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This week, we dive into the state of the bull market, assess real demand for high-priced coins, and analyze the latest market trends. Is the consolidation nearing its end?
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The Mt. Gox reserve has decreased by 66% (-94,458 BTC). Since the start of the coin distribution, the price of Bitcoin has risen from $55K to $66K.
Really, no questions at all.
You know what's brilliant?
Halving, bull rallies, and U.S. presidential elections coincide every four years. This means the 50 million U.S. holders will influence elections, and candidates can't ignore them. ๐
Average monthly inflow of USDC and USDT across all exchanges equals $53 billion per day, which is above the annual average. The record inflow of $72 billion per day occurred when the price was at $70,000.
The increase in stablecoin inflow directly correlates with BTC purchases.
๐งต 1/2
The chart displays bitcoin price dynamics and UTXO P/L Supply Ratio Momentum. This metric divides average weekly P/L ratio by the yearly average. In the past decade, two significant momentum spikes were observed, with a third emerging now.
A simple strategy is to buy BTC when NUP > 0.5, and sell BTC when NUL > 0.7.
It seems not too complex to grasp, yet only about 2% of investors will be able to execute it.
As Bitcoin declines, there is a resurgence in demand from retail investors (+7%).
It's too early to talk about a full recovery, but the signal is positive.
25% of the total available Bitcoin supply was purchased at the price level of $73-58K.
This represents a quarter of the total Bitcoin market capitalization, approximately $300 billion.
The good news is that during the bull cycle, the drop in demand for coins among STHs has significantly decreased by more than six times, indicating a more stable asset retention.
Currently, it is neutral.
The SOPR (Spent Output Profit Ratio) for short-term holders (90-day simple moving average) falling below 1.0 could signal the end of a correction and the beginning of a new bullish trend.
More time is needed for this to occur.
When the unrealized profit metric for short-term holders rises above 0.4, you need to consider the end of the bull cycle.
The maximum of this cycle is 0.29.
In the last 24 hours, rising BTC and open interest show positive trends.
Next week should clarify this consolidation phase. Above 72K, expect a cascade of short liquidations and opening the way for a rise to 80K.
Since May 2021, the number of people willing to sell BTC has rapidly decreased: the average number of addresses sending coins for sale daily fell from 234K to 22K.
This demonstrates BTC's high value to users and, despite the current correction, makes the coin bullish.
HODL โ
One of the most favourite and accurate models is the UTXO Block P/L Count, which displays the P/L Ratio in each block. This model has accurately shown the bottom and peak of the cycle over the last 10 years.
Take a look ๐ at where we are now.
On the futures market, bullish optimism still prevails, with more open long positions than short ones.
For a correction bottom to form, there needs to be a dominance of bears on the market.
Based on average losses in this bull cycle, if no major crises occur, few panic sellers remain.
Ideally, a drop would shake out the rest and build a robust bull trend, but that's proving elusive and might not happen at all. ๐คทโโ๏ธ
There is mild panic in the market due to the small-scale sales of Mt.Gox/Govt coins, but no one is talking about the unrealized losses of STH whales, which currently equal 218K BTC.
I have no idea what will happen to the market if they lose their nerve.
โ HODL
The average monthly change in demand for bitcoins from retail investors <$10K has fallen to -17%.
A similar previous drop to -18% ended with an increase from 40K to 70K.
The market is boring. Over the past 7 days, the Netflow equals -8,748 BTC, meaning there have been 8.7K more BTC purchases than sales.
Other than BTC being bought up, nothing is happening.
After falling from the $72K level, monthly changes in the capitalization of Tether (USDT) show an increase.
Typically, the growth of this metric directly correlates with the rise of Bitcoin.
A bullish impulse (Green Bar) is forming in the market. This means that the demand for coins exceeds the supply that was realized a week ago.
As investor confidence grows, a breakthrough above 70K can be expected.
The Bitcoin Net Unrealized Profit (NUP) has dropped from a peak of 0.64 to 0.53.
It is worth noting that in the previous three cycles, the peak occurred when the metric was above 0.7.
From the $51K level, there is a +9% increase, totaling 4.2M BTC - that is exactly how many coins are in the wallets of investors holding between 100-1K BTC on their balance. At the current rate, this amounts to $250B.
Essentially, they control 20% of the total supply.
I wouldn't think about a bull run yet, but rather worry about the mental health of the newbies who hold 1.2M BTC and how they will cope with this shake-up.
