Bitcoin Bounces

Key Takeaways

• Markets rebound sharply, with impressive price action across all major crypto sectors.
• On-chain and derivatives data point toward a combination of low liquidity, seller exhaustion, and short liquidations as the major catalysts for this price run.
• A disproportionate increase in price compared to realized cap suggests that low liquidity levels are exacerbating price movements.
• We review several events of the past week and discuss the major implications.
• Bottom Line: We remain bullish on the performance of Bitcoin and Ethereum through the end of this year but have yet to see sustained demand come into the fold. We think it is wise to stay long but reserve capacity to buy on dips through Q1 and Q2 as we wade through potential choppy waters brought on by macro uncertainty.

Markets Rebound

Over the past week, the global crypto market has performed impressively, with both majors and altcoins rallying despite continued increases in the US 10-year and more hawkish-leaning economic data. At the time of writing, BTC and ETH are both trading nearly 20% higher over the previous seven days, while the total crypto market cap has reclaimed the $2 trillion mark for the first time in over three weeks.