# Buying or Fading the Alt Rally? _A market update as BTC converges on key support zones_ March 26, 2025 • Michael Nadeau --- # Buying or Fading the Alt Rally? ## A market update as BTC converges on key support zones Michael Nadeau March 26, 2025 Hello readers, Given the bearish views we shared over the last few months, I wanted to provide a quick update as conditions continue to evolve. This week, we’ll run through our framework and cover the current setup as we see it. Topics covered: - [Analyzing BTC via Momentum Indicators](#analyzing-btc-via-momentum-indicato) - [BTC Onchain Data](#btc-onchain-data) - [Animal Spirits Onchain Data](#animal-spirits-onchain-data) - [Macro](#macro) - [Concluding Thoughts](#concluding-thoughts) ***Disclaimer:**** Views expressed are the author’s personal views and should not be relied upon as investment, legal, tax, business, or any other advice. * Let’s go. # Analyzing BTC via Momentum Indicators Please note that we use the 50, 100, and 200-day Simple Moving Averages to identify/confirm longer-term trend reversals. This helps us smooth out shorter-term volatility and provide a clearer picture of the market’s directional bias. Data: The DeFi Report as of 3.25.25 ##### Key Takeaways: - BTC is currently trading below its 50-day moving average of $89.9k and its 100-day moving average of $94.6k. Furthermore, the shorter 50-day moving average crossed below the 100-day on 3/4/25 (after the price peaked on 1/30/25), indicating a loss in momentum and a potential break in the bull market structure. - BTC is still trading slightly above its 200-day moving average of $85k — a key support zone. - Context matters. We analyzed periods throughout Bitcoin’s history where the 50-day crossed below the 100-day moving average *after a period of at least 2 years of a sustained uptrend.* Here’s what we found: 2013 Cycle: BTC 50-day crossed below the 100-day on 2/20/2014 — after the price peaked on 12/4/2013. The 50-day later crossed the 200-day moving average (“death cross”) on 3/24/2014. The 100-day went on to cross below the 200-day moving average roughly one month later. This was the final confirmation of the long-term downtrend as BTC went on to experience a bear market, with the price bottoming roughly one year later. 2017 Cycle: BTC 50-day crossed the 100-day on 2/15/2018 — after the price peaked on 12/18/17. The 50-day later crossed below the 200-day moving average (“death cross”) on 3/30/18. The 100-day went on to cross below the 200-day moving average one month later. BTC went on to experience a year-long bear market, with the price bottoming on 12/14/18. 2021 Cycle: BTC 50-day crossed the 100-day on 12/27/21 — after the price peaked on 11/14/21. The 50-day crossed below the 200-day moving average (“death cross”) on 1/14/22. The 100-day later crossed below the 200-day moving average one month later. BTC went on to experience a year-long bear market, with the price bottoming on 11/17/22. ##### Notable Exceptions Covid 2020: Bitcoin’s market structure momentum was broken during the COVID-19 pandemic in March of 2020. Of course, this wasn’t confirming a downtrend but rather the beginning of a big uptrend. The difference from today? Massive fiscal and monetary stimulus. May 2021: After a significant run for BTC from late 2020 through March of ‘21, BTC market structure momentum broke down mid-cycle after a 50% correction. The market later rebounded, with BTC (barely) setting another high 6 months later. The difference from today? Once again, we were in a period of sustained fiscal and monetary stimulus when this occurred + there were several catalysts in the altcoin market (NFTs, metaverse). September 2024: BTC dipped slightly below its key moving averages this past September before reclaiming them less than one month later. The difference from today? There were many bullish catalysts that had yet to play out, namely: Fed rate cuts + Trump/Strategic Bitcoin Reserve. ##### Summary Bitcoin is currently trading below two out of three key long-term moving averages, with the 50-day crossing below the 100-day roughly one month after the price peaked at $109k — which is consistent with what we saw at the beginning of more prolonged downtrends in past cycles (after 2 + years of sustained uptrend). With that said, BTC is still trading above its 200-day moving average of $85k, a critical support zone. If we see the price dip below this level and fail to *quickly* reclaim it, this would be further confirmation of the broken long-term market structure. With history as our guide, we could anticipate the 50-day to cross the 200-day moving average (“death cross”) sometime in early April if the trend continues. You should note that our analysis here is backward-looking — meaning that once the cross happens and the downtrend is confirmed, BTC will likely be trading significantly below current levels. Of course, it doesn't have to play out this way. Further context (and data) is needed to evaluate the likelihood of a rebound and potential confirmation of a further *uptrend*. As such, let’s move on to some onchain data analysis and the current macro setup… # BTC Onchain Data In this section, we’ll focus on short-term holders and key momentum data to add further context to the momentum indicator analysis. ##### Short-Term Holder Cost Basis Data: Glassnode ##### Key Takeaways: - Short-term holders are currently sitting on unrealized losses, on average. The short-term holder cost basis is currently $93.4k. To regain momentum, we need to see the BTC price reclaim this level. - Similar to the analysis above, we studied periods where the Short Term Holder Cost Basis dipped below the BTC price *after a period of at least 2 years of a sustained uptrend. *The findings? In each cycle, after the BTC price dipped below the short-term holder cost basis, we saw a relief rally that got the