HODL โ
The average weekly Estimated Leverage Ratio (ELR) - the ratio of open interest to exchange reserves has decreased by 1.5%.
A reduction in ELR may indicate a decrease in market risk or more conservative behavior by traders.
The 8.7% increase in the Ratio indicates that the proportion of BTC held by LTH has increased compared to that of STH over the last 30 days.
This can be interpreted as a sign of growing confidence among LTH in the long-term potential of BTC.
h/t
@CryptoVizArt
From the $68K level, the supply of Long-Term Holders increased by 126K BTC, which is approximately $8B.
Everything that LTH wanted to sell was sold at the $74K-68K level.
After the halving, miners' average income fell from $75M to $30M (-60%). Over 720 days, their reserves decreased by 50K BTC because miners were purchasing new equipment.
They are not at risk, as the net amount in reserve remains at 713K BTC.
The absence of real demand for the coins indicates that investors do not consider the current price attractive for purchasing.
Something might change on Monday, but I highly doubt it.
Investors will need to start worrying about the end of the bull market when the 30DMA MVRV Z-Score exceeds 5 and a ๐ข Strong Bull bar appears. Even then, it could still be half a year until the finale.
GMโ๏ธ
Over 14 years, Bitcoin investors have seen unrealized profits 80% of the time and losses 20% of the time.
This 80/20 ratio exemplifies the Pareto Principle, first described in the late 19th century, which applies perfectly to Bitcoin as well.
At the $73K level, new investors sold 16% of their coins. A similar situation occurred before the 2020-2021 rally, during which the realized capitalization of cohorts holding coins for up to three months increased to 74%.
The current market structure by many metrics resembles the bull market of 2016-2018. We have already passed the first half and should move into the second, more active growth phase known as the โBull Runโ.
Growth Rate shows the difference between changes in Market Cap and Realized Cap. Positive values suggest MC is growing faster than RC, indicating investor optimism.
Thresholds >0.002 indicate an overheated market likely needing a price correction. Now = 0.001.
h/t
@ki_young_ju
If the price does not hold at the level of $60.9 (Short-Term Holders Medium Realized Price (1M-3M vs 3M-6M)), we are more likely to see a deep correction phase.
The $67.1K level remains the last resistance level for the cohort of short-term holders, overcoming this barrier, the price will trade above the average purchase price of the entire STH cohort, which is a bullish sentiment.
The market currently has a very low inflow (average = 30K/day), so if the Mt.Gox coins are distributed in small batches, the market will absorb them without much effort.
Don't you think it's time for long position ๐ฉธliquidations?
There is a greater risk of long position liquidations, and the oscillator is indicating that this is exactly where things are heading.
I think that until 30-50% of the coins bought by the new holders are shaken out, the market will continue to fall.
Once this happens, a buyback will be made, and we will move higher.
Open interest in futures has grown to over $30 billion. Visually, it seems that the market is overheated with open positions, but if you convert the OI to BTC, it will be 440K BTC, compared to the peak of 614K BTC in October 2022.
The market can still increase by $10 billion.
On the Kraken exchange, there is an increased outflow, which means that Mt.Gox coins are being withdrawn from the exchange, or even if they were sold, they have been repurchased and are being withdrawn.
In any case, there is currently no panic in the market.
The Exchange Flow Multiple (BTC) has dropped to a threshold level below 0.6.
This indicates very low speculative demand in the market. Similar metric values were observed around the $30K level, after which growth resumed.
The Exchange Flow Multiple (30D/365D) has dropped to its lowest level. This is the fifth time in the last six years.
The most accurate name for this market situation is "waiting period."
HODL โ
A drop in USDT liquidity will not stimulate BTC growth, conversely, growth will demonstrate demand for purchasing coins.
Currently, the metric is falling.
h/t
@jjcmoreno
Long-Term Holders (LTH) started selling coins at the $45K level.
ะelow this price, it could become a buyback zone for forming the bottom of the correction and the start of a bull rally.
Coinbase currently accounts for 46% of all spot trading. The average trading volume has decreased from 25K BTC/day to 9.7K BTC/day.
In a bull market, this represents a lack of selling pressure (yellow bars), which can stimulate growth.
Current average losses by Short-Term Holders (STH) via exchanges match the June 2023 correction level, but are 2.7 times less than fall 2020's.
I think we've reached a point where further declines would trigger significant stress and panic sales.
