Gm friends,
Another month in crypto… aren’t you entertained? Tariff scares, Bybit getting hacked… While the market initially seemed unmoved, it crashed only days after the hack.
February 25 saw the largest outflow of the Bitcoin ETFs since their launch. What to make of this? Are we still in a bull market? Let’s dive in.
Market Roundup
The crash was not related to the Bybit hack. It appears that the crypto market simply needs a new narrative. Trump in office hasn’t resulted yet in spectacular new policies such as a strategic Bitcoin reserve. In lack of a catalyst, the prices started rolling over and then collapsing.
BTC saw a 18% drop on the monthly chart, the largest percentage drop since May/June 2022.
This poses the question: are we still in a bull market? Judging by the sentiment, you would think otherwise. The fear and greed index is at capitulation levels.
In other words, you’re not the only one to feel a little shaken :).
A way to view this dispassionately is to simply assert that there was a big ‘gap’ in BTC’s price chart that simply needed to be tested. After the Trump election, the price gapped up from roughly 69k to 88k in only six days.
So BTC revisited the price range that it rushed by in early November 2024. This is very common for markets, such a retest.
So how about that bull market, are we still in it? When in doubt, as always, zoom out. Here is the monthly chart for BTC, with the blue line tracking the 10-month moving average.
As you can see, this 10-month moving average has in the past 4 years acted as a clean dividing line between bull markets and bear markets. In the spring of 2021, the 50% correction shook the crypto markets – but there were no monthly closes below this line. Indeed, a few months later BTC reached a new all-time high, even if only narrowly.
Of course, we can use different moving averages than the 10-month MA. The 50-week MA is a similar line in the sand and will give you a bit of an earlier confirmed breakdown signal. But the point here is that we’re still a bull market, until proven otherwise. The burden is on the bears to prove us wrong, and they haven’t conclusively managed to convince us. The current peak-to-trough drawdown from 109k to 78k is 28%, a type of drawdown that has occurred often before in previous bull markets, for example in 2017 and 2021.
Another data point is confluent with this hypothesis of an ongoing bull market, namely the fact that none of the traditional on-chain and technical top indicators have flashed top values yet. Not the Pi Cycle Top Indicator, not the Mayer Multiple, not the MVRV-Z score, to name just a few.
Now that we’ve zoomed out, let’s zoom back in.
This is the daily chart. Which by the way has Relative Strength Readings of below 30 (not on the above chart), meaning oversold. Often a good buying opportunity.
An indication that we MIGHT have bottomed out, is the so-called dragonfly doji candlestick. It tells us that, around the 78k-83k level, buyers have stepped in to push the price back up to the opening level. This sometimes indicates a reversal from a downtrend to an uptrend.
But there is certainly the possibility of a grind down to the 73-74 k level, and even a wick below 70k, while still keeping the bull market thesis intact.
Liquidity seems on the verge of rising
While we’re all scrambling to come up with explanations and narratives for the price plunge, another impassionate way to look at this is simply a look at global liquidity. In the recent months, financial conditions aka global liquidity has been tighter. It’s just a bit harder for people and institutions to get their hands on cash.
Analysts such as Jamie Coutts foresee a trend of rising liquidity. In fact, he sees the recent dip in global money supply (M2) as a healthy retest before lift-off.
Another tailwind is that the dollar seems to have started its downtrend, almost to the day that Trump took office. A lower dollar is good for risk assets such as crypto.
BTC dominance
Surprisingly, BTC dominance is back in the uptrending channel.
Another way to say this is that the markets are still risk-off. Many people are calling off alt season but I wouldn’t go so far. It’s just that there isn’t enough speculative capital around to get people in the mood for gambling a bit, apart from some brief stretches.
Ethereum
Ethereum is hanging on for dear life, but it is, in fact, hanging on.
If you’re a believer, now is a good time to accumulate. Why? ETH is currently one of the most overlooked assets in the market. Retail investors are disengaged and uninterested, while FUD remains high. At the same time, institutions are accumulating, and DeFi has been legitimized as by a new American administration. Institutions build their high-end products on Ethereum, it’s as simple as that.
Airdrops of the Month
Top Altcoins to Watch
DeFi Farm of the Month
Final Notes
What the crypto market is digesting now is the end of the memecoin boom. The market is hungover. I didn’t even talk about Solana here, but as the main crypto casino, it suffered a lot.
To get the juices flowing again, it needs a fresh injection of either bullish news events or simply money printing. Until then, maybe we shouldn’t expect fireworks. It seems like we’re in a reaccumulation phase within a bull market.
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Legal Disclaimer
TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.
You can find a full disclosure of all my crypto & venture investments here.
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
