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In the beginning of 2021, the cryptocurrency market was driven by institutional adoption and loose macroeconomic trends.Today, however, a year later, in different macro environments, January 2022 has begun to move in the opposite direction for most crypto assets.

A lot of analysts like to compare recent volatility to the previous cycles in the history of crypto assets.However, over the past year, the macro environment has changed significantly, and crypto asset price movements are increasingly affected by other assets, such as the stock market.

Stocks fell along with crypto assets as global markets adapt to the Fed's more aggressive stance.The Nasdaq Composite Index is about 13,352, down nearly 14.65% to date in 2022.Often, higher interest rates tend to curb market demand for high-risk assets (high-growth tech stocks).

Return on the S & P 500 and bitcoin on the index showed a highly positive correlation over the past six months, with a correlation factor near an all-time high of 0.35.Changes in the macro environment have negatively affected almost all mainstream markets, especially technology stocks and considered risky assets such as cryptocurrencies, even more severely.This is different from what happened in 2018, when the crypto market didn't fall simultaneously with tech or other stocks.

Markets often do not respond to rate hikes themselves, but to expectations of future policy processes.The market is adjusting price to the new information as the Fed changes its wording and announces faster-than-expected rate hikes.

Treasury bond rates went higher, reflecting the Fed's intention to raise interest rates and fight inflation.One of the best ways to look at interest rate changes is to view the yield curve.The yield curve shows the interest rates available for bonds with different maturities.The figure above shows two Treasury yield curves on different dates: January 4,2021 and January 21,2022.Interest rates (especially in the short term) rose from last year as markets reacted to rate statements that the Fed will start raising rates in March.

Despite the tough macro situation, some of bitcoin's on-chain metrics are hitting historical market cycle lows.MVRV, for example, this is the ratio of market value (free circulation market value) to realized value (already capitalized).MVRV over 3 usually mark local highs, while values below 1 often mean market cycle lows.Currently, bitcoin's MVRV is already at a relatively low level (1.16).Of course, past indicators do not guarantee 100% of their future reliability.Moreover, in extreme cases, MVRV has fallen below 1.0 several times, such as in March 2020.

Another potential positive sign is that much of bitcoin's supply has remained unaffected in recent months, suggesting that long-term holders still maintain strong confidence in prices.

The Bitcoin age distribution band is also known as the HODL wave chart, which classifies bitcoin by taking its supply by the time it was moved on the latest chain.In the past year, about 60 percent of the bitcoin supply was dormant, and long-term holders saw no large shipments.Beyond the metrics, there are other indications on the chain that cryptocurrency adoption continues, a trend that will not be affected by short-term price fluctuations.

The number of addresses holding a relatively small amount of Bitcoin and Ethereum continued to increase.As NFT-related activity continues to surge on the network, the number of addresses holding 0.01 to 1 ETH has recently exceeded 20 million, more than double the January 1,2021 data (9.8 million).Similarly, addresses holding 0.001 to 0.1BTC have continued to increase.

Finally, it's worth noting that tech builders are pouring into the encryption ecosystem, and GitHub data suggests that thousands of technicians have joined them in encryption research and development in recent months.As the project continues to progress in L2 solutions and other areas, the crypto industry is still an incremental market in the long run, regardless of the short-term price trend, and this year is still expected to be an important year for encryption adoption and growth.

*The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of SparkDAO. Every investment and trading move involves risk, you should conduct your own research when making a decision.