Bitcoin’s recent bounce above $70,000 is starting to look like more than a price bounce. An interesting on-chain analysis of on-chain data points to a change in how capital is moving across the market, with money that previously rotated into stablecoins beginning to edge back into Bitcoin. 

That change is still small, but it is arriving as BTC recently reached an intraday high of $73,720 and as macro fears tied to the US-Iran conflict are changing.

The Defensive Phase Is Starting To Fade

Bitcoin’s market structure has been telling a story of restraint for many months. Capital moved to the sidelines, and stablecoins got bigger. Notably, the Bitcoin realized cap, a measure of the aggregate cost basis of all coins in circulation, plunged deep into negative territory, which is a sign that the market had absorbed significant unrealized losses. 

This Bitcoin realized cap is the premise of the capital rotation setup, which was shared in a technical analysis by a crypto analyst that goes by the name Darkfost.

At the end of February, Bitcoin’s realized cap change fell to about negative $28.7 billion, which is one of the signs that capital tied to the cryptocurrency had moved into a deeply defensive posture. At the same time, stablecoin market capitalization grew by more than $6 billion, showing that investors were moving funds still in the crypto market instead of keeping that exposure in Bitcoin. According to the analyst, it was the first time this kind of rotation had appeared since the last bear-market phase.

However, the tide may be quietly changing, and the timing of that change has not gone unnoticed. Darkfost’s updated reading shows Bitcoin’s realized cap change recovering to about negative $3 billion, while stablecoin capitalization has fallen to around negative $1 billion. 

This means that capital that had been parked on the sidelines appears to be moving back out of shelter and into Bitcoin again. The move is not large enough yet to call it a full risk-on reversal, but it does suggest that investor positioning is no longer as defensive as it was just weeks ago.

Capital Rotation Net Position Change

Price Action And ETF Flows Support The Recovery Story

Perhaps the most striking element of this observation is the timing. The early stages of capital re-exposure to Bitcoin began when geopolitical tensions had not been fully resolved.

US Spot Bitcoin ETFs received $471.32 million in net inflows on April 6 alone, the strongest single day in almost three months, precisely as global markets were absorbing the uncertainty of a US-Iran ceasefire deadline. Bitcoin is currently trading near $71,746, after reaching an intraday high of $73,720, which keeps it close to a sustained recovery in the new week.

If capital keeps rotating out of stablecoins and back into BTC, then the on-chain setup suggests the recovery rally may have room to continue.

Featured image from Unsplash, chart from TradingView

The Bitcoin price has somewhat slowed down over the weekend after a largely positive past few days, slipping below $73,000 in the early hours of Saturday, April 11th. According to an on-chain analyst, investors are beginning to increase their exposure to the world’s largest cryptocurrency by market capitalization.

Are Investors Using BTC As A Hedge Against Inflation?

In a recent post on the X platform, pseudonymous market pundit Darkfost shared that a behavioral shift among Bitcoin investors is occurring at the moment. The crypto analyst revealed that this trend can be observed through the rotation of liquidity over the past few weeks.

Highlighting data from Checkonchain, Darkfost based their analysis on the Capital Rotation Net Position Change, which measures the flow of funds between major cryptocurrencies (Bitcoin, in this case), stablecoins, and fiat currencies. This metric tracks whether investors are moving their capital into riskier assets (risk-on sentiment) or to risk-free assets (flight-to-safety sentiment).

In addition, the Capital Rotation Net Position Change metric calculates the 30-day net change in the digital asset’s realized capitalization. According to Darkfost’s post, Bitcoin’s realized cap fell to an extreme low of -$28.7 billion at the end of February.

Source: @Darkfost_Coc on X

At the same time, while BTC’s realized cap dwindled, the stablecoin market capitalization began to steadily increase, reaching more than $6 billion. This rise in the stablecoin market cap reflects a clear intention from investors to protect their capital, while its coincidence with Bitcoin’s realized cap drop marks the first time for such a rotation since the previous bear market.

