Five Bullish Signals in the Crypto Market

Recently, the crypto market has shown a positive rising momentum. Ethereum started to rise after the successful Shanghai upgrade, having increased by over 75% this year. Let's take a look at the five main bullish signals in the current crypto market.

1. Open contract quantity rises

Futures contracts are a common way for traders to gain leveraged exposure to crypto assets. The open interest ( in the positions ) reflects the market's activity and liquidity.

The total open interest of Bitcoin futures recently broke through 10 billion USD, surpassing the previous high. This indicates increased market participation and improved liquidity. However, it is important to note that the accumulation of leverage may also exacerbate price volatility.

2. On-chain activities increase

The total number of daily active addresses on major smart contract public chains has stabilized around 2 million, an increase of 77% from the low point in August 2022. This reflects the prosperous development of the blockchain economy.

The total yield of DeFi has continuously risen since June 2022, increasing by 94.2% from the lowest point. Higher DeFi yields are usually associated with rising asset prices, indicating that market participants have increased on-chain activities.

3. The proportion of stablecoin holdings decreases

On-chain data shows that since the collapse of Terra-Luna in May 2022, the proportion of stablecoin holdings by large investors has fallen to its lowest point, with an average of only 15% of portfolios allocated to stablecoins.

This indicates that investors are shifting from dollar-pegged assets to other crypto assets, reflecting a bullish market sentiment. However, before reaching a bull market level below 5%, there is still a considerable amount of capital held by large players.

4. Decline in Volatility

The Cryptocurrency Volatility Index ( CVI ) is an indicator that measures the implied volatility of Bitcoin and Ethereum, similar to the VIX panic index in traditional financial markets.

Recently, the CVI index has continued to decline, even falling below the levels of November last year. This indicates that the market's expectations for future price fluctuations are weakening, which is favorable for market stability.

5. Ethereum withdrawals proceed smoothly

Despite previous concerns that there would be a large-scale withdrawal after the Ethereum Shanghai upgrade, the actual situation is relatively optimistic.

As of April 19, approximately 257,000 validators are queued to withdraw their full amounts, of which 46.5% are from a certain exchange. Due to the network's withdrawal limits, these withdrawals will be completed gradually over the next two weeks.

The market seems to have smoothly absorbed the excess supply of over 500,000. A significant portion of the withdrawn funds has been re-staked into the network rather than sold.

Market Outlook

Overall, despite the uncertainties in the macro environment, the crypto market is showing a positive upward trend. Mainstream cryptocurrencies have broken through the bear market range, and small coins are also starting to rise.

Investors are continuously increasing their positions, driving up prices and pushing cryptocurrencies to the brink of a mini bull market. On-chain activity remains active, DeFi yields are rising, and volatility is decreasing, all reflecting that the market is gradually improving.

However, investors still need to be cautious, closely monitor market changes, and manage risks appropriately. The crypto market has always been highly volatile, and there are still many uncertainties regarding future trends.