Base case is $BTC consolidates into Q1 2022.
Right now incumbents are just trading against each other, chopping each other to death.
Here's my current thoughts on the state of the market.
[THREAD]
Right now incumbents are just trading against each other, chopping each other to death.
Here's my current thoughts on the state of the market.
[THREAD]
1. Context: In the chart above I displayed realized price, which is essentially the average on-chain cost basis of $BTC.
Realized cap is more intuitive.
Realized cap = aggregate price of every coin when it was last transferred on-chain.
Market cap = $912b
Realized cap=$461b
Realized cap is more intuitive.
Realized cap = aggregate price of every coin when it was last transferred on-chain.
Market cap = $912b
Realized cap=$461b
2. If you look at the slope of realized price some distinct trends can be seen. During bull markets, realized price (orange line) aggressively bends upwards (in logarithmic scale, this is key).
Two reasons:
1. Old coins are being spent
2. New capital aggressively enters
Two reasons:
1. Old coins are being spent
2. New capital aggressively enters
3. Since May, realized cap has increased by approximately its entire valuation (~$90 billion) at the peak of the 2017 bull market.
This chart is in linear scale. But with an asset growing in exponential fashion, log scale is needed. This is key.
This chart is in linear scale. But with an asset growing in exponential fashion, log scale is needed. This is key.
4. So where is $BTC now?
Realized cap has been increasing by $680M/day on average since the market bottomed.
While significant, in terms of relative growth, this is consistent with previous consolidation periods before $BTC goes parabolic.
This period could last several months
Realized cap has been increasing by $680M/day on average since the market bottomed.
While significant, in terms of relative growth, this is consistent with previous consolidation periods before $BTC goes parabolic.
This period could last several months
5. I frequently post about realized cap and the MVRV ratio. This is because realized cap is one of the most pure forms of quantifying the monetization of BTC.
Currently the MVRV ratio is 1.97.
Dips below 1.0 are generational buying opportunities.
Currently the MVRV ratio is 1.97.
Dips below 1.0 are generational buying opportunities.
6. Do we get a dip to 25k (current realized price) ? Highly doubtful imo, unless legacy markets face a significant liquidity crises.
However, the realized price floor continues to rise slowly but surely, as convicted stackers continue to take coins off the market.
However, the realized price floor continues to rise slowly but surely, as convicted stackers continue to take coins off the market.
7. Coin days destroyed (CDD) gives us insight into the spending activity of the market (i.e. 1 BTC that is held for 365 days creates 365 coin days).
When that BTC is moved on chain, those coin days are destroyed.
The 90 day rolling sum of CDD is still near decade lows. #HODL
When that BTC is moved on chain, those coin days are destroyed.
The 90 day rolling sum of CDD is still near decade lows. #HODL
8. Things to watch out for is tightening financial conditions heading into 2022:
The $DXY specifically, which measures dollar strength against a basket of fiats has been steadily rising throughout 2021.
Rising $DXY = Tightening financial conditions = Risk assets perform poorly
The $DXY specifically, which measures dollar strength against a basket of fiats has been steadily rising throughout 2021.
Rising $DXY = Tightening financial conditions = Risk assets perform poorly
9. My expectation is bitcoin consolidates into 2022, where the Fed will (supposedly) try and taper asset purchases and likely raise rates.
The market is pricing in 3 Fed rate hikes (+75 bp) in 2022, as per Eurodollar Futures.
The market is pricing in 3 Fed rate hikes (+75 bp) in 2022, as per Eurodollar Futures.
10. I suspect that a large market selloff will follow any attempt by the Fed to taper (if its even attempted), & the stimulus that follows will make 2020 look like nothing.
Does $BTC get hit if a liquidity event occurs? Yes, but it's wise to keep on eye on the bigger picture.
Does $BTC get hit if a liquidity event occurs? Yes, but it's wise to keep on eye on the bigger picture.
This is when the $BTC moon mission resumes. Capital inflows into the market are here, but in order to become a multi trillion dollar asset class, another catalyst likely needs to arrive.
Just stack sats, cut back on the mark to market leverage, & enjoy the ride.
[END]
Just stack sats, cut back on the mark to market leverage, & enjoy the ride.
[END]
If you found any of this thread valuable, check out The Deep Dive where I publish market analysis daily with @BitcoinMagazine.
deepdivebtc.substack.com
deepdivebtc.substack.com
Update:
Any capital inflows have been marginally offset by losses from top buyers. Realized market capitalization stagnant since late November.
Personal strategy for last month has been to continuing stacking $BTC daily and selling short term volatility tails for a premium.
Any capital inflows have been marginally offset by losses from top buyers. Realized market capitalization stagnant since late November.
Personal strategy for last month has been to continuing stacking $BTC daily and selling short term volatility tails for a premium.
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