Crypto markets: what's in the pot? | Part 2

In the previous article I focused on illustrating the model based on the phases of accumulation and distribution and explaining the dynamics that are governing the markets at the moment. We have seen that supply has been reduced to a minimum, and the market is preparing for a new upward cycle, because all it takes is a slight increase in the demand for coins (renewed investor interest) to trigger a bull market.

Let us dwell for a moment on some observations by Willy Woo.
Woo reinterprets Glassnode's model, which is based on alternating distribution and accumulation.

According to the "classic" model, the bullish phase of the cycle starts with holders holding coins accumulated in the previous cycle.

However, Woo highlights a graph of Glassnode which shows that this time the initiators of the cycle were new generation "whales", without coins from the previous cycle and who hoarded coins at the beginning of the cycle, starting around October 2020, continuing to buy until February 2021.
These newcomers then started selling from February 2021 and stopped recently, in late May and early June.

The movements of these new players in the market interposed themselves on the usual distribution-accumulation cycle.
This is, in my view, why we have had this strange rather short cycle, with such a constant upward phase (almost without any notable retracements) followed by an equally steep and constant downward phase.

One could say, to simplify, that these whales "played it and sang it" on their own, creating a cycle of their own and leaving the other protagonists to act as background noise.

Conclusion

This is why the current cycle has those mixed aspects that make it so difficult to decide whether it is an intermediate cycle within a long-term bull market (or bear market), or a shortened long-term cycle. For example, who is accumulating the coins thrown away between February and June by these new generation whales? It is the "normal" holders, made up of both holders with a lot of capital (long-standing whales) and holders with smaller capital.

Overall, it is a part of the market that does not have the same availability as the new generation whales and therefore will take longer to reabsorb the large amounts of coins available.

If so, can we still say that this reabsorption process is an "accumulation" phase in the "classical" sense (i.e. the bearish part of a complete long-term cycle)?
The question is legitimate, since the previous phase was not at all a "classical" distribution phase ....

Who are these "whales" that have messed up everything? Of course it is the institutional investors (hedge funds, multinationals, funds of all kinds). The entry of these new entities has probably made the parameters with which we interpret this market obsolete.

Thank you for reading.

Written by Macron, Cryptosniperz Team

Further reading

https://willywoo.substack.com

http://charts.woobull.com

DISCLAIMER

We are not giving any financial advice regarding cryptocurrencies, but rather giving applicable advice for new, intermediate and experienced people who are currently into cryptocurrencies or someone who is just now realizing what it is. Before you read this I must say that this blog will be based on the assumption that you have already done some research on cryptocurrencies and the Blockchain ecosystem. We will continue to provide explanations and details to the best of our ability, however we encourage you to do your OWN research because only YOU will know how this second financial revolution will best fit into your life.

Thank you for reading our contents.

The Cryptosniperz Team