Sun. Aug 7th, 2022

You might not know it by the bitcoin price, which has slipped further overnight to the $8,100 level on CoinMarketCap, but things are looking up for the crypto market. November marked a sea change in seasons for crypto, with the SFOX Volatility Report revealing a shift in sentiment. Crypto trading platform SFOX said its Multi-Factor Market Index has switched from “neutral” to “mildly bullish, pointing to several several key catalysts, including:

  • Regulatory clarity in Hong Kong
  • Institutional crypto products (Bakkt, etc.)
  • Not one but two bitcoin mining giants planing U.S. IPOs – Bitmain and Canaan Creative
  • Libra effect (“taking lessons from Libra and applying them to China”) 
  • China green-lighting the blockchain
  • Bitcoin whale activity coupled with a ramp-up in BTC futures trading
Source: SFOX

Another potential catalyst that unfolded in recent hours was that the U.S. SEC has decided to reconsider a bitcoin ETF application that it previously rebuffed. After declining the bitcoin ETF application submitted by NYSE Arca for a Bitwise Asset Management product last month, the securities watchdog has decided to review the proposal once more, giving market participants the opportunity to submit comments in favor of or opposed to the BTC ETF. Perhaps the U.S. is feeling the heat from China, which has taken a much friendlier approach to tech innovation.

Crypto Market Sentiment

The SFOX index ranges from highly bearish to highly bullish. SFOX calculates its index by analyzing factors such as”price momentum, market sentiment, volatility, and continued advancement of the sector” combined with “search traffic, blockchain transactions, and moving averages.” Fundstrat’s Misery Index similarly measures crypto market sentiment, reflecting on a scale of zero to 100 how miserable or optimistic investors appear to be, respectively. Lee most recently updated the BMI last month, suggesting that it had “bottomed.” Fundstrat Co-Founder Thomas Lee describes BMI as a contrarian index, saying in times past that the low readings reflect buying opportunities.

Source: Twitter

Headwinds and Tailwinds

China is a mixed bag on crypto. China President Xi Jinping’s decision to publicly recognize the blockchain is clearly a tailwind. China has proven its influence to move the needle in the crypto market. In October, after the government declared its support of the blockchain, the bitcoin price soared more than 40% over the span of just two days. They have also decided to remove crypto mining from their endangered list.

President Xi’s stance on bitcoin and other cryptocurrencies, however, remains blurred. Besides, there are still other major headwinds to contend with. For instance, according to Sino Global Capital’s Matthew Graham, the Chinese government is doling out rewards to citizens who squeal on blockchain startups illegally using token sales to raise funds.

Source: Twitter

On the flip side, with the heightened geopolitical tensions between the U.S. and China in the ever-changing trade war, bitcoin is expected to increasingly behave as a safe-haven asset. Plus, SFOX reveals that investors are traditionally bullish on bitcoin during the holiday season.

One of the market forces that could fuel this year’s rally is bitcoin whale activity. According to SFOX, these big investors are on the move, as is bitcoin futures trading.

 

By Dov Herman

Dov is a Blockchain and Forex trading enthusiast, who spends most of his time trading and examining software who are related to cryptocurrencies and forex trading. You can follow on Dov’s reviews and articles here on TrustedBrokerz and across the web.