According to Darkfost, this behavior seems to be experiencing a gradual shift, with the Bitcoin realized cap recovering to -$3 billion, while stablecoin capitalization declined to -$1 billion. This shift suggests that investors are slowly starting to re-expose themselves to the market, which can be seen in BTC’s recent price action.

Darkfost added:

For now, this remains a modest development, but if this dynamic continues, Bitcoin could potentially extend the ongoing recovery rally. It is all the more interesting to observe that this dynamic began to emerge precisely as uncertainties surrounding the Iran conflict were reaching their peak.

The analyst concluded that it appears that some investors are starting to view Bitcoin as a hedge against inflationary and macroeconomic risk, especially in the current global market landscape.

Bitcoin Price At A Glance

As of this writing, the price of BTC stands at around $72,800, reflecting no significant change in the past 24 hours. According to data from CoinGecko, the premier cryptocurrency is up by more than 8% on the weekly timeframe.

The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image created by DALL.E, chart from TradingView

Ethereum is once again in the spotlight as institutional demand and whale accumulation continue to shape the market, even in the face of a recent correction. Despite price retracements that have introduced uncertainty, the broader trend reveals that large investors are steadily rotating capital into ETH. Headlines about whales moving significant amounts of funds to accumulate Ethereum have dominated the news cycle, reinforcing the view that ETH remains a cornerstone asset for the next phase of the market.

One of the most notable players driving this trend is a massive Bitcoin OG wallet that has repeatedly caught analysts’ attention. According to Lookonchain, this whale has sold another 2,000 BTC, worth approximately $215 million, and immediately purchased 48,942 ETH ($215M) spot over the past four hours. This aggressive move adds to an already substantial position, reflecting a decisive capital rotation strategy away from Bitcoin and into Ethereum.

Such transactions highlight the growing confidence among whales and institutions in Ethereum’s long-term value, particularly as network activity and adoption remain robust. While short-term volatility continues, these large-scale moves point to a deeper underlying trend: Ethereum’s role as the leading alternative to Bitcoin is strengthening, and the market is preparing for the next stage.

Whale Accumulation Sparks Ethereum Speculation

According to Lookonchain, the Bitcoin OG investor has now accumulated an astonishing 886,371 ETH, valued at approximately $4.07 billion. This massive accumulation has quickly become one of the most discussed developments in the crypto market, sparking intense speculation about Ethereum’s trajectory in the months ahead. Many analysts view this as a clear case of “smart money positioning,” with whales and institutions increasingly treating Ethereum as the leading alternative to Bitcoin in the ongoing capital rotation.

The scale of these purchases suggests more than simple speculation. Large players are signaling confidence in Ethereum’s long-term role, especially given its dominance in DeFi, stablecoins, and network activity. By staking much of these holdings, the whale also demonstrates conviction in Ethereum’s ability to generate yield while securing the network, further underscoring ETH’s utility beyond price speculation.

However, risks remain. Bitcoin has struggled to maintain its uptrend, and uncertainty around its ability to recover momentum weighs heavily on the broader market. At the same time, several altcoins are facing steep corrections, highlighting the fragility of sentiment during this phase.

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After a strong move in the week before this one, the Nifty spent the last five sessions largely consolidating in a very defined range.

The markets traded with a weak underlying bias and lost ground gradually over the past few days; however, the drawdown remained quite measured and within the expected range. As the markets consolidated, the trading range got narrower.

The Nifty moved in a 337-point range during the week. While the Index formed a near-similar high, it marked a much higher low. The volatility also retraced; the India VIX came off by 0.59% to 12.31. While showing no intention to trend higher, the headline Index closed with a net weekly loss of 176.80 points (-0.69%).

