Exploring the Crypto Landscape

Disclaimer

This is not financial advice and should not be taken as such. This is merely an opinion article.

Introduction

Since our previous blog update, the landscape of Bitcoin and the broader cryptocurrency market has witnessed a large upswing. Bitcoin, Solana, and Avalanche have experienced significant price movements, with Bitcoin reaching a peak of 45k before pulling back to 41.5k. We at wevr believe these trends indicate the onset of an early bull market, echoing the patterns observed in late 2020.

However, the driving forces behind this upswing might differ from the 2020 rally. The potential rollout of Bitcoin and Ethereum ETFs, along with the anticipated Bitcoin Halving in April 2024, are pivotal events that could shape the market's trajectory. Our team is poised to offer insights and analytics on these developments.

Correlation to 2020?

Figure 1: Bitcoin price longterm

The price patterns of Bitcoin between October and December 2020 show a resemblance to recent months, although the growth is more measured, reflecting the asset's maturation. The two dips observed in December before a three-month rally are particularly noteworthy. The recent correction from 45,000 to 41,500 mirrors this pattern and may influence Bitcoin's market in the next 3 to 6 months.

Figure 2: Bitcoin Interest Comparison

Google Trends shows that Bitcoin's interest, while higher than in early December 2020, is much lower than its peak in late December 2020. For the Bitcoin price to continue increasing, retail investors need to reengage in the market. We expect a delayed rise in blockchain activity metrics for Bitcoin and Ethereum due to high gas prices.

Bitcoin Halving

The upcoming Bitcoin halving in April 2024 is anticipated to stir retail interest significantly. While halving events have historically led to price increases, the market response might deviate from expectations. The halving will reduce the rate at which new Bitcoins are generated, affecting miners more than retail users.

Figure 3: Bitcoin UTXO Volume

UTXO volume analysis shows a decrease in Bitcoin transfers, indicating that holders are treating Bitcoin more like gold. An increase in UTXO volume could signify long-term holders beginning to take profits.

Altcoin Activity

The recent weeks have seen significant activity in the altcoin market, with top altcoins experiencing 20-50% price increases. The trend of significant airdrops, like those on the Solana network, continues to attract attention. Altcoins often exhibit higher volatility compared to Bitcoin, with sharper price drops following Bitcoin's declines.

Institutional Investment and Market Stability

Institutional investment continues to play a pivotal role in the cryptocurrency market, contributing to its increasing stability and maturity. Large-scale investments from hedge funds, asset managers, and corporations have added a layer of credibility and financial backing to the market. These institutional investors bring not only significant capital but also a level of scrutiny and regulatory compliance that can help mitigate some of the risks associated with cryptocurrencies. Their involvement is likely to sustain market growth and attract more conservative investors, further solidifying the market’s foundation.

Regulatory Landscape and Its Impact

The evolving regulatory landscape is another critical factor influencing the cryptocurrency market. Governments and financial authorities worldwide are working towards establishing comprehensive regulatory frameworks to address issues such as market manipulation, fraud, and investor protection. These regulations can have a profound impact on market dynamics, affecting everything from trading volumes to investor confidence. While some regulatory measures might introduce new challenges, they also have the potential to enhance market transparency and stability, making the cryptocurrency ecosystem more robust and appealing to a broader range of investors.

Conclusion

The current period is exciting for cryptocurrency investment. With continued interest and upcoming feature launches, wevr.ai is poised to provide valuable insights into the cryptocurrency market. Be sure to check out wevr.ai for more information and updates.