Crypto Market Breadth Widens, Signals Bullish Momentum

Market breadth is a technical analysis technique that gauges the number of tokens participating in bitcoin's rally.

AccessTimeIconOct 31, 2023 at 9:05 a.m. UTC
Updated Oct 31, 2023 at 9:16 a.m. UTC

Bitcoin (BTC), the leading cryptocurrency by market value, has gained nearly 27% this month, registering its most significant single-month percentage rise since January.

A swath of alternative cryptocurrencies is following BTC’s lead, according to data provider ByteTree’s market breadth indicator, which measures the number of digital assets advancing relative to the number of coins declining.

The indicator powered by CryptoCompare tracks real-time data of more than 5,300 digital currencies and categorizes tokens by their trends on a scale of 1 to 5. A score of 5 means the coin is in a strong uptrend, while zero represents a strong downtrend.

At press time, just 4.7% of tokens are in a strong downtrend, the lowest since January. It shows market breadth is expanding, with more coins participating in the bitcoin rally.

Expanding market depth reflects increased investor risk appetite and suggests the bullish momentum is healthier and more sustainable.

“Crypto breadth is improving, so much so that there are few downtrends left. Uptrends (blue) are on the rise, and you never know, but this could be the one. Halving is just six months away, and the Fed will have to start printing money again soon,” Charlie Morris, founder and chairman of ByteTree, said in a research note sent on Monday.

Blue skies show uptrends are rising. (ByteTree)
Blue skies show uptrends are rising. (ByteTree) (ByteTree)

In the above chart, dark blue and light blue areas show coins in solid uptrends and early stages of the bull run. The yellow portion represents coins in consolidation, and the red zone shows coins in a strong downtrend.

The number of coins in uptrends is rising, as evidenced by the uptick in the dark blue and light blue areas. The situation starkly contrasts a year ago, when advancing stocks were a rarity.

Bitcoin changed hands at $34,400 at press time. The total crypto market capitalization took at $1.32 trillion.

Edited by Parikshit Mishra.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.