BTC- Fundamental, market cycle and capitulationThe great unwind... As Mark Cuban calls it. Such capitulations are, however, not uncommon throughout Bitcoin's history. Feb 2018, Nov 2018 and Mar 2020... To name a few. Of course, to newcomers, such volatility is difficult to stomach. At least, that was how I felt back in 2017.
The latest China FUD is simply three banking and payments associations in China reiterated on the central bank's 2017 ban on financial institutions and payment firms engaging in cryptocurrency transactions and these rules have been in place since 2017. China has been banning the retail trading and the operation of crypto exchange within China’s jurisdiction since 2017. I know this because I was at the front row seat and watched this event unfolded which also coincided with the deep correction of Ethereum from $400 to $140.
China’s latest crackdown on Bitcoin mining will be limited to operations that are not using hydroelectric power. If you think about it, it’s actually good for BTC’s reputation and the global environment in the long run as the world’s adoption of the decarbonation accelerates.
Elon musk’s bashing of BTC…. Hard to take him seriously when he doesn’t even know the high ownership concentration of DOGE and when he believes that he can magically 10x the block size of DOGE. Obviously, he hasn’t thought seriously about the scalability dilemma and the tradeoff between privacy & decentralization and transaction volume/speed/cost. He is right about the BTC’s environmental impact though and it is an important issue for Bitconers to address as the worldwide trend toward the greener environment marches on. I just wish that he didn’t flipflop on whether or not he would allow Tesla to accept BTC payment.
FOMOers, long-term holders/whales and miners determine crypto’s market cycle. Let’s examine them one by one.
Short-term holder's capitulation-
Panic selling is actually good as weak hands get shaken out and market cools off a bit.
Both aSOPR and STH-SOPR have dipped below 1.0 recently indicating the widespread and aggressive panic selling by new holders.
# of address with a non-zero balance has also decreased which is another sign of panic selling by FOMOers.
Bitcoin’s Net Transfer volume from/to Binance is another panic selling indicator as it went up when panic selling intensified.
Long-term holder is HODLing-
The ASOL, CDD and Dormancy metrics are all down indicating HODL sentiment among long-term holders.
# of Bitcoin supply held by Long Term Holders indicating that LTHs haven’t distributed their holdings to the lvl where the new accumulation phase typically begins.
Coinbase’s outflow continues to increase and its balance continue to decline which indicating institutional accumulation and demand and the increasing # of accumulation addresses also point to the same trend.
Total supply held by long-term holders has also slightly increased though this data by itself doesn’t tell us if LTH is accumulating at the bottom of the bullish retracement or the beginning of bearish cycle.
Miners' accumulation-
Last but not the least, miners’ behavior has great influence on the market sentiment. Both Bitcoin’s Miner Net Position Change and OTC Desks Balance indicate that miners are bullish and are accumulating BTC instead of distributing it.
Most other on-chain datas and technical indicators such as BTC NVT price, Bitcoin Difficulty Ribbon and Mayer multiple paint a bullish picture as well . However, one thing that concerns me is that Bitcoin Wallet Sizes: > 1,000 BTC seems to be declining a bit.
It’s possible that the price can continue to fall and bottom around 25k, but the likelihood of it happens will depend on if BTC can convincingly break above 38k and how long BTC stays below 40k. Whatever you do, base your judgement on the combination of different source and analysis rather than the biased intuition and simple trading patterns. Most importantly, play the long game. It's paramount that you can survive the bearish cycle, which will come eventually, and have enough capital set aside so you can buy at the bottom formation and enjoy the fruit of your labors when the market rises up again.
