Bitcoin and other digital asset markets have failed to shore up their strong resilience again.
Meanwhile, the general situation has become more pessimistic recently, and the world’s largest cryptocurrency cannot maintain a position above its immediate support level. The same holds true for the majority of altcoins.
One month has passed since the crash on May 19, and the market has not really contributed to a significant recovery. So the question remains, when and how can we confirm that we are in a bear market?
Bitcoin price: Still bullish?
Although the dominance of bitcoin has declined in the last few months, its market value remains responsible. It represents 43.3% of the overall value of cryptocurrencies. Ethereum accounts for 16.8% of the market, so we will try to determine the trend based on the statistics of these two currencies.
Now, from a price standpoint, bitcoin is still not the terrain of man. His last attempt to bounce back and go up to $40,000, or $42,000, was foiled, and he had more problems.
No returns and lower lows below $30,000 to $28,850 are possible. On top of that, one expects that Bitcoin may touch its previous ATH range of $20,000. Now, this is principally based upon technical analysis, but several other critical factors should be given equal weight.
These factors include
- On-chain Dynamics
- Derivatives Activity (Futures, Options Volumes)
The net growth of BTC remains high
When we mentioned On-chain dynamics, we pointed out the level of business in terms of Bitcoin users. And, it would seem that the space hasn’t lost hope yet.
Based on the net growth chart of Glassnode entities, there is still a fair amount of new users joining the Bitcoin network, something that was not noticeable during previous downmarkets. At the time of writing, net growth was nearly as strong as it was during the month of April-May.
A bearish market is usually confirmed with a view to net growth when users do not buy support prices anymore. Talking about support prices, the importance of derivatives cannot be ruled out either.
One of the key reasons for heightened activity and cost action of altcoins has been the emergence of Ethereum Futures. As observed, the cumulative open interest is still markedly high for Ethereum, which means that the market has not lost the involvement of its user base.
Nonetheless, it is crucial to bear in mind that the bears are having the most dominant period since the end of 2020. The chance of a prolonged price decline is not out of the question, but for the time being, the cryptocurrency market has not yet folded.
Net growth for CTB is still high. When we spoke about the dynamics of the On-chain, we focused on the level of activity of Bitcoin users. Space seems to have not given up hope.
According to Glassnode’s physical net growth chart, there is still a substantial number of new users joining the Bitcoin network, which has not been noticed in the previous bear market.
At the time of publication, net growth from April to May was nearly as high as previously. When users no longer purchase support prices, a bearish market is typically confirmed with a view to net growth. The significance of derivatives cannot be disregarded.
A major reason for the increase in altcoin activity and price movements is the emergence of future Ethereum. One can see that the total open interest of Ethereum is still high enough, which means that the market has not lost the promise of its user base.
The bears are gaining grip, but the bulls are still struggling. They are in their most dominant period since the end of 2020. The likelihood of a long-term decrease in prices is not impossible, but for the moment, the cryptocurrency market has not closed.