Cryptocurrency asset manager VanEck has shared remarkable findings regarding market dynamics in its latest Bitcoin research report.
The report, authored by Patrick Bush and Matthew Sigel of the firm’s digital assets research team, notes that indicators historically considered “bullish signals” for Bitcoin have emerged from both derivatives markets and network data.
According to the report, market volatility has decreased significantly as tensions between the United States and Iran have eased. Bitcoin’s realized volatility fell from 56% to 41%, while its 7-day average funding rate fell 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 average 30-day 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 the hash rate. The change in hash rate over the past 30 days has fallen to one of its all-time lows, but past data shows that strong rallies 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%.
As for institutional investments, the situation is showing signs of recovery. Spot Bitcoin ETPs, which saw outflows of approximately $4 billion between late January and late February, have reversed direction since late February. Net flows were recorded in six of the last seven weeks through mid-April.
In the options market, investors seem to maintain a cautious attitude. The fact that put option premiums reached all-time highs over the past 30 days revealed that strong hedging demand and bearish expectations were 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 daily trading volume increased 22% month-over-month to 545,000, the number of active addresses and the creation of new addresses saw a limited decrease. Trading volume averaged $48.5 billion per day, while network fees declined monthly and year-over-year. This indicates that costs remained low despite the increase in transaction activity.
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Different trends have been observed in the behavior of long-term investors. Although selling activity increased among investors who had held their holdings for 1 to 5 years, this movement remained below annual averages. On the other hand, there was a significant increase in transfer volumes among investors who had held their assets for 5 years or more. In particular, the activity of investors holding coins for 10 years or more has reached the highest levels in recent years.
On the mining side, the unbalanced drop between mining difficulty and hash rate is remarkable. The fact that the difficulty level is decreasing faster than the hash rate indicates that the network’s adjustment mechanism is operating with a delay and that a rebalancing process is underway among miners. Nonetheless, the fact that recent declines have been shorter and more limited suggests that a healthier structure is emerging for the market.
VanEck analysts say that, based on historical data, negative funding rates and declining hash rates have been associated with strong future returns, making their overall outlook for Bitcoin increasingly bullish.
*This does not constitute investment advice.