The Bitcoin price has finally had some green days after the implosion of FTX. After hitting the provisional bottom of about $ 15,600, the price has now climbed back above $ 17,000. These are the first signs of recovery, but can we say that the bear market is over?
Sentiment is getting better
If it is up to Ki Young Ju, the founder of analytics firm CryptoQuant, sentiment is at least starting to recover. Then Young Ju specifically talks about the sentiment in the United States, which we can track via the Coinbase Premium Index. It shows a green candle again for the first time since the collapse of FTX.
The Coinbase Premium Index is a way of charting the behavior of larger investors. This index shows the difference between the Bitcoin price on Coinbase and Binance. If the index is positive, this means that buying behavior on the US stock market is increasing.
Coinbase is home to the big investors from the United States. If the Bitcoin price on Coinbase is lower than on other exchanges, it indicates that the interest of major US investors has cooled. At the moment, that sentiment is turning, which means that the Americans are at least on the buy side of the market.
The length of the bear market
Another interesting insight pointing to a possible bottom comes from Arcane Research. The lords and ladies of this analytics company found that Bitcoin’s current bear market is now about the same length as those of 2015 and 2018. That in itself is not a reason to conclude that the misery is over, but it is certainly an indication of a possible bottom.
Bitcoin’s previous macro bottom was reached in December 2018, when crypto’s total market cap fell from about $800 billion in January to $100 billion in December. Note that December 2018 is now exactly four years ago.
In that regard, more and more hopeful statistics are emerging, which provide a cautious light in the dark tunnel that has been 2022. On the other hand, we should not forget that the macroeconomic picture is still not positive for Bitcoin and crypto. The Federal Reserve does not seem ready to abandon its strict interest rate policy.
Federal Reserve remains strict
Yesterday, Federal Reserve Chairman Jerome Powell returned to the microphone to shed light on the market. The leader of the US central bank said, among other things, that the Fed does not intend to cut interest rates in the short term. In the meantime, there is room to reduce the rate of interest rate hikes.
While we were confronted with a rate increase of 0.75 percent in recent interest rate meetings, we seem to be able to prepare for an increase of 0.50 percent before December 14. That is a positive development, but it is still an increase in interest rates.
That in itself is not surprising, because inflation came in at 7.7 percent last month. That’s a solid drop from the top, but still well above the Federal Reserve’s target of 2.0 percent. In that sense, we will probably have to make do with the relatively high interest rates of the US central bank.