The Nifty has created an intermediate resistance zone between 25600 and 25650. A trending move on the upside would happen only if the Nifty is able to take out this zone on the upside convincingly. Until that happens, we will see the Nifty continuing to consolidate with 25100 acting as support. This is the prior resistance level, which is expected to act as support in case of any corrective retracement. So long as the Nifty is inside the 25000-25650 zone, it is unlikely to develop any sustainable directional bias on either side.

Friday was a trading holiday in the US. Because of this, we will not have any overnight cues to deal with on Monday. The Indian markets may see a stable and quiet start. The levels of 25650 and 25800 are likely to act as probable resistance points. Support levels come in at 25250 and 25000.

The weekly MACD is bullish and remains above its signal line. The weekly RSI is 62.40; it stays neutral and does not show any divergence against the price. No major formation was noticed on the candles.

The pattern analysis of the weekly chart shows that after breaking above the rising trendline resistance while moving past the 25000-25150 zone, the Nifty consolidated after trending higher for four days. Over the past week, it gave up a portion of its gains and consolidated at higher levels. In the process, it has dragged its support level higher to 25000. As long as the Index remains above this point, the breakout and the resumption of the upmove observed in the preceding week remain valid and intact.

Overall, it is expected that the Nifty will remain within the 25000-25650 range over the coming week. The markets are unlikely to develop any directional bias unless they move past the 25650 level or violate the 25000 level. Sector rotation within the market is very much visible; it would be imperative to efficiently rotate sectors and stay invested in those that show improved relative strength and a promising technical setup. We are likely to see improved performance in the Auto, Energy, IT, and broader markets, among other sectors. It is also strongly recommended to protect profits here, where the stocks have run up hard. Any aggressive shorting should be avoided as long as the Nifty stays above the 25000 level. A cautiously positive approach is advised for the coming week.

In our look at Relative Rotation Graphs®, we compared various sectors against the CNX500 (NIFTY 500 Index), representing over 95% of the free-float market cap of all the listed stocks.

Relative Rotation Graphs (RRG) show that the Nifty PSU Bank Index and the Midcap 100 Index are the only two groups that are inside the leading quadrant. They are likely to outperform the broader markets relatively.

The Nifty Infrastructure Index is experiencing an improvement in its relative momentum while it remains within the weakening quadrant. Additionally, the PSE, Nifty Bank, and the Financial Services Index are located within the weakening quadrant. While individual stock-specific performance may not be ruled out, the overall relative performance may take a backseat.

The Commodities Index and the Services Sector Index have rolled inside the lagging quadrant. The Consumption, Pharma, and the FMCG Indices also continue to languish inside the lagging quadrant. The Metal Index is showing a sharp improvement in its relative momentum against the broader markets, while staying within the lagging quadrant.

The IT, Energy, Media, Realty, and Auto Indices are inside the Improving quadrant. They continue to rotate firmly while improving their relative performance against the broader Nifty 500 Index.

Important Note: RRG charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.

Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae and is based in Vadodara. He can be reached at milan.vaishnav@equityresearch.asia

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

The Indian equity market recently experienced a significant correction, declining 16% from its all-time high before staging a recovery last week. Historically, such downturns have been followed by strong rebounds, with markets reverting to their mean and surging to new highs over the long term.

A closer look at past trends reveals that each market recovery has been led by different sectors, highlighting the importance of sectoral rotation in driving overall market performance.

The historical performance of BSE sectoral indices reveals a clear pattern of sectoral rotation, providing valuable insights for investors to strategically position their portfolios for the upcoming financial year. Understanding the cyclicality of different sectors can help investors make informed decisions while managing risks effectively.

The below chart shows financial year-wise sectoral returns of indices.

(Source: Google Finance)

Understanding Sectoral Trends & Rotation

During periods of heightened volatility, the Banking and FMCG sectors act as defensive anchors, absorbing market pressure and mitigating downside risks. While these sectors may deliver moderate returns during rallies, they provide resilience during corrections. Notably, the Banking sector has not posted negative returns over the past five financial years, underscoring its stability.

