A New Bull Market is Starting, All Short Positions Closed Last Month

On August 21, a crypto investment firm stated in its latest publication that BTC has seen a strong rise over the past two days. Coupled with the market performance over the past month, the firm has high confidence that "the digital asset cycle has bottomed out," and revealed that it closed all short positions last month.

It noted that BTC and ETH previously experienced peak drawdowns of 54% and 70%, respectively, and have now reclaimed the 200-day moving average, marking the first time since the end of the last cycle that this breakthrough has been achieved. Its quantitative model also shows that after stabilizing near the 50-day moving average, BTC and ETH have seen a volume breakout and have reclaimed the year-to-date VWAP. Additionally, this bear market cycle has lasted approximately 315 days, nearing the historical average.

The firm believes that the recent proactive measures by U.S. regulatory agencies to advance rules for the digital asset market, along with the U.S. Treasury's expansion of long-term Treasury bond repurchases, are significant catalysts for the market cycle reversal. Although this is not quantitative easing, the Treasury's focus on long-term yields may improve the liquidity environment, which BTC still heavily relies on.

Regarding the new cycle, the firm believes that most traditional crypto-native assets may not replicate the performance of previous bull markets. After experiencing this round of market elimination, investors will place greater emphasis on real income and protocols that can return value to token holders. It anticipates that assets with actual income or value capture mechanisms, such as HYPE, LIT, PUMP, VVV, and DRV, may receive greater attention, while many tokens lacking fundamental support could become shorting opportunities in the upcoming upward cycle.

It also stated that BTC may experience a phase adjustment near $80,000 in the short term, a position close to the VWAP of historical highs. Nevertheless, the firm remains highly optimistic about stablecoins, asset tokenization, prediction markets, and on-chain perpetual contracts, claiming to be "unprecedentedly bullish" on its long-short liquidity token strategy and neutral yield strategy in the DeFi market.

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