Original Author: Crypto_Painter (X: @CryptoPainter_X)
This Bull Market:
1. Rises slowly, without showing the money-making effect of previous bull markets;
2. Poor liquidity, most altcoins with high market value other than BTC have not reached new highs;
3. Lack of traffic, social media attention much lower than in previous bull markets;
Let’s talk systematically about these 3 points.
1. Is this bull market rising slower than previous ones?
Is it a technical issue to judge whether this bull market is rising fast or slow? Momentum in price increases is not just about the speed of change, but also about its sustainability;
For example, if a bull market takes 1 year to complete, and it fluctuates at lows for the first 11 months but then rises by 300% in the final month before topping out and entering a bear market, would you call this a bull market?
Even though the last month saw a rapid increase, this kind of market does not represent sustained demand in the market; it’s more likely to be manipulation by major players, often seen in small market cap altcoins where the purpose is simply to pump and dump;
Therefore, for BTC, the bull market we need to see is one that has long-term sustainability, with continuous buying interest and price increases over an extended period, reflecting sustained demand and genuine transactions: buy, hold, and long-term holding;
We can analyze the price increase of each bull market from 3 different perspectives: the duration of the bull market, the increase in price brought by the bull market, and the momentum during the bull market process.
To make a fair comparison with the current bull market, I have used the same structural intervals to calculate the average daily percentage increase in price during each early trend phase of the bull market. This phase is from the low point to just before the price breaks through the previous historical high and hovers near it.
By dividing the price increase during this period by the number of days, we find that the average daily increase in the early trend phases of the recent 3 bull markets has been gradually decreasing, at 1.10%, 0.71%, and currently 0.65% respectively.
Even if BTC were to break out to new highs in this bull market, the speed of increase during the early trend phase of this bull market is lower than the previous two, and if BTC continues to fluctuate, this 0.65% figure will continue to decrease over time.
Thus, it seems that this bull market is indeed rising slowly.
Next, let’s look at price momentum:
The three charts below correspond to the performance of BTC on the ASR-VC trend indicator after breaking to new highs in 2017, 2020, and 2024:
March 2017
December 2020
March 2024
At first glance, there seems to be a noticeable difference;
After the last two price breakthroughs, there were varying degrees of deep retracements, but these retracements did not disrupt the upward trend strength. The green midline in the charts always maintained an upward trajectory. In the current market, the daily level green channel midline has almost flattened, a situation not seen in history.
Moreover, after the deep retracements in the previous two bull markets, the second or third attempt to test historical highs led to successful breakthroughs, resulting in a new strong bullish market. In contrast, the current market has seen multiple failed attempts to break out into a strong bullish trend.
Conclusion: From this perspective, the early trend phase of the current bull market is far weaker in trend momentum than the previous two bull markets.
Although this does not necessarily mean that this bull market has peaked, from an overall structural perspective of a bull market, the foundation of this bull market is weak due to insufficient demand, leading to prolonged consolidation near previous highs.
So, why is the foundation weak?
Next, let’s compare liquidity levels!
2. Is the overall liquidity of this bull market worse than previous ones?
Although the overall liquidity level does not directly reflect price movements, liquidity levels determine the upper limit of price increases;
Observing the overall liquidity level of the cryptocurrency market, we mainly consider two aspects: on-exchange liquidity and off-exchange liquidity.
On-exchange liquidity generally refers to assets that have been exchanged for stablecoins or cryptocurrencies, reflected in the total market value of stablecoins.
Off-exchange liquidity generally refers to global liquidity, more specifically represented by net dollar liquidity, reflected in the Fed’s balance sheet minus a series of dollar financial accounts’ deposits.
First, let’s look at on-exchange liquidity, i.e., the performance of stablecoin market values in the past two bull markets. Since USDC and DAI appeared later, let’s start by looking at USDT:
To match the current market rhythm where BTC prices are ready to break through previous highs, we compare the USDT market value levels at the historical high and the upcoming new high just before the bull market:
Before fully breaking the $20,000 barrier, USDT’s market value had increased by $18.7 billion compared to the market value at the peak of the 2017 bull market. This means that when the price returned to the same position, USDT had an additional $18.7 billion.
