The crypto market in the past year has achieved massive gains despite some growing pains. In the month of November, the market has pulled back and started to consolidate for a possible bull run. Some of the major coins have dipped to 4-month lows but are stabilizing at key support levels. This market correction will erase overleveraged positions and rid the market of weak trades and reset itself.
Institutional Inflows and Strong Fundamentals Signal Major Upswing on the Horizon
Altcoins have been quite resilient against the dip. Many coins in the DeFi, DePIN, and privacy sectors have performed extremely well amid the current adverse market conditions. Several factors, such as broader crypto adoption, which include new ETFs, RWAs, corporations using crypto for their treasuries and better regulatory policies, have propped up these sectors.
Many indicators in the industry are signaling a bear run: the Fear/Greed index is around 10%, there was a major selloff in the past week, and major coins are down by 13% or more. But this consolidation phase may be the setup for a major bull run and a strong year-end rally. Many investors are buying the dip and are optimistic that the current situation is just a brief anomaly that will lead to a massive bull run and new all-time highs for the market.
Bitcoin Set for Historical Upswing
Bitcoin struggled this week, falling over 13% and dropping below 90k USD, but has since retraced some of its losses. BTC is currently trading at 91k USD with resistance around 94k USD and support at 89.8k USD. Over the past weekend, BTC had remarkably low volatility, moving only 1.7% either way. This narrow range led analysts to say that BTC continued to absorb billions in selling pressure and maintained strong demand. The BTC metrics were very positive, as exchange balances were down slightly, while whales accumulated BTC, with over 100 wallets making buys of over 254K USD.
Institutional buyers continued to buy the dip, and Strategy added another 2 billion USD on November 17th, bringing its total to over 300K BTC. BlackRock reported on November 14th that it had the largest ETF inflow in the past 8 months, totaling 1.43b USD, while Ark and Fidelity stated they had approximately 900b USD in inflows between them. The overall BTC ETF market saw inflows of almost 6b USD, offsetting any outflows by a massive margin. An interesting technical positive in the past week was that hash rates reached an all-time high of 743 EH/s, which has historically signaled an imminent bull run.
With the Thanksgiving holiday approaching and BTC forming a historically strong breakout pattern, it appears that BTC is not just consolidating but signaling a parabolic rise.
Ethereum Innovation a Mainstay as Market Dips
Ethereum suffered from a selloff, but the chain continues to be the choice of most developers because of its stability and scalability, and is in full recovery mode after its dramatic slide this week. ETH did dip below the psychological 3k USD barrier but has since recovered and is currently trading just above 3k USD. The most important sector for ETH this week was L2 ecosystems. The L2’s took off, and on November 13th, the daily transactions were 32m, which is around 13x the ETH mainnet. TVL for L2s climbed to approximately 50b USD with Coinbase leading the consumer charge.
The metrics for ETH were surprisingly high, with staking deposits over 40m USD and a rise in active validators to 1.1m and participation rates around 99%, signaling a strong, healthy and reliable network. This is positive news on the back of waning BTC dominance and mirrors the 2021 altcoin season bull run. ETH appears to be strengthening during this market correction and continues to prove that November is its strongest month historically.
BCH Strong Amid Weak Market
While the rest of the market was selling off, Bitcoin Cash held up surprisingly well. Holder activity in the past week has been strong, with collective BCH holdings in wallets of up to 100k USD, around 4.5 m BCH. There is some negative news, though: funding rates are showing weakness, so BCH derivatives aren’t being funded, and bearish sentiment is taking over. This sentiment has caused BCHs’ open interest to drop 41% since last September, when it was at its highest level.
Bitcoin Cash slipped almost 6% this week, seemingly immune to the selloff, unlike other similar altcoins. The BCH price fluctuated between 530 USD and 475 USD, but is currently holding at 485 USD, showing a rare sign of relative strength. It is evident that this altcoin will continue to grow as the market expands, driven by its real-world adoption in the fast-growing digital cash retail sector.
TRON Exceeds Expectations
Tron continues to surprise the market with increasingly great on-chain numbers. While the rest of the market was selling off, TRX held up, only coming off by 2.9% this past week. Some of the data was record-setting as daily transactions hit 9.38m on November 16th and active addresses surged to 2.8m. The amount of USDT traded on TRX was 3.2b USD in the past week, which is 57% of all Tether, making it the number one stablecoin transaction company (remittances, payments and DeFi at almost zero cost).
Another fundamental is their buyback and burn program, which keeps inflationary pressures under control and has burned over 12 million TRX this week, representing over 4% annually. TRX is executing more transactions than almost any other chain and has solid fundamentals in place, as reflected in its current price of 0.2893 USD.
The crypto market is experiencing a consolidation period amid selloffs, probable overselling, and extreme market-wide fear (as indicated by indicators), but if history repeats itself, the coming weeks could see a massive leg up. If this sentiment transpires, traders/investors could enjoy some great investment opportunities.
