‘Bitcoin has already bottomed’, states Binance Research
Binance, the world’s largest crypto exchange, recently published a report, titled ‘Investigating Cryptoasset Cycles’, stating that the cryptocurrency market has already bottomed. Binance used a cross-sectional method to find correlations throughout the crypto market, in order to identify patterns in crypto market cycles.
According to the report, “High correlation suggests that market sentiment has already found a local maximum during that period, and a trend reversal may possibly ensue. Having emerged from a period of the highest internal correlations in crypto history, the data may support the notion that the cryptomarket has already bottomed out.”
A strong correlation between Altcoins and Bitcoin over a long period of time will result in a price trend reversal. Altcoin’s correlation with Bitcoin reached its peak on March 13, 2018. Simultaneously, Bitcoin’s value fell from $6,000 to the $3,000 range.
Price co-movement of crypto assets is quite high; the relatively new crypto asset market and the weak pricing ability may have contributed to this phenomenon. An estimated 7% of the Crypto assets are held by institutional investors, which is almost one-thirteenth of the institutional holdings proportion for the U.S. stock market.
Higher turnover rates for Crypto assets (five times higher than that of the U.S. stock market) indicate that participants in the crypto asset industry could be more active or reactionary than in traditional markets. The Realized Cap metric suggests that crypto-investors tend to hold the cryptocurrency rather than sell it as prices drop. They sell it only when the price recovers.
Extreme internal correlation among coins is often accompanied by a price “inflection point”.
The situation was termed ‘price bottom’ when the value of bitcoin fell in early 2018 from $17,000 to $ 6,000. By mid-November, its value stooped to $3.100.
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