The Crypto Bull Run may have ended, the market ready for a winter characterized by prolonged losses and stagnation, according to the institutional arm of Coinbase.
“The 200dma Model on Bitcoin DOES Suggest that the Token’s recent steep Decline qualifies this as a bear Market Cycle Starting in Late March. But the Same Exacise Performed on the Coin50 Index (Which Includes The Top 50 Tokens by Market Capitalization) Shows the asset class as a Whole has been Trading in Bear Market Territory Sale the End of February, “David Duong, Global Head of Research at Coinbase Institutional, Said in a note published Monday.
Bitcoin slipped below its simple 200 -day mobile average (SMA) on March 9 and has since established a foot below the same thing in the sign of a long -term lower change in momentum. The 200-day SMA is widely followed to assess long-term trends, with persistent movements above the same thing, representing a bull market and vice versa.
Duong noted this observation while noting the challenges of identifying a crypto bear market, where 20% or more the corrections are routine. On the other hand, a decrease of 20% is generally used to define the bears markets on the stock markets.
The report argued that the 20% arbitrary do not take into account a breach in the feeling of investors and the resulting wallet adjustments stimulated by smaller and more intense sales.
“We have seen in the past that decrees focused on feeling can often trigger defensive portfolio adjustments, although it is not reached the arbitrary threshold of 20%. In other words, we believe that bear markets represent fundamentally regime changes in market structure – characterized by Duong.
In addition to the 200-day SMA, Duong has highlighted the performances adjusted at the risk of bitcoin measured in standard deviations (Z-SCORE) compared to average performance during the previous 365 days as another effective method to identify the markets of cryptographic bears.
“Our model (Z-SCORE) indicates that the most recent bull cycle ended at the end of February. But it has since classified all subsequent activities as” neutral “, highlighting its potential gap in rapidly evolving market dynamics,” said Duong, calling for a defensive position on risk asses at the moment.
The imminent winter can be more brutal for alternative cryptocurrencies given the slowdown in funding funding (VC).
While the BTC set new peaks at the start of this year, well above the summit of $ 70,000 in 2021, the upward trend failed to inspire more risk taking in the VC space, leaving the overall funding of 50% to 60% below the levels of 2021-2222.
Duong said that the cryptography market “could find a floor in the middle in 2T25 – setting up a better 3T25”.
