Key takeaways of the week: Bearish market sentiment and signs of a local bottom
Analyzing the current market environment, I conclude that we are observing a classic consolidation phase after a prolonged decline. Key metrics indicate that the bearish sentiment among market participants has reached extreme values, which historically often precedes a local reversal.
Trading volumes on spot markets have decreased, while the dominance of stablecoins continues to rise. This suggests that investors prefer to lock in profits or wait out uncertainty in "cash" rather than build long positions. However, it is precisely at such moments, when fear and panic peak, that experienced players begin to eye assets for entry.
Fundamental Indicators
On-chain data shows an increase in the number of addresses holding coins for over a year. This is a clear sign that long-term holders are not succumbing to panic and are not dumping their positions. Liquidity on exchanges, on the other hand, is shrinking, creating conditions for a sharp upward move even with a small volume of purchases.
I also note the decline in open interest in futures. Long position liquidations have already occurred, and the market has been cleansed of "weak hands." Now, selling pressure is easing.
My professional conclusion: The current situation reminds me of late 2022, when the market hit bottom but no one believed it. While the mass investor remains skeptical, for us analysts, this is a signal that the worst is likely behind us. In the coming days, we should expect attempts at a rebound, but confirming a trend change requires a breakout above key resistance levels.