BTC price back to the short-term holder cost basis before ultimately failing. Why? Weak hands that came into the market late in the cycle are looking to get out. In the current regime, we saw this play out in early March after the price dipped to $78k and shot back up to the low 90s after Trump tweeted about the Strategic Reserve. It did not hold. We may see another relief rally toward these levels. If it happens again, we are looking to see if the price can hold and regain momentum. ##### Long Term Holders Long-term holders tend to set the market bottom, while short-term holders tend to push the price to all-time highs during blow-off tops. After taking profits in Q1 and Q4 of last year, long-term holders are stepping back into the market as dip buyers (green showing in far right of the chart below). This is encouraging to see, but it doesn’t necessarily mean we are setting a new bottom at current levels. We can see a similar dynamic early in past bear markets, as investors were quick to buy dips before the price ultimately capitulated lower. Data: Glassnode ##### BTC Trading Volume Trading volume has dropped off significantly in March, averaging $9.6b of volume per day — below pre-election levels. This is now the 4th month in a row where average daily trading volume is dropping — a similar dynamic that we observed from Nov. ‘21 (prior cycle price peak) through Feb. 22. Data: Glassnode # Animal Spirits Onchain Data In this section, we assess the presence of “animal spirits” on Solana, where the crypto casino played out this cycle. ##### DEX Volumes Data: The DeFi Report, Dune Average daily DEX volumes on Solana are down roughly 80% over the last month and 95% from the peak in mid-January. If you’re curious, DEX volumes are down 45% on Ethereum and 65% on Base over the same period. ##### New Trading Tokens Data: The DeFi Report, Dune Solana has averaged about 24k new tokens/day over the last week, which is down roughly 60% from peak periods in late January. For reference, these levels are similar to what we saw in late September/October of last year. To be clear, 24k tokens/day is still a lot. The animal spirits haven’t completely left the premises. But what’s more concerning is the number of tokens that are “graduating” per day. These are the tokens that achieve escape velocity in terms of market cap and trading volumes. We’re seeing roughly 175 graduate per day currently, which is down from roughly 85% (1,100 per day at peak). ##### Key Takeaways: - In addition to the loss of momentum in terms of BTC price action, we are seeing a significant reduction in flows — from both trading volumes and ETF flows. - Less onchain activity via DEX trading, declining token issuance, and negative funding rates for BTC provide further confirmation that the bull market vibes are waning. - Finally, the unwind of hidden leverage from the two largest sources of BTC buying (the ETFs & Microstrategy) could spark a black swan event if prices continue to move in the wrong direction. # Macro We think it’s clear that the crypto market structure is broken at present. Of course, things can turn around quickly. But there needs to be a catalyst. Unfortunately, the macro setup doesn’t look great either. ##### Global Liquidity Data: Cross Border Capital Global liquidity is rising, but at a measured pace. Two key factors are driving growth right now: the weakening US dollar and improving Central Bank liquidity, specifically from the PBOC, with the Fed more guarded. Our primary concern is that the “hidden QE” boost in ‘24 via the reverse repo drain and front-loading of new debt issuance in bills will be largely non-existent this year. Furthermore, we are anticipating a drain on liquidity from the fiscal side (DOGE) in the US. ##### Fed FOMC Meeting Last Week The Fed held rates last week, which was expected. But what other clues can we get from the meeting that can help us project the direction of markets in the near term? The takeaways from the meeting, as far as we see it: - The Fed reduced its GDP growth projections for the year from 2.1% down to 1.7%. It also increased its inflation projections from 2.5% to 2.8%. This is concerning as they are basically projecting some stagflation on the horizon. - QT was reduced from $25b/month to $5b/month. This is positive for liquidity on the margin, but not a catalyst for a renewed appetite for risk in our opinion. - Two rate cuts are projected for the remainder of the year, with rates settling at 3.9% by December. This is unchanged from the last meeting. That said, the number of Fed officials anticipating one or fewer cuts changed from 4 to 8 — a hawkish shift. Furthermore, the number of officials anticipating three or more cuts shifted from 5 to 2 (again, hawkish). In summary, we did not view this as a dovish meeting. If anything, it was neutral. ##### Messaging from the Trump Admin The Trump administration has been very transparent about its plans. We’d encourage you to check out the interviews that Secretary Bessent and Lutnick did with the All-In Podcast last week. It’s quite clear that the plan is to transition the economy from one that is dependent on fiscal spending/deficits to one driven by the private sector. We’re bullish on this long-term. That said, it’s difficult to imagine getting to the other side without some significant bumps in the road. # Concluding Thoughts The setup here doesn’t look great. This is why we believe that the probability points to a longer bear market as opposed to a short-term consolidation before another leg up. To answer the question: Are we buying or fading the altcoin rally? We’re fading it. Of course, we want to buy more of our favorite crypto assets. We just think we’ll be able to do so at better prices later this year. Take a Report. And Stay Curious. ***Disclaimer****: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.*