Looking at historical patterns, the IT sector, which was a key outperformer between 2018 and 2022, has lagged in recent years. However, its cyclical nature suggests a potential recovery, positioning it for outperformance in the coming years. Meanwhile, Oil & Gas has made it to the top-performing sector list only twice since 2010, making it less predictable in terms of sustained leadership.

Cyclical sectors such as Auto, Realty, and Metals follow distinct performance patterns. The Realty sector, for instance, tends to alternate between extreme outperformance and significant declines. Data suggests that after a strong performance phase, Realty often delivers negative returns. Similarly, the metal sector exhibits a cyclical trend, typically trading as outperforming sector for two years, followed by a phase of underperformance over the subsequent two years. Given this cyclical pattern, the metals sector could continue its previous trend, demonstrating bullish outperformance.

Past data also indicates that the IPO index performs exceptionally well during bull markets, as investor sentiment fuels enthusiasm for newly listed companies. However, IPO stocks tend to be the first to decline when markets correct, making them more vulnerable to downturns. If the broader market rally continues, we may witness IPO stocks leading the next uptrend.

Meanwhile, Midcap and Smallcap indices consistently remain in the middle ranking of 4 to 9 performing segments, generating robust long-term returns. Midcaps, in particular, have demonstrated strong growth potential while exhibiting lower drawdowns compared to more aggressive sectoral indices.

Investment Discipline: The Key to Market Success

While historical trends offer valuable insights, it is important to recognize that markets do not follow an exact script. The market operates under a set of rules – those who understand and follow these rules stand the best chance of achieving sustainable and superior returns.

As we enter into a new financial year, investors must remain agile, diversified across defensive, cyclical, and high-growth sectors, and prepared to capitalize on emerging opportunities while managing risks prudently.

Here are the rules which we can call the “Rules of the Jungle (Market)” in order to generate higher returns.

1. Markets always revert to the mean in the long run. Up moves will be followed by down moves and vice versa.
2. Markets are dynamic. There isn’t a constant. So, be prepared for change.
3. Never put all your eggs in one basket. But don’t over-diversify either. Keep a well-balanced yet concentrated portfolio.
4. Unfortunately, there isn’t a one-size-fits-all rule for diversification or concentration. Find your own sweet spot.
5. Don’t be overjoyed when markets are good. Don’t be sad when markets are not going your way. Remember: This too shall pass.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Market Overview

The markets continued to stay tentative over the past five days, trading with a weak undertone as the Nifty digested the reaction to the US election outcome. Although there were two days of a strong technical rebound, this was subsequently sold into, which kept the Nifty in a broadly defined range. The trading range was wider than usual, with the Nifty oscillating in a 721-point range. Volatility cooled off, and the India VIX declined by 6.95% to 14.47 through the week. Following this ranged trade with a weak underlying bias, the headline index closed with a net weekly loss of 156.15 points (-0.64%).

Technical Analysis

From a technical perspective, the markets are not out of the woods yet. The Nifty has violated the 20-week moving average, which currently stands at 24,775. This level also coincides with an extended trendline that initially acted as support but now acts as resistance. Below this point, there are several other resistance levels as well. The 100-day moving average is placed at 24,709, and the short-term 20-day moving average is placed at 24,486. Combined, these have created a 250-point resistance zone between 24,500-24,750 levels. This means that all technical rebounds will start facing turbulence as soon as the index approaches this zone. The resistance levels have been dragged lower. On the downside, major pattern support exists at 23,800; if this is violated, the markets will become weaker. This keeps the Nifty in a broad but well-defined trading zone.

Outlook for the Coming Week

Monday is likely to see a quiet start to the week. The levels of 24300 and 24485 are likely to act as probable resistance points for the Nifty, while support comes in at 23960 and 23800 levels. The trading range is likely to stay wider than usual.

