Five Positive Signals in the Crypto Market

Recently, ETH has performed remarkably, with an increase of over 75% since the beginning of the year. Following the successful Shanghai upgrade, ETH has entered a new round of upward momentum. Besides ETH, the overall crypto market is also showing multiple positive signals. Let's take a look at the five major bullish signs in the current market.

1. The scale of open contracts hits a new high

Futures contracts are one of the main ways for traders to gain leveraged exposure to encryption assets. The open interest ( reflects the number of futures contracts that are not closed or hedged, including positions from both long and short sides. Higher open interest is typically associated with risk appetite and ample liquidity.

The total open interest for Bitcoin futures recently broke through the $10 billion mark, surpassing the previous historical high. This indicates that market conditions are improving and liquidity is gradually recovering. However, it is important to note that the accumulation of leverage may also exacerbate reflexivity during price fluctuations.

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2. On-chain activities are becoming more active

Despite the lingering uncertainty in the macroeconomic outlook, the blockchain economy is showing a robust growth trend. The total number of daily active addresses on major smart contract public chains has stabilized around 2 million, marking a 77% increase from the low point last August, returning to the levels seen during the bull market of 2022.

The overall yield of DeFi has also significantly rebounded from the low point in June last year, with an increase of 94.2%. The rise in yields is usually related to the increase in asset prices, reflecting that individuals and institutions have increased on-chain activities and adopted more yield strategies. At the same time, it also indicates that borrowers have the capacity to bear higher capital costs, leading to an overall improvement in capital conditions.

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3. The proportion of stablecoin holdings has decreased

Since the collapse of Terra in May last year, on-chain whales ) have reduced their exposure to stablecoins to the lowest level, with an average of only 15% of their portfolios allocated to stablecoins. This indicates that market sentiment is shifting from dollar-pegged assets to token assets, which is a positive sign.

However, the liquid funds in the large wallets still have a certain scale, and there is room for decline before reaching the 5% bear market low. Overall, investors are gradually increasing their exposure to crypto assets, with no signs of slowing down.

4. The volatility index is at a low level

The crypto market also has volatility indices similar to the VIX, such as the crypto volatility index launched by CVI Finance (CVI). This index tracks the implied volatility of ETH and BTC, similar to the VIX index in traditional financial markets.

Currently, the CVI index continues to decline amidst recent turmoil in the banking industry, even falling below the previous historical low of 62.80. This indicates that the market's expectations for future price fluctuations are weakening, which is a positive signal. Especially against the backdrop of a rapid increase in open contracts, the decline in volatility expectations is particularly commendable.

5. Limited Impact of ETH Withdrawals

Before the Shapella upgrade, there were widespread concerns that large-scale withdrawals would impact the price of ETH. However, the actual situation is rather optimistic. As of April 19, only 25.7k validators are in line waiting for full withdrawals, of which 46.5% come from a trading platform that was forced to shut down its staking operations in the United States.

In terms of partial withdrawals, approximately 1 million ETH was removed from the beacon chain within 5 days after the upgrade. However, the market seems to have smoothly absorbed this portion of the supply. Some funds were also re-staked into the network. Overall, the Shapella upgrade has had a limited negative impact on the ETH price.

Market Outlook

Despite the uncertainty in the macro environment, the crypto market is showing a positive trend. Major cryptocurrencies have broken through the bear market trading range, and smaller coins have also seen significant increases. After experiencing excessive pessimism in 2022, investors are gradually increasing their allocations, driving prices up.

It is worth noting that this round of price increase is not only reflected in the price but also accompanied by active user engagement, rising DeFi yields, and other positive factors. The volatility index has also dropped to its lowest point since 2022. Overall, the crypto market is on the edge of a small bull market, but investors still need to be cautious of risks.