From the perspective of on-chain data indicators, what stage is the current bull market in?
The overall sentiment in the market seems to be good these days. After Bitcoin just attempted to break through, the AI + Memes concept has exploded and attracted a lot of attention. A few days ago, everyone was discussing various topics like geese, frogs, and goats, but in the past couple of days, I noticed that many friends in the group are enthusiastically jumping into Memes on APE again. I wonder where this Memes Pump trend will blow next in a few days?
From the operations that friends are currently engaging in, the process of chasing Memes generally follows these steps:
First, find the target. Some friends use on-chain tools (like GMGN, AVE, DexScreener, etc.) to scan the chain, while those with technical skills might use programs to do so. Some friends focus on monitoring messages from various groups, hoping to get recommendations and shares from group owners or friends as soon as possible. Others prefer to keep an eye on the dynamics of certain celebrities or meme coin hunters on Twitter (X).
Second, filter the targets. Currently, there are at least tens of thousands of new Memes added on-chain every day, and most friends can't buy too many, so after finding some alternative targets, they will conduct quality checks, such as using the aforementioned tools or other security detection tools for necessary inspections (to see if there are any scams).
Third, research the targets. This mainly involves searching on Twitter (X), such as directly searching for contract addresses or the number of topics related to specific tokens.
Finally, execute the trade. Currently, I see that many people are using the OKX Web3 wallet for operations, and some are using aggregator platforms like DexScreener, or directly operating through certain Telegram Bots. Of course, some friends might overlook security and social platform checks for the sake of speed, and if they meet their filtering criteria, they might jump in right away while searching for targets.
The overall feeling is summed up in one word: fast. If you buy right, you can make money quickly; if you buy wrong, you can lose it just as fast. In short, we still recommend trying Memes with small amounts, while being cautious of scams (phishing links or fraudulent schemes) and managing your mindset.
Although the market is unpredictable, many people like to make judgments from different angles. For example, some rely on personal feelings, some believe what others say, and some prefer to combine data or indicators for their judgments… In the previous article (October 19), we catered to some friends' needs by making some basic judgments (guesses) based on K-lines and several relatively macro perspectives. This article serves as a supplement to the previous one, as we continue to explore the current market position through other dimensions of on-chain indicators.
1. Continuous accumulation by whales
Historically, whales tend to buy during market weakness and sell during market strength. For example, they often accumulate during the early stages of a bull market and sell in the later stages.
Many friends like to watch various news, such as seeing some crypto media/self-media report that a certain whale address has transferred or sold some Bitcoin, leading them to feel that the market is about to drop, as if all whales are selling off their coins. This perspective can be somewhat narrow-minded.
In fact, looking at the overall situation, although a few whales may choose to sell their Bitcoin due to panic or other reasons, most whales continue to prefer buying and accumulating. In just the past six months, whales (wallet addresses holding over 1000 BTC) have accumulated 1.5 million Bitcoins. As shown in the figure below.
From the current on-chain data, the Realized Price of Short-term and Long-term Whales is $27,000 and $63,000, respectively. As shown in the figure below.
From the Growth Rate Difference, we can also see that the bull market is still ongoing. As shown in the figure below.
In addition, Bitcoin ETF funds continue to flow in, and the balance of Bitcoin on exchanges is continuously decreasing (Bitcoin is being withdrawn from exchanges). Moreover, as the selling pressure from some miners and other entities (such as governments and institutions) decreases, it seems that smaller groups are also accumulating Bitcoin. If this were a bear market, we shouldn't see the situation described above.
2. Are retail investors returning?
Compared to previous bull markets, retail investors seem to have a much greater interest in MemeCoins than in Altcoins in this round of the bull market. From the current search interest trends, retail interest in MemeCoins and Altcoins resembles that of November 2023 (just before the major rebound). As shown in the figure below.
Additionally, there are some intuitive feelings; for instance, it seems that various crypto-related groups are becoming unusually active again, with many groups frequently discussing various MemeCoins, giving a sense of déjà vu.
