Change is afoot in the cryptocurrency markets
Cryptocurrency has gone through some changes in the last two months, which are registering in prices.
Today the cryptocurrency markets bounced upwards, with the total market cap rising about 15% in the last 24 hours.
Will it last or is it just another price burp ahead of a long crypto winter?
No one knows, but there are several measures which say this isn't just business as usual for cryptocurrency and which suggest that change is afoot.
By the numbers
The most apparent shift is trade volume, with a sustained uptick in trade volume following the most recent upwards bump last month. That extra trade volume has hung around for the last few weeks even as markets remain relatively flat, suggesting more sustained interest.
Bitcoin prices are also showing a range of technical indicators for the first time in several years.
Firstly, Grayscale's inflows proportional to assets under management reached their highest level since 2015. The last time this happened was in 2015, right before cryptocurrency markets began their meteoric rise to 2017 peaks.
More recently, Bitcoin's 50 week moving average bullishly crossed the 100 week moving average for the first time since 2015, which analysts say historically tends to be a good sign as it signals the exhaustion of selling power. The last time this happened was also in 2015, right before Bitcoin began its meteoric rise to 2017 peaks.
There are other signs in the works too. Bitcoin's moving average convergence/divergence (MACD), which is basically a way of drawing a line on a chart that tells you whether something might have a bullish or bearish vibe at any given time, has formed an exact mirror of 2015 and is currently pointing to the bullish.
There are other parallels too. At the start of February Bitcoin broke its own record for the longest downturn. The previous record also ran from 2013 to 2015.
Furthermore, Bitcoin's halvings have historically registered on the charts as a price rise about 12 months in advance of the event itself. This date marked the rise of 2015, and also points to a cryptocurrency market ascent sometime in early to mid 2019.
Of course, there are enough different techniques to make technical analysis say anything you want, if you look for patterns you'll find them and similar signals were still screaming "buy" in the middle of 2018.
But there are a lot of parallels between now and 2015. And even more significantly, it's clear beyond a doubt that even if the markets currently look stagnant from the outside, there's been a pronounced shift in just the last couple of months.
There's some major interest (by some standards) boiling away beneath the placid-looking surface of the cryptocurrency markets.
Beneath the surface
The last few months have seen Intercontinental Exchange's Bakkt continue to move forwards. It's seen J.P. Morgan launch its own blockchain-based cryptocurrency, Julius Baer announce digital asset plans and Fidelity near the final stages of its own cryptocurrency plans, and much, much more.
Institutional market activity has unsurprisingly been bubbling up in February and March 2019 to an extent that can register on technical indicators. More individuals are also looking more closely at cryptocurrency now than during the depths of 2018, and by every indication people are buying.
This is manifested in signs such as an overall increase in the number of Bitcoin addresses holding 1-10 BTC. Notably, this growth metric lagged throughout 2018 with a mere 0.7% increase over the year. But it's picked right back up in 2019, with a 3% increase.
So what happened recently that's seen interest in cryptocurrency pop up again now?
Beyond the slow burn of institutional involvement, it may be that more people are getting sucked down the blockchain rabbit hole. Surveys show that blockchain enthusiasm reached new highs in 2018, and a lot of people are now entering the area through news that their businesses are considering a blockchain solution, or a new wave of word of mouth from acquaintances.
And even though blockchain does not equal cryptocurrency, it's still hard to explore or invest in blockchain as a technology without you – and your money – ending up at cryptocurrency.
Disclosure: The author holds ETH and XLM at the time of writing.