Crypto Researcher: Does Recent Price Action Suggest Bull Market?

• IntoTheBlock published a blog to determine if the current crypto landscape is a “bull market” or “bull trap.”
• Network fees have increased due to the increase in Bitcoin’s price since November.
• The blog suggests that while the bottom may be behind the users, there is still uncertainty due to the macro landscape.

The crypto market has experienced a sudden improvement, entering 2023. Bitcoin shot up by 27% nearly three weeks into January. This poses the question if it is real after all. According to crypto researcher Lucas Outumuro, whether crypto can still rally amid broader financial liquidity drops is still uncertain.

Blockchain intelligence platform IntoTheBlock published a blog to explore if the current market is actually bullish in nature or if it is a “bull trap.” The article by Lucas Outumuro begins by addressing the strong price action that the crypto market has observed in 2023 and proceeds to evaluate probable signs for a bottom based on blockchain metrics of prior bear markets.

The blog initially establishes that it is accounting for an actual possibility that it may be “different” this time as compared to the market’s history considering the macro outlook and the broader effects of global liquidity on risk assets.

According to the document, network fees rose as Bitcoin’s value spiked above $20,000 for the first time since November, while Ethereum also experienced a three-month hike in its fees with OpenSea and UniSwap increased its gas consumption.

On the other hand, $300M worth of Bitcoin left centralized exchanges after a week with smaller outflows. Meanwhile, Ether recorded $400M in inflows, majorly flowing into exchanges including Kraken and Binance.

The researcher analyzes the profitability of Bitcoin holders by studying a few factors, including the percentage of addresses earning or losing money that has historically pointed to peaks and bottoms. The intelligence platform defines “out of the money” as a situation when previous bear markets have bottomed after getting to the point where 50% or more of the holders are losing money on their positions.

However, Bitcoin surpassed this level back in November before jumping back again shortly after. Hence, the blog states: Bitcoin believers were eager to accumulate as the FTX-driven capitulation led most holders into losses.

The document also confesses that while it may be too soon to call the bottom, hodlers’ balance hiked by 1.6M BTC ($30 billion at the time) in November indicating the high demand realized.

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