Investing.com — The bull market “still has room to run,” according to a new proprietary indicator from Needham & Company.
The investment firm said on Monday that its Crypto Euphoria Needham Diagram (CEND) shows that despite Bitcoin's recent rally to record highs, the market is still in the phase of extreme euphoria that usually precedes a peak. This suggests that it is not included.
The CEND Index is designed to track where the crypto market is in its cycle by combining seven indicators that measure retail enthusiasm levels, institutional sentiment, and market trends. By assigning scores to these inputs, the tool quantifies overall market sentiment and provides a structured approach to identifying periods of excessive optimism or indifference.
“The higher the score, the more exalted the crypto market is and therefore the more likely it is to peak,” Needham explains.
CEND recently hit its highest score in 2024 of 55, above the year-to-date level of “meme coin” mania, but still far below the 82 recorded at the peak of the 2021 cycle.
Needham said the gap shows the market has not yet reached the level of euphoria associated with the top of the cycle.
“If this cryptocurrency cycle comes full circle as usual, we expect CEND to reach higher levels than it is currently at and closer to the levels seen in 2021. “This shows there is room,” the company continued.
Among the key inputs to CEND, app rankings for platforms like Coinbase (NASDAQ:) and Robinhood (NASDAQ:) have skyrocketed this year, indicating a resurgence of interest in retail. Bitcoin's MVRV Z-score, a measure of market value relative to realized value, has also increased, suggesting the market is entering mid-to-late cycle.
Bitcoin’s dominance remains strong, reflecting its continued consolidation into major cryptocurrencies rather than riskier altcoins, a trend consistent with the early stages of a bull market.
“Typically, Bitcoin dominance reaches its highest level near the start of a bullish cycle and its lowest point near the top of the cycle,” Needham's note said. “We note that the introduction of Bitcoin ETFs in 2024 could distort this metric more this cycle than in previous cycles.”
While other metrics such as DeFi leverage are also rising, Google's (NASDAQ:) search interest for “Bitcoin” and “Cryptocurrency” is recovering but still below its 2021 peak.
Other CEND indicators include Wall Street sentiment on the premium associated with holding Bitcoin in crypto-related stocks and publicly traded vehicles. The growing consensus for a “buy” rating on crypto-related stocks such as securities companies and mining companies shows that the market's outlook is growing optimistic.
Meanwhile, MicroStrategy Incorporated's (NASDAQ:) share price premium over Bitcoin holdings has become another indicator of market sentiment this cycle.
