Crypto Outlook: More Bearish Than Bullish

SummarySentiment, positioning, network activity, network growth and other on-chain indicators continue to trend favourably and appear positive for the long-term outlook for crypto and digital assets.Bitcoin miners currently pose meaningful downside risk to crypto markets, given their rising costs and plummeting profitability.However, there are signs to suggest over the coming weeks, positive price action in crypto markets is a possibility.Any rallies should continue to be sold or used as opportunities to add downside protection as they are not supported by the outlook for the growth and liquidity cycles, both of which point to further downside for digital assets over the medium term.One for the bulls and the bearsDespite crypto markets being one of the hardest hit throughout the bear market that has engulfed almost all risk assets over the past 12 months, we have seen crypto not only hold up relatively well since the June lows but indeed be one of the better-performing asset classes. The following chart from Pantera Capital summarises this development well, highlighting crypto’s positive performance relative to the S&P 500, gold and treasuries. Given how relative outperformance of higher-risk assets tend to precede positive returns in the short term, this could well offer critical insight of things to come as we close out 2022.Indeed, from a technical perspective there are a number of positive signs suggesting favourable...