Investing.com — The bull market “still has room to run,” according to a new proprietary indicator from Needham & Company.
The investment firm said Monday that its Crypto Euphoria Needham (CEND) chart suggests that despite Bitcoin’s recent rally to record highs, the market is not yet in the extreme euphoria phase that typically precedes a peak.
The CEND Index is designed to track the state of the crypto market over its cycle, combining seven metrics that assess retail enthusiasm levels, institutional sentiment, and market dynamics. By assigning scores to these inputs, the tool quantifies overall market sentiment, providing a structured approach to identifying periods of excessive optimism or disinterest.
“The higher the score, the more euphoric the crypto markets are and therefore the more likely the market is to peak,” says Needham.
Recently, CEND hit its 2024 high score of 55, surpassing levels from earlier in the year during meme coin mania, but still well below the 82 recorded at the peak of the 2021 cycle.
According to Needham, this gap indicates that the market has not yet reached the level of euphoria associated with a cycle peak.
“If this crypto cycle experiences a full cycle like previous years, we expect CEND to reach levels higher than currently and closer to those seen in 2021, which tells us that this market still has the margin to operate in the longer term.” » the company continued.
Among the biggest contributors to CEND, app rankings for platforms like Coinbase (NASDAQ:) and Robinhood (NASDAQ:) have jumped this year, signaling renewed interest in retailers. Bitcoin’s MVRV Z-score, a measure of market value relative to realized value, has also increased, suggesting that the market is entering the mid-to-late cycle.
Bitcoin dominance remains high, reflecting continued consolidation in the leading cryptocurrency rather than riskier altcoins – a trend consistent with the early stages of bull markets.
“Typically, Bitcoin dominance reaches its highest levels toward the bottom until the start of a bull cycle and bottoms toward the top of the cycle,” Needham’s note said. “We note that the introduction of Bitcoin ETFs in 2024 could distort this measure more this cycle than in previous cycles.”
Other metrics, including DeFi leverage, are also on the rise, while Google (NASDAQ:) search interest in “Bitcoin” and “crypto” is recovering but still lags behind peaks observed in 2021.
Other CEND indicators include Wall Street sentiment toward cryptocurrency-related stocks and premiums tied to Bitcoin holdings in publicly traded vehicles. The growing consensus “Buy” ratings on crypto-related stocks, such as brokerages and miners, demonstrate growing market optimism.
Meanwhile, MicroStrategy Incorporated’s (NASDAQ:) stock premium over its Bitcoin holdings has become a new indicator of market sentiment in this cycle.