3. BTC.D
Since around September 2022, Bitcoin's dominance has been on an overall upward trend. As shown in the figure below.
Historically, maintaining dominance during an upward trend for Bitcoin is a good sign, as it indicates liquidity is entering the market and may pave the way for a potential altcoin season. Once Bitcoin breaks through its previous ATH and starts to run strongly, theoretically, some altcoins will begin to catch up and experience rapid increases.
4. USDT.D
In previous articles discussing the altcoin season, we have introduced the USDT.D indicator, which shows the dominance of USDT and the inflow/outflow of USDT in the crypto market.
Typically, if USDT.D rises, it indicates an increase in USDT's dominance, suggesting that people are starting to prefer stability, which may signal a bearish outlook. Conversely, a decline indicates a bullish signal.
From the current data, we can see that since hitting a low in August this year, the total market cap of USDT has increased from $114 billion to $120 billion, while USDT.D has decreased from 6.7% to 5.1%. As shown in the figure below.
This indicates that some cautious funds seem to be shifting towards investing in Bitcoin and altcoins. If we estimate based on expectations, when USDT.D drops to the level of 2%-2.5% and its market cap exceeds $180 billion, the entire crypto market may reach a peak again.
Of course, we need to pay attention not only to USDT, as since last December, the market cap of USDC has been on the rise, which is certainly a good sign, as US institutions prefer to use USDC. As shown in the figure below.
5. Other comprehensive indicators
In addition to the aspects we have outlined above, there are actually many other indicators that can assist us in making judgments, such as those previously introduced in earlier articles:
MVRV Z-Score: This is an indicator that determines whether BTC is undervalued or overvalued. Historical data shows that whenever the MVRV Z-score approaches or exceeds 7, it indicates that the market is entering a euphoric phase (bull market peak). Currently, this indicator's value is 1.97, having reached 3.06 in March 2024, as shown in the figure below.
NUPL: This is an indicator used to assess the total unrealized profit/loss of investors holding BTC. Historical data shows that whenever this indicator approaches or reaches 75%, it may be time to consider exiting. Currently, this indicator's value is 52%, having reached 62% in March 2024, as shown in the figure below.
The Puell Multiple: This is an indicator focusing on the supply side of BTC (i.e., Bitcoin miners and their income). Historical data shows that when this indicator approaches or reaches 3.5, it signals an exit point. Currently, this indicator's value is 1, having reached 2.44 in March 2024, as shown in the figure below.
Pi Cycle Top Indicator: This indicator uses the 111-day moving average (111DMA) and the multiple of the 350-day moving average (350DMA × 2) to identify potential market peaks. For example, in 2017 and 2021, whenever the 111DMA moved upward and crossed the 350DMA × 2, it indicated that BTC had reached its peak. Currently, according to this indicator, such a crossover has not yet occurred, which may suggest that BTC has not yet formed a peak in this cycle. As shown in the figure below.
In addition to the indicators mentioned above, there are many others that can serve as auxiliary references. Interested friends can continue to explore the data websites in the Huahua Toolbox (reply with the keyword "tool" in the backend to obtain access).
In summary, if we overlook short-term fluctuations and consider a relatively longer time frame (such as the next 5-6 months), we tend to (guess) that the market is re-entering a new round of bull market phase, and it may currently be in the later stages of this cycle's bull market. This time, Bitcoin has a significant chance of making a genuine breakthrough, and it is only a step away from $70,000. At this stage, we still do not recommend frequent position changes; instead, we should continue to wait patiently and observe the changes.
It is also important to note that while we lean towards the possibility of a new bull market opportunity within the next six months, we must also learn to respect the market and manage our positions according to our personal risk preferences, keeping an exit strategy in mind.
This concludes our content for this issue. More articles can be viewed on the Huahua homepage. The above content is merely personal opinions and analyses, intended for learning and communication purposes only, and does not constitute any investment advice.
