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Cryptocurrency asset manager VanEck shared noteworthy findings regarding market dynamics in its latest research report on Bitcoin.
The report, authored by Patrick Bush and Matthew Sigel of the company’s digital asset research team, noted that indicators historically considered “bullish signals” for Bitcoin emerged from both derivative markets and network data.
According to the report, market volatility has significantly decreased as tensions between the US and Iran have eased. Bitcoin’s realized volatility fell from 56% to 41%, while its 7-day average funding rate moved into negative territory, reaching -1.8%, its lowest level since 2023. Analysts note that negative funding rates have historically coincided with periods of strong bullish sentiment. Since 2020, Bitcoin’s 30-day average return during periods of negative funding has been 11.5%, while the overall average has remained at 4.5%. It was added that returns were significantly higher during periods of deeper negative levels.
According to VanEck’s analysis, another important signal in the market is the decline in hash rate. The change in hash rate over the last 30 days has fallen to one of its lowest historically lows, but past data shows that strong recoveries in Bitcoin price follow such declines. In six of the previous seven similar periods, Bitcoin was at higher levels after 90 days, with a median return of 37.7%.
On the institutional investment side, the picture is showing signs of recovery. Spot Bitcoin ETPs, which experienced outflows of approximately $4 billion between the end of January and the end of February, have reversed direction since the end of February. Net inflows were recorded in six of the last seven weeks until mid-April.
In the options market, investors appear to be maintaining a cautious stance. The fact that “put” option premiums reached historical highs in the last 30 days revealed that strong hedging demand and bearish expectations were being priced into the market. However, the significant decline in these premiums in recent weeks suggests that excessive pessimism may have passed its peak.
On the on-chain data side, a mixed picture emerges. While the daily transaction volume increased by 22% month-on-month to reach 545,000, the number of active addresses and the creation of new addresses saw a limited decrease. Transaction volume averaged $48.5 billion per day, while network fees decreased both monthly and year-on-year. This indicates that costs remained low despite the increased transaction activity.
Different trends were observed in long-term investor behavior. While selling activity increased among investors holding their holdings for 1 to 5 years, this movement remained below the annual averages. In contrast, there was a significant increase in transfer volumes among investors holding their holdings for 5 years or more. In particular, the activity of investors holding coins for 10 years or more approached the highest levels in recent years.
On the mining side, the unbalanced decline between mining difficulty and hash rate is noteworthy. The fact that the difficulty level is declining faster than the hash rate indicates that the network’s adjustment mechanism is working with a delay and that a rebalancing process is taking place among miners. Nevertheless, the fact that recent declines have been shorter and more limited suggests that a healthier structure is emerging for the market.
VanEck analysts argued that, based on historical data, both negative funding rates and declines in hash rates have been associated with strong future returns, leading their overall outlook for Bitcoin to become increasingly bullish.
*This is not investment advice.
coindesk.com
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