Binance Research Shows Bitcoin (BTC) and The Greater Crypto Market Has Bottomed Out
The market research arm of crypto exchange giants Binance recently released a report titled:
“Investigating Cryptoasset Cycles: A look at changes in cryptoasset correlations based on market structure” in which they conclude that “the data on correlation cycles may support the notion that the cryptomarket has already bottomed out.”
— Binance (@binance) April 13, 2019
Since the price high of over $19,000 in early 2018, every little stall during its downfall was considered the bottom price by crypto optimists. First, it was around $9,000, then at $7,500, after that, it was stuck near $6,000 when it finally fell to $3,100 in mid-November. The situation was so dire that many in the crypto ecosystem believed that Bitcoin was going down to $1,000. Luckily it was not the case.
However, since the new bull run, many experts think that Bitcoin has finally bottomed.
7% of Cryptoassets are Held by Institutional Investors
Crypto funds are estimated to have about $10 billion in assets. This is about 14% of the total market value of Bitcoin. Considering the Bitcoin domination of 50% of the market share, it can be estimated that the “institutional proportion” overall could be less than 7% for the cryptoasset market.
This is in stark contrast with traditional equity markets. Only Chinese stock markets loosely resemble this with retail investors accounting for 99.8% of the Chinese stock market by a number of accounts, more than 40% by market value, and more than 80% by trading volume.
High Correlation Between Cryptos
This will not come as a surprise to anyone. Anyone following the crypto market closely would have realized this correlation. If Bitcoin is going on a bull run, chances are most Altcoins will be following the same path. This phenomenon is known as the herding effect. Extreme market optimism drives up the price of cryptoassets while extreme pessimism drags it down.
When compared to traditional markets, the crypto markets are young and face several issues. It is an incomplete system and regulations around it are still in the process of formation. The information around the crypto ecosystem is asymmetric. A lot of fake news in this sector which leads to the widespread of misinformation.
Although, the report says:
“Given the short history of the crypto market, it may be premature to say that there is a causal relationship between peaks in correlation and market reversals, or if it’s actually a herding effect during the market reversals themselves.”
Investors HODL During Bear Markets
Data shows that most BTC holders tend to “Hodl” during the bear markets and become active during the bullish runs.
This chart shows that crypto investors tended to HODL in bear markets, beginning to only moderate variations in UTXO cap during these periods.
The report states:
“If individuals were to transact with Bitcoin at the lower USD value prices at the same pace as pre-bear-market, the decline of UTXO cap would be steeper. It is also worth noting that after a significant bear period, the measure does not quickly pick up, at least until the underlying price approaches its previous peak.”
Live Bitcoin (BTC) Price:
1 BTC/USD =$46,244.7492 change ~ -9.90%