Matrixport Research: Market Rebound Conditions Gradually Forming After Bitcoin's Five Consecutive Months of Decline
- Core View: Despite the current weak sentiment and low trading volume in the crypto market, multiple key indicators suggest the market may be building a stage bottom, creating conditions for a potential rebound.
- Key Factors:
- Bitcoin has declined for five consecutive months; historically, such rare trends are often followed by a staged rebound.
- The total market cap of altcoins has retreated to valuation ranges that have historically triggered multiple rebound initiations.
- The number of tokens that have reclaimed the 30-day moving average and passed momentum screening has increased significantly, indicating improved market momentum.
- Stablecoin funds are flowing back into the market; for example, USDC recorded approximately $8 billion in net inflows over the past month, improving the liquidity environment.
- Bitcoin is building a potential stage bottom around $66,000. If support can be held and resistance broken, the recovery process is expected to continue.
The overall sentiment in the crypto market remains weak, with trading volume staying at low levels. Many traders have shifted their attention to traditional assets like gold and crude oil. However, beneath the surface calm, some key changes are gradually emerging. Bitcoin has fallen for five consecutive months, a historically rare occurrence, and similar patterns have often preceded interim rebounds. Concurrently, the total market cap of altcoins has also retreated to a range from which historical rebounds have frequently launched. Although our altcoin model has not yet officially turned bullish, the number of tokens that have reclaimed their 30-day moving average and passed momentum screening has increased significantly. As stablecoin capital flows back into the market, overall liquidity conditions are also continuously improving. These signs collectively point to a potential market inflection window that may be forming.
Historically Rare Consecutive Pullback: Bitcoin's Potential Bottom is Forming
Historical experience shows that Bitcoin often experiences interim rebounds after three consecutive months of decline in a bear market phase. However, a sustained decline lasting four to six months with little recovery is relatively uncommon. The current market is in such an extreme sequence, which also increases the probability of a short-term counter-trend recovery.
Meanwhile, the valuation of the altcoin sector has entered a range historically more prone to cyclical rebounds. When the total altcoin market cap deviates from its 90-day moving average by approximately 30%, the market is often in an overall bottoming phase, typically followed by sustained recovery in both Bitcoin and the altcoin sector. Although trading volume remains low, the price structure of some altcoins has begun to improve, and Bitcoin is also building a potential interim bottom around $66,000. If the price can hold the current support zone and gradually break through key resistance levels upward, the market recovery process is expected to continue.
Synchronized Improvement in Momentum and Liquidity: Market Breadth Begins to Expand
Although altcoins have generally underperformed in this cycle, some structural changes are emerging. An increasing number of altcoins are reclaiming their 30-day moving average and beginning to outperform Bitcoin on an interim basis, which is typically an early signal of improving overall market momentum. Simultaneously, the number of altcoins passing quantitative momentum screening has increased significantly, with some of these assets exhibiting a confluence of improving momentum and fundamental catalysts.
More importantly, the market's capital environment is also changing. The previous dynamic dominated by liquidations and capital outflows is gradually shifting towards capital inflows. The renewed expansion of stablecoin liquidity is one of the key signals. Over the past month, Circle's USDC alone recorded a net inflow of approximately $8 billion, indicating that fresh capital is re-entering the crypto market. As liquidity gradually improves, the probability of capital being reallocated to Bitcoin and Ethereum is also rising, which will provide support for the broader market.
Overall, crypto market activity remains subdued, but several key conditions are gradually taking shape. After experiencing a historically rare streak of consecutive monthly declines, Bitcoin appears to be forming a potential bottom. The return of stablecoin capital is also improving market liquidity conditions. Concurrently, the breadth of the altcoin market is beginning to expand, with an increasing number of tokens reclaiming the 30-day momentum demarcation line. Although our altcoin model has not yet officially turned bullish, the number of trading setups meeting our screening criteria has risen to its highest level in months. If Bitcoin confirms a trend breakout above key price points, the probability of a broader market interim rebound will further increase.
Some of the views above are from Matrix on Target. Contact us to get the full Matrix on Target report.
Disclaimer: The market carries risks, and investment requires caution. This article does not constitute investment advice. Digital asset trading can carry significant risk and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
