Chinese Investors to Drive Next Crypto Market Bull Run

BTC and the Whole Cryptomarket Already Bottomed Out, Binance Research Concludes

The crypto market appears to be recovering from the bearish trend of 2018 to the extent that many analysts believe t historical lows have already been reached, and the market may be at the forefront of a trend reversal.

A research published by Binance came to the same conclusion after analyzing historical bitcoin behavior data, suggesting that statistics show that BTC has bottomed out.

The study reveals that when there is a high correlation in the crypto assets, there is a reversal in the trend towards bullish performance. This phenomenon is currently being noticeable.

The correlation of assets is a measure that shows how much the price of one product changes with respect to another, estimating how strongly one market influences another. In the case of the BTC, since it is the token against which most of the altcoins are traded, this relationship is easy to determine.

The study conducted by Binance, however, not only demonstrates the existence of a correlation but also uses this value to determine the moment at which a reversal occurs in the graphs:

Having emerged from a period of the highest internal correlations in crypto history, the data may support the notion that the cryptomarket has already bottomed out.

The study also showed that there is a difference between crypto traders and stock traders. Generally, crypto traders have tended to overreact to changes, taking trading as general without seeing the potentialities or risks of a specific token in an isolated manner:

– Extreme market optimism often drives up the price of all crypto assets, including the ones with no clear utility or value. This often leads to the formation of a bubble;

– Extreme market pessimism often sends the price of all crypto assets into a tailspin, including the ones with clear utility or value. This often leads to market over-adjustment.

Another interesting point mentioned in the report is that there was a strong tendency to hodl crypto in bearish times. This behavior differentiates crypto traders from institutional traders.

The HODL mentality could have helped to prevent the fall in prices from being even more significant than observed.

In the face of market downtrends, unlike many momentum-driven institutional investors, most investors in the crypto asset market may prefer to “HODL” through a prolonged decline in prices, but quickly become active when prices recover to near previous highs.

The study closes, explaining that despite the short life span of the cryptomarket, commercial and legal developments give signs that the market is “maturing faster than ever” developing its own characteristics that make it different from the rest of the markets.