According to data from CryptoQuant, it appears that the bottom may have already passed for Bitcoin and has become an attractive option for investors despite the recent bumpy ride. Meanwhile, expert Arthur Hayes believes that the bull period has arrived. Here are the details…
What does sentiment analysis indicate for Bitcoin?
In traditional investment markets, overconfidence often signals the peak of an asset’s value. Times when optimism prevails and good news abounds in various media outlets often signal that an asset’s bull run has reached its peak. Conversely, when the market is flooded with negative sentiment, this tends to indicate that the asset is approaching a bottom. CryptoQuant’s data shows that sentiment surrounding Bitcoin is not at its peak right now. One of the indicators used is Google Trends data, which measures global interest in Bitcoin. When Bitcoin nears its peak, global interest typically skyrockets as people rush to get in on the action.
However, available data suggest that global interest remains relatively low. Another important metric taken into account by CryptoQuant is the proportion of Bitcoins estimated to have been purchased one week to one month ago. When the market approaches its peak, most individuals make their largest purchases of Bitcoin, hoping to benefit from the wave of price increases. In contrast, big whales, who often have the power to influence market movements, tend to sell their BTC holdings to retail investors during these periods, leading to a correction in the market. However, available data shows that there is no significant influx of new buyers into the market. In other words, the top of the bull market may still be a significant distance away. This situation offers a unique opportunity for investors to accumulate BTC at attractive prices.
Arthur Hayes: These are harbingers of the crypto bull market
In an X thread on Oct. 4, Arthur Hayes, former CEO of crypto exchange BitMEX, called the ballooning returns a harbinger of a new Bitcoin and crypto bull market. US treasury yields are “skyrocketing” and yet Hayes believes a macroeconomic flashpoint is only a matter of time. This occurs in the form of a “bear steepener,” a phenomenon that describes long-term interest rates rising faster than short-term ones. “Why do I love these markets when yields are skyrocketing? “There is no concept in the bank models that a bear steepening has occurred,” he said.
Why do I love these markets right now when yields are screaming higher?
Bank models have no concept of a bear steepener occurring. Take a look at the top right quadrant of historical interest rate regimes.
It's basically empty. pic.twitter.com/P6MQnCU73N
— Arthur Hayes (@CryptoHayes) October 4, 2023
The current steep rise in the 2h30s curve – the difference between 30-year and 2-year yields – combined with rising long- and short-term interest rates is adding pressure across the economy. According to Hayes, the result should be clear: a return to massive liquidity injections versus the quantitative tightening seen since late 2021, which has weighed on crypto markets. According to Hayes, this cannot happen without major losses along the way. Hayes concluded:
The faster this bear thorn rises, the faster someone sinks, the faster everyone realizes there is no way out but printing money to save the government bond markets, the faster we get back to the crypto bull market.
What does the data indicate?
Separate data from TradingView shows the yield on 30-year US government bonds hit 5% this week – a first since August 2007, before the Global Financial Crisis. Later in the discussion, Philip Swift, creator of statistics resource LookIntoBitcoin and co-founder of trading suite Decentrader, voiced his support for Hayes’ prediction. An accompanying chart showed Bitcoin’s relationship with treasury yields. “This would be the most important catalyst for the Bitcoin bull market,” he commented on a theoretical return to money supply expansion. In addition, the United States continues to increase its record national debt at an astonishing rate.
Two weeks after the debt tally first surpassed $33 trillion, the government increased the debt total by $275 billion in just one day. This situation did not go unnoticed by financial commentators. “The US added more than half of the entire market value of Bitcoin as debt in a single day,” said Samson Mow, CEO of Bitcoin firm Jan3. “This is something like 10 million BTC. “And there are still people who aren’t sure if $27,000 is a good price to buy.” While BTC/USD is trading around $27,500 at the time of writing this article, the combination of these factors makes the future of Bitcoin and cryptocurrency markets a matter of curiosity.
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