CryptoQuant analysts, including Maartunn and Carmelo Aleman, agree that the prolonged decline in Bitcoin has finally cleared the market of speculators, panic sellers and other 'weak hands'. All on-chain metrics clearly demonstrate the foundation for the recovery and subsequent growth of cryptocurrency prices.
I have highlighted five main arguments from on-chain statistics:
Argument: Completion of 'Deleveraging'
The market was overheated, but the situation has now normalised. This is indicated by a sharp drop in open interest of over 12% per week at present.
Argument: Return of spot demand
This critically important signal distinguishes a 'dead cat bounce' from a real reversal.
The Spot CVD (Cumulative Volume Delta) metric on spot exchanges, especially Coinbase and Binance, has moved from negative to neutral or positive. Sustained growth is impossible without investment in spot Bitcoin.
Argument: Hidden bullish divergence on the weekly chart in the RSI indicator
Argument: Short-term holders (STH) have capitulated.
The Short-Term Holder Spent Output Profit Ratio metric has fallen well below 1.0. This indicates that short-term investors were selling coins at a loss. The 'weak hands' are out of the game. Coins have flowed from panic sellers to 'smart money' willing to hold the asset long term.
Argument: Growth in liquidity in stablecoins
There has been an influx of stablecoins (USDT and USDC) on exchanges, while the influx of BTC has declined.
This morning's drop in BTC may mislead traders, so pay attention to trading volumes. These were low, creating a 'thin market', which market makers took advantage of by 'knocking out' the 'best price' for institutions to enter the market. I would describe this situation as a 'double bottom' reversal signal forming.
