Exploring the Crypto Landscape

Disclaimer

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

Introduction

In the last three months, the cryptocurrency market has notably captured mainstream media's focus, highlighted by events such as speculation over ETF approvals, Zhu Su's apprehension, and the widely-followed trial of Sam Bankman-Fried.

Analysis

Figure 1: Bitcoin and Cryptocurrency Interest Increase in November

As shown via Google Trends, both Bitcoin and cryptocurrency have seen significant increases from the start of the year.

But Does This Mean Anything?

Are we about to start a bull market again, or will the market retrace? From our blockchain data, there has been an increase in market interest.

Figure 2: Ethereum Average Transactions in November

The small increase in transactions per block on Ethereum may indicate more usage and adoption. However, the small but noticeable increase in Unique Addresses gives a clearer image of the current market sentiment.

Figure 3: Ethereum Unique Addresses Trend

The increase is not substantial enough to assume retail investors have returned in large numbers.

A classic sign of manipulation is the Gas fees hitting a 6-month high overnight (10th of November).

Figure 4: Ethereum Average Gas Fees Spike

The spike in gas fees is likely caused by market makers, affecting retail investors and potentially pushing liquidity to Ethereum layer two solutions and other low gas cost layer ones.

So What Does This Mean?

Our analysis suggests that the recent price increases in Ethereum and Bitcoin are positive signs of a potential bull market, likely driven by institutional buyers. The recent pump may not have attracted enough retail investors, posing risks for late long positions. We believe the increase in volume is reminiscent of the price movements from October to December 2020, when Bitcoin first broke its all-time high.

What is the catalyst going to be this time?

Previous catalyst events, like DeFi summer in June 2020 and the Bitcoin all-time high in December 2020, were driven by innovation and favorable financial market conditions. While a spot Bitcoin ETF approval could be a significant catalyst, such rumors have frequently circulated without materialization.

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