The weekly RSI stands at 49.50, remaining neutral and showing no divergence against the price. The weekly MACD is bearish and stays below its signal line. Pattern analysis of the weekly charts suggests that the Nifty remains in a corrective downward trajectory. The recent downward move has also dragged the resistance levels lower for the Index. Presently, the markets have multiple resistance levels nestled in the zone of 24500-24750. With immediate pattern support existing at 23800, the Nifty remains in this wide but well-defined trading zone.

All in all, the markets are likely to see intermittent technical rebounds over the coming days. However, it is important to be mindful that a sustained rally is unlikely as long as the Nifty does not move past the 24500-24750 zone. Until this zone is surpassed, the Nifty is unlikely to see any runaway rally. Therefore, during any technical rebounds, it is crucial to mindfully protect gains at higher levels. Rather than mindlessly chasing such rebounds, it is necessary to vigilantly guard positions at higher levels, as the markets remain susceptible to selling pressure at those levels. A cautious outlook is advised for the coming week.

(In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all the stocks listed.)

Relative Rotation Graphs (RRG) Analysis

Relative Rotation Graphs (RRG) show that the Financial Services index has rolled inside the leading quadrant, along with the Nifty IT, Services Sector, and Pharma indices. These groups are likely to continue to relatively outperform the broader Nifty 500 Index.

The Nifty Consumption index has rolled inside the weakening quadrant. The FMCG and the MidCap 100 indices are also inside the weakening quadrant and may continue giving up on their relative performance.

The Nifty Auto, Commodities, Energy, Media, Infrastructure, Realty, and PSE indices are inside the lagging quadrant. These groups may relatively underperform the broader markets.

The PSU Bank Index has rolled inside the improving quadrant, along with the Nifty Metal and the Nifty Bank Index. They may continue bettering their relative performance against the broader markets.

(Important Note: RRGTM charts show the relative strength and momentum of a group of stocks. In the above Chart, they 1 show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.)

(Milan Vaishnav (CMT, MSTA) is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae)

In a shift, Ethereum (ETH) has outpaced Solana (SOL) in the last 24 hours, leading some experts to believe that a “great capital rotation” is underway.

Ram Ahluwalia, CEO of Lumida, a cryptocurrency investment firm, is among those who are bullish on Ethereum’s prospects. Taking to X on December 28, the CEO said the “great rotation,” referring to the capital injection, is on. The coin could be ready for a new all-time high, above $5,000, in the coming few trading weeks or months. 

Ethereum Outperforms Solana In The Past 24 Hours

The resurgence in Ethereum is when Solana appears to be cooling off after sharp gains in the past few trading months. While ETH adds roughly 5%, Ahluwalia notes that SOL is down by around the margin in the past 24 hours. This formation is reflected in the SOLETH chart, though SOL bulls maintain a lead over ETH from a top-down preview.

Ahluwalia’s optimism and expectation of ETH stretching gains stem from Ethereum’s recent price action. The coin has broken out of intermittent resistance levels. It is now poised to break even higher, looking at the formation in the daily chart. As it is, ETH is at around December 2023 highs, a cool-off from early today when prices broke above $2,400 to register new 2023 highs. 

Notably, looking at the ETH candlestick arrangement, it is evident that buyers have the upper hand. The upswing observed today is primarily due to the surge in trading volume on December 27. The spike in trading volume suggests trader interest. It could fan even more demand, forming a base for ETH to roar towards $3,500 and even $5,000 in the sessions ahead. 

For what’s happening, price-wise, Ahluwalia said traders should expect to ride the expected big moves, especially in lower time frames. According to the CEO, ETH will “teleport” as it soars higher, registering new all-time highs in 2024. 

Will Dencun And Talks Of Spot Ethereum ETFs Propel ETH To New Highs?

