Crypto Assets market shows 5 positive signals

Recently, ETH assets have performed strongly, rising more than 75% this year. After the successful Shanghai upgrade, ETH continues to maintain its upward momentum. Multiple indicators show that the Crypto Assets market is displaying positive signals.

Bitcoin and Ethereum have broken through the bear market trading range, and other Crypto Assets are also poised for a breakout. Although there are still some concerns in the market, the overall trend of Crypto Assets has remained upward since the FTX incident hit the bottom. During the turbulence in the banking sector, Crypto Assets have surged significantly.

The following 5 key indicators may provide some reference for investors:

1. Open Interest Hits New High

Futures contracts are one of the main ways for traders to gain leveraged exposure to Crypto Assets. The open interest of ( reflects the number of futures contracts that have not yet been hedged or closed. High open interest is typically associated with risk appetite and high liquidity.

The total open interest in Bitcoin futures has exceeded the peak of $9.9 billion before the FTX collapse, recently breaking through $10 billion multiple times. This indicates that market liquidity is improving, but caution is needed regarding the risks that may arise from the accumulation of leverage.

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2. On-chain activities are becoming more active

The daily active address count of major smart contract public chains has stabilized around 2 million, an increase of 77% from the low point in August 2022, reaching the highest level since the end of the bull market.

The total return rate of DeFi has continued to rise since June 2022, increasing by 94.2% from its lowest point. This reflects an increase in on-chain trading activity and investors increasing leverage to obtain returns. It also indicates that the capital strength of borrowers has improved.

As inflationary pressures ease, the relative attractiveness of Crypto Assets has increased.

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3. The proportion of stablecoin holdings has decreased

Since the collapse of Terra in May 2022, the proportion of stablecoin holdings among large investors has dropped to its lowest, averaging only 15% of their portfolios. This indicates that they are increasing their exposure to Crypto Assets.

Although liquidity has decreased, the large holders still have a considerable amount of "ammunition" before reaching the 5% low point of the bull market. After the banking crisis in March, investors' willingness to hold stablecoins has declined, as they prefer volatile assets instead.

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4. The Volatility Index Declines

The crypto volatility index ) launched by CVI Finance is similar to VIX(, showing that even during the recent turmoil in the banking sector, the index continues to decline, currently falling below the minimum point of 62.80 before the FTX incident.

Despite the rapid increase in open contracts potentially exacerbating price volatility, the CVI index anticipates a decrease in future volatility, which is a positive sign.

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5. Ethereum withdrawals proceed smoothly

After the Shapella upgrade, the Ethereum withdrawal process is progressing smoothly. As of April 19, 25.7k validators are queued for full withdrawals, with Kraken accounting for 46.5%. According to the network setup, these withdrawals will be processed within two weeks.

Although some withdrawals have not been fully completed, the market has smoothly absorbed the additional supply of over 500,000 ETH. A considerable portion of the assets has not been sold but has been re-staked into the network.

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Market Outlook

Despite the uncertainty in the macro environment, the Crypto Assets market as a whole presents a positive trend. Major digital currencies such as ETH and BTC have broken through the bear market range, and other small coins have also seen significant increases.

After experiencing pessimism at the beginning of 2023, investors are continuously increasing their positions, pushing prices up and placing Crypto Assets on the verge of a small bull market. Smart money has participated in this year's rise and still has room for allocation.

It is worth noting that this round of increase is reflected not only in prices but also in the high user activity and the rise in DeFi yields. The local "VIX" index for Crypto Assets has surpassed the low point of 2022, and trading activity has reached a new high since the last bull market.

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