The crypto market's bearish period seems to be prolonged more than enough this year. The expected turn of events that analysts predicted in December never came, but instead, a more clash was what the market experience, no thanks to FTX. And now, there are fears that the bulls wouldn't come earlier in the year.
However, some significant events have happened in the crypto space during the last month of the year that may signal the bulls' return early on in the new year.
On December 14, a report from crypto analytic company Santiment shows new addresses that have started accumulating Bitcoin this December. According to the report, between 100 to 10,000 BTC in total, amounting to $726 million was contributed to these new addresses within the last two months of the year. This may be a sign that the bear market finally appears to be ending. The report said these wallets "have been growing their assets holdings in the past few weeks."
If this report is anything to go by, then the tide is turning. If this trend continues, it could signal the start of a bullish period in the new year.
Moreover, the report also shows that not just BTC is been accumulated massively in these wallets. Stablecoins such as $USDT, $DIA, and $BUSD have also seen immense interest from investors. This seems a good radiance of optimism in the market.
In a similar development, a study undertaken by the Coalition Greenwich on financial advisor firms revealed that high net-worth clients are interested in having cryptocurrencies as part of their portfolios.
The result of the study shows that about 92% of financial advisors' customers are interested in allocating a small amount to cryptocurrency in their portfolios. This may suggest that in 2023, investors are likely to allocate bigger amounts to these alternative investment vehicles.
It is the rate of inflation on the USD that has made several fund managers advise their clients to allocate more to the crypto market, as they find it the best way to hedge against inflation.
What does this signify? Well, it signifies the amount of interest in the market's high-return opportunity of cryptocurrency. That's why we see large numbers of wallet addresses come into existence and funds being put into new wallets as their owners cash out their holdings in the other asset classes. This could, in the long run, pave the way for a bull market in the new year.
Although the bear market may continue for some more time, this scenario could change if the numbers in the report and the number of addresses amassed by these wallets for crypto continue to rise in the coming weeks and months.
Undoubtedly, the return of the bitcoin bulls could be great news for the market and could boost overall confidence in the cryptocurrency sector.
There is one other potential sign that the bearish phase of the cryptocurrency market could be coming to an end.
16th, December, the Bank of international settlements released its end-of-the-year report stating that Banks are now allowed to hold 2% of their reserve capital in digital currencies. This is a sign that banks and other financial institutions are slowly getting comfortable in dealing with digital currencies.
But what happens when all the banks start accepting digital currencies for payments? Would this have any impact on the crypto market in the long run? We'll know only after the change of mindset is complete since the new policy is scheduled to take effect in 2025. But the short run may have an impact on cryptocurrencies.
So while the short-run picture for the crypto market remains uncertain, one thing is for sure: It is better to be at the forefront of such a change. We hope we'll see some recovery in the prices of all digital assets, especially bitcoin, in the next two months.
This is something the market will be watching closely.
Conclusion
The cryptocurrency market has experienced a lot of pain in recent months. However, a lot of evidence points towards the fact that the bearish phase of the cryptocurrency market may be coming to an end, at least in the short run.
Whales' continuous accumulation of Bitcoin and other notable high-class stablecoins could mean that the bear market is almost over. The increase in new addresses created in the last few months could also be a sign that the market is starting to expand in the space of crypto assets.
This, of course, would boost the confidence of the market players.
Banks coming into cryptocurrency is yet another strong indicator that the bear market has started to turn.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. Investors and potential investors should always conduct their independent due diligence before making any investments.
Lead image screenshot from Santiment tweet.