Experts from Coinbase Institutional and Glassnode have noted a recovery in the market following October's deleveraging. This is detailed in a joint report from the companies.
Analysts believe the industry has become more resilient and "disciplined." A key trend is the shift in focus from aggressive risk-taking to protective strategies.
Bitcoin Dominance and Investor Caution
The leading cryptocurrency has maintained its dominance, with the dominance index hovering around 59%. Assets with medium and small market capitalizations have lost their upward momentum.
Market participants remain cautious. The Net Unrealized Profit/Loss (NUPL) indicator has dropped from the "Belief" zone to the "Anxiety" zone following the October liquidations.
Source: Coinbase Institutional/Glassnode.
The stabilization of this metric at low levels indicates that investors are reluctant to take directional risks, despite improving macroeconomic conditions.
The report also highlights an increase in coin distribution. In the fourth quarter, the share of active Bitcoin supply (coins that have moved in the last three months) rose to 37%.
Shifting Away from Risk
Events in October led to a significant reduction in systemic leverage. The volume of positions in perpetual futures has decreased, and the leverage ratio (excluding stablecoins) has fallen to about 3% of the total market capitalization.
Instead of completely exiting assets, traders have reallocated capital to the options market. Open interest in this sector has surpassed that of Bitcoin perpetual futures. Market participants are favoring fixed-risk instruments, making the trading environment more stable.
Paradigm Shift for Ethereum
Analysts suggest that Ethereum is approaching the late stage of the current cycle that began in June 2022. However, traditional cyclical indicators are losing their predictive power.
Source: Coinbase Institutional/Glassnode.
This is attributed to structural changes in the ecosystem, including reduced fees in L2 networks and new tokenomics. Experts believe that Ether's dynamics are now more dependent on overall liquidity conditions than on the duration of the market cycle.
Institutional investors, according to surveys, maintain a "selective positivity" and continue to prefer large-cap assets amid geopolitical uncertainty.
It is worth noting that CryptoQuant analyst Gaah reported that realized losses for holders of digital gold reached $4.5 billion — the highest in three years.