The "crypto winter" won’t last forever, that’s why we are checking graphs constantly in the hope that finally, the bullish trend will start. But how can we detect that the next price decrease is a bullish trend and not a short-time surge that will be followed by a sudden and probably even more drastic drop?
Finally, how can we be sure that the bullish trend is going to come? What if Bitcoin (and other altcoins) will never recover?
Yes, we all know that the market is moving in cycles but if an asset dies, the next cycle will start without it.
But when is an asset is dead? When nobody uses it.
It is easy to detect when the asset is dying. It happens when users sell it massively. Here, I’d specify that a coin starts dying when whales start getting rid of it massively (do you remember what happened with FTX? If not, you can check here what happened when the main holders started dumping the token).
So, the Bitcoin case is not like this. Moreover, approximately one-quarter of the current Bitcoin supply has not moved from wallets during the last 5 years.
Source: Twitter
As you can see, these coins were mostly purchased when Bitcoin became popular.
"Those are not the minor users but whales, the ones who actually can determine the asset development."
Yes, those whales dumped FTX and caused the bank run which led to the FTX and Alameda Research collapse.
But they don’t dump Bitcoin, they hold it for many years. It means that they are sure that the BTC price is going to recover and the asset will generate a significant profit.
What about other crypto assets?
The FTX collapse has pulled many companies to the bottom, and many of them are trying to avoid bankruptcy by looking for sources to stay afloat.
Goldman Sachs, a leading global investment banking, securities, and investment firm, is planning to devote tens of millions of dollars to buy crypto companies that were affected by the collapse. And you can trust me, Goldman Sachs doesn’t invest money in just anything. Moreover, this move alone can already push the crypto prices up.
So, the major market players are sure that the market will recover. They impact the market, so, for us, there are no reasons to doubt that a bullish trend will start.
Another question is when it is going to happen.
Many people claimed that the bulls will be back by the end of 2023 but we can already see that these forecasts were incorrect.
Moreover, there are NO signs that the recovery is going to start soon.
Why do I think so?
Traditionally, the bullish trend starts when there is an inflow of resources, and these resources are normally provided by institutional investors. During the bull run of 2021, institutional investors were pouring funds into the crypto market. We could see how the BTC/USD market share was growing compared to the BTC/USDT market share. Now, the trend is the opposite. Institutional investors don’t hurry to invest in BTC. Therefore, for now, we cannot expect the BTC price to grow.
Another detail that makes me feel rather pessimistic about the fast BTC recovery is the market sentiment.
The market sentiment is calculated based on a number of factors such as volatility, market momentum, social media, market dominance, and trends and it shows the mood of investors and their willingness to invest in an asset. The higher the value on the scale is, the more willing are investors to buy the asset. And on the contrary, if the value is low, it shows that investors are fearing to purchase the asset.
During the several last months, the market sentiment has not moved out of fear or extreme fear.
It means that investors are consistent in their unwillingness to purchase BTC and thus, no fast BTC recovery is in sight.
Finally, the crypto winter may be prolonged by global inflation, the looming recession, and political instability.
How Can You Detect That a Bull Trend Has Started?
Now, that we know that the crypto market won’t recover soon, how can we see when the recovery starts?
There are some factors to check.
Institutional investors
When they start buying Bitcoin, and the BTC/USDT market share starts growing compared to the BTC/USD share, the market will start recovering.
Market sentiment
As soon as it starts mowing in the green, you can start checking it more frequently. If the movement is consistent, it may be a sign of a bull run start.
Bitcoin halving
Every time before halving, the BTC price surges. The next anticipated BTC halving is in May 2024. So, we can expect the coin to boost in value in the first quarter of 2024. But without the previous factors, halving alone doesn’t guarantee a bull run.
While we have determined that BTC is going to recover, even though it may not happen soon, don’t forget that crypto is volatile, and investing in it is connected with risks. That’s why my investment tip is standard: invest only those funds that you can afford to lose and always perform your own research.