The bulls have been predicting an accumulation phase is just around the corner. The bears have been sitting on the fence as various indicators point towards an increased appetite for risk assets, both in institutional and private investment in crypto.
The breakthrough we have been waiting for was Bitcoin passing the $66,000 resistance mark. The market leader has smashed through that number and is trading close to $75,000 today. The weekly increase is closing in on a 20% breakout, passing its first major test after weeks of sideways price movement.
We’ve also been waiting patiently for the global Crypto market cap to increase. It’s been range-bound around the 2.27 trillion mark; however, with positive price movement this week, it has hit 2.61 trillion, adding roughly 340 billion.
There are several catalysts behind this week’s breakout, including clearer rules for crypto proposed by the SEC as well as renewed ETF inflows.
The Big Question: Has Bitcoin entered an accumulation phase?
In our August 12th crypto news release, we reported that Glassnode, a renowned blockchain data and market-intelligence company, said crypto was on the doorstep of historical bottom territory.
Although the company didn’t say it outright, most would translate it as: the only way for crypto is up. It also matched Yahoo Finance’s label, calling the current market cycle a clean-up and build phase, which American trader Peter Brandt coined as a crab market accumulation phase.
As we’ve seen over the past few weeks, patterns have emerged, with Bitcoin leading as a key indicator for the overall crypto market state, holding between $60,000 and $66,000, uninterrupted for seven weeks, while aside from a slight late June drop off to $58,000 to $59,000 overall, Bitcoin has held itself above $60,000 for well over 44 weeks before this week’s rally, which is the consistency bulls are looking for.
Of course, we still track other factors closely in our weekly reports, which we’ll cover next.
A Rise In The Fear And Greed Index And Bitcoin Supply In Profit
If you followed our crypto news closely, then you’d already know we always monitor the ‘Fear and Greed Index’ and ‘Bitcoin Supply in Profit’ indicators closely. It’s a great way to gauge current market sentiment and how close we are to that elusive accumulation phase.
On the crypto fear and greed index provided by alternative.me, it currently stands at 72, which puts the market firmly in greed territory and well up on last week’s 29. Put this into perspective: yesterday it was at 62.
Also, Glassnode reports that the Bitcoin profitability indicator is now positive at 66.675% of circulating supply. That’s up from 57.5% last week. It means that two-thirds of Bitcoin supply is now in unrealized profit.
In our previous reports, we set benchmarks for the ‘Fear and Greed Index’ at 50, ‘Bitcoin Supply in Profit’ exceeding 64%, and Bitcoin breaking through the $66,000 to $66,800 resistance area.
It’s safe to say that Bitcoin has exceeded those benchmarks. That means we now have the strongest evidence that we are entering an accumulation phase, or we are already in it. We still need consistency over the next couple of weeks
Institutions re-enter the market with 30% Increase in ETF inflows
US spot Bitcoin ETFs took in a round $1.107 billion in net inflows during this week’s Opening trading hours. Last week, inflows were $853 million, and this week they rose by nearly 30%.
- Monday: $297.5 million
- Tuesday: $189.3 million
- Wednesday: $517.2 million
- Thursday: $103.3 million
Institutional investment, alongside private investors, has become an integral ingredient in the stability of the overall crypto market, particularly bitcoin, the leader of the pack. From here, the benchmark is set. As investment institutions appear to be regaining confidence in the market, we need to see consistency for the current rally to reach the next level, which would effectively put us into bull-run territory.
Why The Sudden Crypto Breakout?
For many balls the breakout isn’t sudden, but for the Bears it is. We’ll always have the Bears versus the Bulls.
- ETF Inflows: For the most part, renewed ETF inflows have triggered the breakout. However, confidence in the market has been spurred via the SEC’s announcement that it has proposed a regulatory framework.
- U.S. Treasury Buy Back: Bond yields are lower, which effectively weakened the dollar and definitely increased the value of risk assets. At the same time this was caused by the U.S. Treasury’s decision to increase buybacks of long-term government debt.
- Liquidated Short Positions: Reports circulating on Wall Street are that over 3 billion in leveraged crypto positions. Short positions were liquidated over just a 24-hour period. With those positions forced to close, buying pressure helped Bitcoin and other cryptos’ prices increase, pushing them higher.
Has the crypto catalyst for a bull market or accumulation phase finally arrived?
It’s easy to get carried away, but all of our benchmarks we set in our previous weekly reports have been met. We do always say that we need consistency, and on a positive note, we can say that crypto’s consolidation phase has remained consistent over the past 44 weeks, as pointed out by Glassnode. Realistically yes. It looks like we are in that accumulation phase, but it’s too early to call, and it’s too early to call a bull market just yet.
One explosive week doesn’t mean much in the grand scheme of things, but it’s a positive sign. If ETF demands continue after the short squeeze has ended, and the SEC makes a final decision on the Clarity Act and crypto rules, then we’re in an accumulation phase, and we can start looking at more bullish estimates over the next few weeks.