This bullish momentum can attributed to several factors, including network enhancements and even hopes of the United States Securities and Exchange Commission (SEC) approving a spot Ethereum ETF. So far, the crypto community expects the regulator to green-light the first spot of Bitcoin ETFs in early 2024. Once this happens, it is likely that the focus will shift to ETH and whether the SEC will authorize a similar product after the approval of Ethereum Futures ETFs in 2023.  

Ethereum is expected to release the Dencun Upgrade in Goerli in mid-January 2024. Implementation is after the community thoroughly tests all proposals. However, Dencun is a vital update that will improve scalability, performance, and security. This upgrade also sets in motion Proto-dank sharding, which will see the main net scale.

Feature image from Canva, chart from TradingView

Following a strong consolidation in the week before this one, the markets finally staged a decisive rally over the past four sessions of the truncated week. The benchmark index Nifty50 surged in all four sessions; it went on to move past the previous lifetime high of 20222.45 and managed to end at a fresh all-time high level. Amid high volatility, the trading range also got wider; the NIFTY moved in a range of 491.55 points through the week. While managing to maintain the gains, the headline index managed to close near its high point with net weekly gains of 473.20 points (+2.39%).

While the markets rose, so did the volatility. The volatility, as represented by INDIAVIX, surged 9.29% to 12.38 on a weekly basis. From a technical standpoint, the Index remains firmly on a rising trajectory. If it continues to advance within its defined and laid path, it may go on to test the upper edge of the rising channel which translates into the levels of 20500—20650 zone. The spikes in the volatility may turn the market choppy; however, there are greater of the breakout getting extended and the Index testing the upper edge of the rising channel. After that, some consolidation cannot be ruled out.

Monday is expected to see a positive and strong start to the week; the levels of 20400 and 20580 are likely to act as resistance. The supports come in at 20080 and 19900 levels.

The weekly RSI is 65.90; it has marked a fresh 14-period high which is bullish. It stays neutral and does not show any divergence against the price. The weekly MACD is bearish and below its signal line; however, it looks on the verge of a positive crossover

The NIFTY has closed above the upper Bollinger band. Even if it temporarily pulls itself back inside the band, it has laid a strong foundation for a sustainable breakout taking place. This setup has further increased the possibilities of the NIFTY testing the upper edge of the rising channel as mentioned above.

The pattern analysis of the weekly charts lays out a simple picture. The markets suffered a full throwback and this led to the NIFTY retesting the original breakout zone of 18900-18950. Very much on the expected lines, this zone acted as a potent support and the NIFTY not only rebounded but went on to form a fresh lifetime high. It is expected that the Index may go on and test the upper edge of the rising channel while attempting to test the 20500-20650 zone.

All and all, the larger setup looks evidently buoyant; there are greater possibility of the markets extending their breakout. However, over the coming week, we will also see some sector rotation taking place with money moving more into relatively defensive pockets like FMCG, Consumption, Pharma, etc., while the PSE space may continue doing well. It is strongly recommended to chase the right group of stocks while focusing on the stocks that are enjoying greater relative strength. An equal amount of emphasis should also be kept on protecting profits at higher levels.

Relative Rotation Graphs (RRG) show a similar kind of setup that was seen over the previous week. We have Nifty Realty, PSE, Infrastructure, Commodities, and Energy Indices inside the leading quadrant. These groups are expected to relatively outperform the broader markets.

The PSU Bank Index has rolled inside the weakening quadrant. This may see this space start to weaken its relative performance. Besides this, the Metal, Media, Pharma, IT, Auto, and Midcap indices are inside the weakening quadrant. Among these, the Metal, Auto, and Pharma groups are seen improving on their relative momentum. Besides Nifty Bank, none of the Indices are inside the lagging quadrant. This space may struggle a bit so far as relative performance is concerned.
Nifty FMCG, Consumption, Services Sector, and Financial Services indices are placed inside the improving quadrant.

Important Note: RRG charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.

(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae and is based in Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)