Is the Crypto Crash Coming to an End? Key Reasons for an Imminent Bull Run

The recent downturn in the crypto market has intensified, with Bitcoin slipping to a crucial support level of $80,000 and the overall market capitalization of all cryptocurrencies dropping to $2.90 trillion. Many altcoins, including Ethereum, Ripple, Binance Coin (BNB), and Cardano, have faced significant declines of over 12% within the past week. However, there are indications that the crypto crash may be nearing its conclusion, as several historical patterns align.

Key Takeaways

The Fear and Greed Index has plummeted to a low of 10, historically signaling the potential end of a bear market.
The crypto market is showing signs of being oversold, with a Relative Strength Index of 24.
Reductions in futures open interest suggest a healthier market environment as investors use less leverage.
Several additional factors, such as potential Federal Reserve interest rate cuts and new altcoin ETF approvals, could support a crypto resurgence.

crypto crash

Fear and Greed Index Signals Potential Bull Run

One of the key indicators for a possible revival in the cryptocurrency market is the significant drop in the Fear and Greed Index, which has fallen to a year-to-date low of 10.

Fear and Greed Index means crypto crash is ending Crypto Fear and Greed Index | Source: CMC

This decline has coincided with reduced momentum in the crypto sector, increased volatility, and a negative shift in social media sentiment. Historically, most bullish trends in the cryptocurrency space begin when this index shows extreme fear levels. For example, Bitcoin reached a record high last May shortly after the index indicated extreme fear. Conversely, bear markets often start during periods of high greed or when the index is in the green zone. As we approach the end of November, there’s a strong possibility that December will yield a more favorable environment for cryptocurrencies, potentially driven by the anticipated "Santa Claus rally."

Oversold Conditions in the Crypto Market

Another supportive factor for the anticipated bull run is the current oversold state of the crypto market.

Crypto Market Cap has become oversold | Source: TradingView

The data reveals that the Relative Strength Index for the Crypto Market Cap has fallen to an oversold level of 24. This indicates that the downward divergence pattern that has persisted since July may be close to its conclusion, which opens up the possibility of Bitcoin and other altcoins staging a rebound in the upcoming weeks. It’s important to note, however, that this recovery may not be linear; a double-bottom price pattern could form in the process.

Conclusion of Ongoing Market Cleansing

Yet another reason pointing towards the finalization of the crypto crash is that the ongoing 'cleansing' phase within the industry appears to be ending.

The available data from CoinGlass indicates that futures open interest has experienced a sharp decline to $123 billion, down from a peak of over $320 billion earlier this year. Total liquidations since October 10 have exceeded $40 billion. The ongoing liquidations, coupled with diminishing open interest, suggest that the crypto market will be healthier moving forward, as it indicates that investors are employing less leverage in their trades.

In addition to these factors, other potential catalysts for a new crypto bull run include an increased likelihood of interest rate cuts from the Federal Reserve, a growing M2 money supply, and the ongoing approvals for altcoin ETFs, all of which could further energize the market.