As a seasoned analyst with over two decades of experience in traditional finance and a keen interest in the cryptocurrency market for the past six years, I find Jamie Coutts’ analysis insightful and well-informed. His emphasis on key indicators such as the altseason indicator, percentage of digital assets above their 200-day moving average, and fundamental metrics like daily active users and network value-to-fee ratio, offers a comprehensive view of the market’s health.
In an extensive write-up about X, cryptocurrency expert Jamie Coutts shared the key signals he uses to predict when the market could experience a surge in optimistic activity.
Crypto Market Might Be In The Final Stage Of The Bearish Phase
According to Coutts, who serves as Chief Crypto Analyst at educational platform RealVision, there has been a steady drop in the cryptocurrency market. Specifically, an analysis of the equal-weight index (EWI) for the top 200 cryptocurrencies by market capitalization reveals that they have collectively experienced a 55% decline over the last six months.
Even though these digital assets are currently trending downwards, Coutts thinks that the potential benefits outweigh the risks, making it a good time to invest in certain digital assets at their current prices.
Coutts pointed out an impressive spike in the Alt Season Indicator, a metric that compares altcoin performance against Bitcoin (BTC), but it’s worth noting that this increase doesn’t coincide with a prolonged surge in Bitcoin prices exceeding its all-time high (ATH).
Consequently, the bullish trend suggested by the altseason indicator might not last long. However, Coutts believes that the market is nearing the end of its downtrend phase.
As a researcher, I’d like to underscore an important point: Just because some altcoins might be showing price growth compared to Bitcoin (BTC), it doesn’t necessarily mean that investing in them is always prudent when they are still experiencing a downward trend. This lesson was vividly demonstrated during the 2022 collapse of the FTX exchange. My recommendation, much like Coutts’, would be to invest in altcoins only when they are clearly on an upward trajectory, not just based on absolute price charts but also considering their relative performance against Bitcoin.
This Indicator Must Hit 45% For Bull Market To Resume
As per Coutts’ explanation, a significant indicator for identifying a bullish market in the digital asset sector is when more than half (45%) of these assets are found to be above their 200-day moving average (MA). At present, just 11% of these digital assets are positioned above their 200-day MA. In order for a bull run to commence again, this percentage should ideally increase significantly.
To put it simply, for those new to this concept, the 200-day Moving Average (MA) is a tool used in technical analysis that calculates the average price of an asset, such as Bitcoin, over the last 200 trading days. This figure helps traders and analysts discern the general trend of the asset’s long-term performance.
In contrast to the current market dip, some key aspects within the cryptocurrency sector have seen growth over the past half year. These include the number of daily active users, the volume of transactions, and the network value-to-fee ratio. Additionally, fees charged daily have dropped by a substantial 84%. This decrease can be linked to the introduction of EIP-4844, a change that significantly reduced transaction fees for users in the Ethereum (ETH) community.
Coutts suggested that an uptrend in both prices and costs might signal the arrival of a bull market. He explained, “Prices will increase first, and fees will subsequently rise as well.” At the time of publication, the combined value of all cryptocurrencies, excluding Bitcoin, was approximately $879.676 billion.
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2024-09-20 05:48