Long-Term Holders (LTH) are currently not selling, following a sales peak at the 73K level.
They currently have a lot of cash, around 1.3 million BTC, so they can afford to wait to buy at the local bottom.
The realized profit of short-term holders has fallen by 32%, signaling a lack of investor desire to lock in profits at current levels, essentially anticipating further growth.
The MVRV Z-Score indicates which phase of the cycle we are in; the maximum value of the metric in this cycle is 3.07, which corresponds to the middle stage of a bull cycle.
The average incoming volume of all stablecoins (Ethereum ERC-20) has dropped by 2.1 times from $84 billion to $40 billion. This is a bearish signal for the market.
A drop below $30 billion will be considered a deep correction phase.
OI on the three major exchanges dropped by 65% in one day - this is the largest position closure in history.
We do not know whether these were short positions being closed or profits being taken on long positions. One thing is clear - traders are unwilling to take risks.
The transfer of BTC by miners through OTC continues. In total, over the last two months, they have transferred 71,000 BTC.
A growing balance at OTC desks can be associated with increasing selling activity outpacing Bitcoin demand.
h/t
@jjcmoreno
Realized losses over the last 30 days total $403M, similar to early COVID market crash losses.
However, they are far less than the losses post-Chinaโs mining ban (3.3x higher) and the Luna ecosystem crash (4.6x higher).
HODL โ
The average paper profit for investors after the ATH has decreased by 60% and is currently at the 'Anxiety' level.
Market recovery in a similar situation in December 2019 began when the metric reached zero.
Over the last 1.5 years, the average BTC transfer volume has ranged from 700K to 1M. The rest of the coins are being HODLed.
History justifies this behavior of holders.
The average Exchange Inflow is currently very low at 25.9K BTC per day, indicating not many are willing to sell.
Therefore, even if the Mt.Gox trustee begins selling 141.6K BTC, the market will absorb this volume within a week and no one will notice.
The current bull market structure resembles the market from 2015 to 2018. It's clear that we have already covered half of the journey, and so far everything is going well with no turbulence like in the previous cycle.
Funding Rate - after explosive growth in March for long positions, it practically cooled down to a zero level.
This is a good sign for the end of the correction.
Over the past three years, hash rate recovery has led to price increases in three instances and declines in three others.
However, post-2020 halving hash rate growth drove the price from $20K to $63K.
Currently, the average investor is earning 84% unrealized profit from their investments.
The price is nearing the mean (PR Bands) of $52.2K - this will reduce unrealized profits by about 14% and could trigger coin sales as investors may secure profits fearing further drops.
It is clear that bears are dominating, but they need to increase the pressure to drop the price even lower, to create short liquidity which can be used to form a new bullish trend.
The average number of days with high price performance this year equals 25 days, compared to past cycles, which recorded 56, 140, and 64 days, respectively.
At a minimum, this cycle is expected to see a doubling in price growth.
There isn't strong panic in the market yet, it will start when the orange bars appear.
In the current situation, 47K doesnโt look as terrible as it did three weeks ago when we were at 70K.
We need more shakeout, but at a slower pace.
It must be acknowledged that the bears' pressure since the beginning of summer has been impressive.
Until the metric becomes greater than zero, the bulls will have to worry.
Overall, there remains a very high demand for BTC in the market, similar to the excitement before the start of the bull rally in 2016, but back then the price was $300 compared to $67K, so the current one is stronger in terms of the volume of finances in the market.
The Realized Profit and Loss Ratio metric has dropped to extremely low values after profits were taken at the 72K level.
Everyone who wanted to sell at 72K has done so, therefore, for the next profit to be realized, the market needs a new level above the all-time high (ATH).
The market needs tests and a breakthrough above the ATH that will create new FOMO. Investors are just waiting for more paper profit.
Go to the new ATH! ๐
As of today, the highest demand for buying
#BTC
comes from players with balances ranging from 10 to 100 BTC.
Essentially, they are buying up the current dip.
#buythedip
Miners continue to face issues with the hash rate.
The income they receive for a new block has decreased by 2.5 times, while the volume of sales on the exchanges has increased by four times.
Essentially, this is a bearish alert.
The average bearish pressure, reflected by the 30DMA Net Taker Volume metric, has weakened from $15M/30D to $1.8M/30D.
This was the greatest pressure in the last two years.
It might be the final trigger for the resumption of the rally.