musk’s appearance on Saturday Night Live.
That day may still be months away. Then came the news that the SEC was delaying approval of ETFs. Interestingly, some traders prefer to hold off so that the market remains in a bullish mood.
7. All in all, the market remains confusing
Consensus across the crypto community is divided on whether this rally will continue. To me, this rally feels like what we experienced in the first half of 2023. People get too excited about a rally and then immediately get frustrated when the market pulls back the next day.
The urge to “go all in before the mood sours” is clear evidence of distrust in markets. A few days ago, altcoins had a spike, liquidating almost all long positions.
Imagine spending several days opening a position only to be closed/liquidated on a 1 hour pin.
This liquidation is far from a guarantee that the market is ready to enter a bull market. This means 1. Liquidity is still too low. 2. Some people are still short-sighted and want to make quick profits.
Another piece of evidence comes from comparing spot trading volume with future trading volume. High spot trading volume usually indicates that long-term investors are entering the market. However, a quick glance at Binance shows that the majority of trading volume is still perpetual contracts trading. As long as this continues, you can expect a sharp pump and selloff in the market.
The ideal price movement for a bull market to really begin is usually gradual. Instead of huge increases, what we get is small increases that last for months, with long-term investors happy to add to their positions bit by bit, and most of the time they dont lose money doing it.
Perhaps, this time is different. who knows.
The above items and opinions should not constitute investment advice, DYOR. According to the Notice on Further Preventing and Dealing with Speculation Risks in Virtual Currency Transactions issued by the central bank and other departments, the content of this article is only for information sharing and does not promote or endorse any business or investment behavior. Readers are requested to strictly abide by the laws and regulations of their region and do not Engage in any illegal financial practices.