This $18.7 billion in additional liquidity was the foundation laid in the early stages of the last bull market. Considering the difference in BTC prices, we also need to look at the increase in USDT market value during this period, which showed a 1680% increase before the last bull market completely broke the historical high!
Now, looking at the current bull market, under the same conditions, the growth in USDT’s market value reached $38.5 billion, but the increase was only 52.16%. Although the total market value is higher in this bull market, the price of BTC is completely different.
In other words, because of the different historical highs of BTC, the required liquidity for the breakthrough is inevitably different.
Let’s do a simple calculation using price ratios:
$69,000 / $20,000 = 3.45
$18.7 billion x 3.45 = $64.5 billion
This means that for this bull market to achieve the same breakthrough trend as the previous one, we would need USDT’s market value to be $64.5 billion higher than the peak of the last bull market.
In other words, the additional $38.5 billion currently added to the market is not enough, indicating that the overall liquidity of this bull market is insufficient compared to the last bull market.
You might say, “You didn’t count other stablecoins, isn’t that misleading?”
Okay, let’s calculate the performance of the three major stablecoins, USDT, USDC, DAI, and BTC’s spot ETF net inflows:
By adding USDC and DAI, along with BTC’s spot ETF net inflows, we can see that the on-exchange liquidity of the current bull market has indeed increased significantly, reaching $509 billion;
However, the on-exchange liquidity of this bull market is still inadequate compared to the previous one.The current bull market has reached $220 billion in liquidity accumulation. In comparison to the previous bull market, which was three times larger at $759 billion, the current market has only accumulated $509 billion in liquidity. This means that in order to replicate the previous bull market’s rapid breakthrough after weeks of consolidation near the previous high, an additional $250 billion in liquidity is needed. It is evident that the lack of this $250 billion is the reason why the current bull market has been stagnating near the previous high for an entire quarter.
However, the key lies in whether liquidity can continue to increase. If in the next three months, the combination of “stablecoins + ETF + Hong Kong ETF” brings in liquidity increments exceeding $200 billion, then breaking through the historical high and escaping the current range will be smooth.
Looking at the recent trends in stablecoin market value and weekly net inflows of ETF over the past three months, it is clear that stablecoin market value growth has stagnated. Any decrease in stablecoin market value outflow poses a significant threat to the current bull market. While stablecoin liquidity has stalled, ETF net inflows have started to recover in the last month, leading to a gradual rebound in BTC prices.
The focus now needs to be on whether stablecoin market value can move in a new direction. A positive move will indicate long-term macroeconomic benefits and pave the way for BTC to break through the current range. On the other hand, a downward trend in stablecoin market value will lead to prolonged consolidation and pullback.
In conclusion, the current bull market is different from previous ones due to its rapid initial phase. If sufficient time is maintained within the current range with continued liquidity growth, a breakthrough is still possible. However, a breach of the range and shrinking liquidity outflows could prematurely end the bull market.
Furthermore, comparing the external environment’s net flow of US dollars during the previous bull market and the current one reveals a significant difference. The current bull market has seen a decrease of $8,571 billion, while the previous bull market experienced an increase of $14,330 billion. Despite the challenging external environment, BTC has performed well, indicating a higher level of trust and preference from traditional capital.
When it comes to media attention, the current bull market seems to be receiving less attention compared to past bull markets. The data on YouTube views of BTC-related channels over the past five years show a decline in interest during the current bull market compared to the 2021 bull market peak. However, if BTC continues to show strong performance and surpasses the $100,000 mark, dormant retail investors are likely to return.
In conclusion, while the current bull market may seem more complex than previous ones, the normalization of social media presence for BTC suggests otherwise. The attention from retail investors may not be as crucial in the current market environment, which is gradually becoming more mainstream.
In conclusion, the complexity of the current bull market compared to previous ones is a nuanced topic that requires thorough analysis and research. Despite the challenges, the potential for BTC to continue its upward trajectory remains, provided that liquidity and external factors align. Thank you for reading!
