After a rocky start to the new year, March may have finally put the crypto markets back on an upward trajectory. In February, news of the war between Russia and Ukraine created significant opportunities for traders to re-enter the market at reduced prices. However, this did not last long.
The market soon began to recover, with traders expecting Bitcoin (BTC) to drop below $40,000 once again sitting on the sidelines.
The whales remain cautious
On March 28, Bitcoin surged back above $48,000 after nearly three months of consolidation. But surprisingly, key stakeholders with 100 to 10,000 BTC in their wallets have quietly continued to make profits.
The whales dumped 178,150 BTC over the course of five months, which is equivalent to $8.39 billion at current price levels.
However, holders of Tether for Sharks and Whales (USDT) have also dumped $816.4 million worth of Tether in just three weeks, further compounding the concern. A bullish scenario would typically require these high-end traders to hold more USDT as it implies more purchasing power.
Inactive investments on the move
One of the main metrics from Santiment that confirms that a flat or bear market may be ending is the average investment age in dollars, and it measures the average age of investments in Bitcoin.
In short, a flattened or shortened period indicates that previously dormant tokens have been moving and reveals a higher probability of a long-term bullish price movement.
A prolonged period of decline can be seen for the first time in 2022, aside from a few one-day drops in BTC’s dollar investment average age line. In most cases, the gradual decline of this line portends good long-term prospects for an asset’s price.
Market problems have subsided in March
But what drove prices up in March so quickly? For starters, there is less talk of war, COVID-19 cases, and higher inflation on crypto forums, indicating that the community may believe that these market tensions are past their worst points.
Big Bitcoin transactions appear
Whales become active when prices have had a sustained pattern of rising or falling. When the markets are flatter, there is less activity. With March bringing huge profits left and right, it was only a matter of time until the whales made their moves. The number of transactions exceeding a value of $100,000 or more skyrocketed to 3,266 separate transactions just before March 28.
Unsurprisingly, this big spike on March 28 and the day before signaled that the whales were making profits, which preceded a price correction for Bitcoin and the rest of the markets and foreshadowed where traders could and should take profits. optimally.
Transactions in profit increased as whale transactions increased
Santiment has a separate metric known as the Earnings vs Transactions Ratio. Loss, which compares the profitability with the number of transactions. A higher ratio indicates that more trades result in a profit, which could eventually indicate a cap if the ratio is too high and vice versa. Both Bitcoin and Ether (ETH) experienced the most significant spikes in four months on March 28, meaning that both coins had more than three times the amount of transactions made while the coins were in profit, compared to losses.
Is the market ready to change gears?
Eventually, crypto traders were proven correct as there was a correction to $44,000. However, Santiment recorded a continuing pattern of negative comments that outweighed the positive comments on various social media platforms. Generally, when the crowd thinks prices will go down, prices can actually bounce back. And vice versa, prices tend to plummet when the crowd is too euphoric and excited.
March was full of negative sentiment and has remained so since news of the conflict in Eastern Europe broke in the last week of February. Now that a mid-sized price pullback has occurred, which was a rare thing in March, the markets should shift into speculation mode as to whether this is the time to buy.
Cointelegraph’s Market Insights newsletter shares our insights into the fundamentals that drive the digital asset market. This analysis was prepared by leading analytics provider Santiment, a market intelligence platform that provides on-chain, social, and development insights on over 2,000 cryptocurrencies.
Santiment develops hundreds of tools, strategies, and indicators to help users better understand cryptocurrency market behavior and identify data-driven investment opportunities.
This post Cryptocurrency prices are enjoying a solid relief rally in March. But how and why?
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