Space Review｜Sentiment hits bottom, liquidity tightens: How to identify the "true bottom signal"?
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Space Review｜Sentiment hits bottom, liquidity tightens: How to identify the "true bottom signal"?
This article uses key metrics such as TRON's stablecoin liquidity as an observation window, providing users with a comprehensive framework to identify genuine bottom signals during periods of market chaos.
Navigating Web3 tides with focused insightsThe current crypto market is suffering from a lack of buying interest due to low sentiment, while tightening liquidity continues to test psychological price support levels. Meanwhile, previously reliable mainstream narratives have already failed. At such a moment, every market participant is left with one core question: Where exactly is the bottom? More importantly, how can we identify the signals that truly indicate a turning point amid chaos and noise?
Against this backdrop, SunPump's latest SunFlash event hosted an in-depth discussion on the topic: "Sentiment at rock bottom, liquidity tightening—how do we spot the 'real bottom signals'?" Unlike "historical bottoms," which are only clearly defined in hindsight, this session aimed to return to the market itself, reverse-engineering the "components of a bottom" through multiple dimensions such as market behavior, capital flows, and on-chain data, offering listeners a calmer, more objective cognitive framework to gain greater insight during future market turning points.
Bottom Signal Analysis: The Market Has 'Checked Out,' But Sentiment Lows Are Only a Necessary Condition
When discussing the "bottom of market sentiment," several guests corrected a common misconception: A true market low isn't always marked by intense panic or a bloodbath—it is more often characterized by extreme numbness and indifference.
Guest Bull King pointed out that unlike early October when complaints and arguments still existed, the market has now entered a state of being "numb." He believes that investors’ emotional disengagement—no longer reacting to price swings, indifferent to gains or losses, even feeling "it doesn’t matter whether I trade or not"—is the real sign of sentiment exhaustion. This state indicates that selling pressure has largely been released, leaving mostly long-term dollar-cost averaging investors or those who "won’t sell no matter what," creating fertile ground for bottom formation. However, he cautioned that sentiment lows are merely a key signal; a true reversal requires improved liquidity and a new market narrative to reignite enthusiasm.
Guest Yuna supported the existence of a sentiment low with data, noting that BTC spot market depth is thinner than in July, with order density sharply declining, reflecting a classic "low-volume cooling" phase. She clearly stated: A sentiment low is a "necessary condition" for a bottom, but not a "sufficient condition." She divides sentiment lows into two scenarios: one is "silence before accelerated decline," where the market is fragile and prone to collapse; the other is genuine "bottom-building silence," marked by contracting volatility and shrinking trading volume. Given ongoing contraction in on-chain funds and low community activity, she believes the market leans toward the second scenario, though final confirmation of a bottom requires integrated assessment across sentiment, capital, and structural dimensions.
Mr Potato proposed a multi-dimensional analytical framework from a behavioral finance perspective: quantitative indicators (such as gain-loss ratio and failed breakout rate), behavioral traits (investors shifting from fear to apathy, trading activity dropping below 20% of historical averages), and cycle positioning. He emphasized that sentiment lows often present an opportunity for "going against human nature," but warned they could also become a "downtrend pause." A true bottom must pass triple verification: sentiment exhaustion, improved liquidity, and price stabilization.
Liquidity Turning Point: Leading Signals from Stablecoins, Order Book Structure, and On-Chain Flows
When discussing "which indicators best signal a turning point during a liquidity crunch cycle?", the panelists were in strong agreement: Price is a lagging indicator; the real leading signals lie in capital behavior—and among these, stablecoins are widely recognized as the most important "barometer."
Yuna pointed out that a halt in the decline—or even sporadic inflows—of USDT and USDC total market cap is the earliest sign that external capital is preparing to enter. Reviewing history, whether during the post-2020 rebound or other cycles, "stablecoins stabilize first, prices follow" has been an almost unchanging rule. When discussing stablecoins as the core carrier of liquidity, the TRON network stands out due to TRC20-USDT accounting for over half of the total USDT supply across all chains. Combined with its high-frequency on-chain activity, fast transaction speed, and low fees, TRON has become an ideal window for observing capital flows. Changes in stablecoin market cap and flow direction within its network are critical to judging overall market liquidity inflection points.
Besides stablecoins, Yuna also considers on-chain capital behavior a key metric. She notes that when capital shifts from panicked outflows to gradual accumulation, it sends a direct bullish signal. Another important dimension is exchange order book structure. She emphasizes that a true market bottom is often reflected in the "order book," not just in "price": when selling pressure significantly weakens and buy-side depth begins thickening—even if large-scale buying hasn't returned—this indicates a "nothing left to sell" state, meaning capital is quietly building a base.
She concludes that when stablecoin declines halt, exchange sell-side pressure dries up, and on-chain capital starts accumulating simultaneously, the real market bottom is forming—even if prices remain flat.
Throughout this deep dive into bottom signals, the terms repeatedly mentioned by guests were "stablecoins" and "on-chain activity." Across the entire crypto ecosystem, the TRON network has emerged as one of the core infrastructures for observing and hosting this critical liquidity. During dark market phases, the resilience demonstrated by its network is particularly noteworthy. Thanks to its stable technical features—high throughput, low fees, and fast settlement—TRON has built a highly efficient stablecoin transmission layer, facilitating massive transfers of USDT and other stable assets.
Meanwhile, the TRON ecosystem is also showing remarkable diversification, continuously expanding its footprint in innovative areas ranging from DeFi and AI infrastructure to Meme projects. This comprehensive ecosystem development not only strengthens the network’s anti-fragility but also drives large-scale real-world blockchain adoption globally, building essential momentum for the next market recovery.
When assessing whether liquidity has bottomed, observing changes in stablecoin market cap, on-chain inflows and outflows, and daily transfer activity on the TRON network provides an exceptionally clear and low-noise perspective. Shifts in its on-chain data often reflect the real movements of retail and institutional capital worldwide—whether fleeing in panic or quietly positioning themselves in silence.
Therefore, identifying a market bottom requires not only attention to macro indicators and sentiment cycles but also insight into the "fundamental pulse" of core public chains like TRON. It is not just an ecosystem platform, but a mirror reflecting the tides of market liquidity. When liquidity truly begins to recover, an efficient, active, and resilient underlying network will undoubtedly become the primary hub for capital convergence and value revival, laying a solid foundation for the next market cycle.
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