BullishBTCBitcoinBitcoinUSDCUSDT

10/29/2024 on

Stablecoin Supply Ratio Oscillator indicaté high demands coming back

The Stablecoin Supply Ratio Oscillator (SSRO) is based on the ratio of Bitcoin's market cap to the market cap of stablecoins, including #USDT, #USDC, #BUSD, #TUSD, #USDP, #GUSD, #DAI and #SAI. This oscillator allows us to estimate the demand for purchasing or betting by consuming these stablecoins. Since Bitcoin bottomed in November 2022, the 90-day and 200-day oscillators have seen lows similar to that bottom during the 3 months of Q3 2024. However, October has once again been an 'Uptober' as Bitcoin has recovered to 70K and may retest the ATH high set in Q1 earlier this year. SSRO indicates high demands on the average quarterly data set (90d), breaking above the positive 2-points. If demand continues to sustain and the announcements and news in early November include some favorable macro and election data, a move to and break above the positive 3-points is possible, which has happened three times in the bull cycle: in January 2023, October 2023, and February 2024.  

BTCBitcoinNeutralBitcoin

10/14/2024 on

1 Year Change - From Plankton to Fish Addresses

Since BTC began surging in early 2024, much debate has arisen about whether retail investors and newcomers have re-entered the market. The answer, however, is nuanced. By analyzing specific data, we can gain a clearer picture. Let's focus on the yearly changes in Bitcoin addresses holding varying amounts, categorized as follows: Plankton addresses holding >0 & <=0.1 BTC Shrimp addresses holding >0.1 & <1 BTC Addresses holding exactly 1 BTC Crab addresses holding >1 & <10 BTC Fish addresses holding >=10 & <100 BTC I've deliberately chosen these smaller groups rather than larger ones (like Dolphin, Shark, Whale, or Humpback) because the latter often represent exchanges, custodial wallets, or cold storage, which tend to show fluctuations that are difficult to track. In contrast, the smaller groups give us a more accurate reflection of the general market and sentiment. If we look back at previous cycles, Bitcoin's price increases have typically coincided with a steady rise in the number of addresses belonging to these retail groups, particularly during peak periods. This pattern also highlights the extent of FOMO that drives market behavior during these times. The rise in these group addresses in the current cycle suggests that retail participation is indeed present. However, the growth is weaker and more uneven than in previous cycles, especially during market rallies. This is understandable, given that global monetary flows have generally declined over the past three years. So, the data suggests that future FOMO waves are still possible in this cycle. The most noticeable trend appears in the Plankton chart (holding >0 and = 0.1 Bitcoin). As BTC's price rises, newbies tend to invest in tiny amounts. From the start of 2023 to now, the growth in this group's address number has been negligible, especially compared to the surges of the previous two cycles. Based on these observations, I conclude there is still a basis to look forward to a final wave in this cycle.   

Momentum Short-term Cap recovering but slow.

Momentum Short-term Cap is my experimental metric, which is calculated as a ratio based on the difference between Market Cap and Realized Cap divided by the total Realized Cap of the short-term cohorts. The difference between the Market Cap and Realized Cap is important, as it allows one to show the degree of change in the asset's value over short-term periods. Therefore, with a relatively high degree of accuracy, this ratio shows the peaks where the price reaches the hottest threshold of the short-term cohort's market cap momentum (less than six months). At present, the ratio value has recovered back to the WARM phase; however, less favorable conditions in terms of impact psychology and slow changes in macro conditions are promoting slow momentum. Time is still allowed, and once the macro factors stabilize or show positive shifts, the momentum will quickly return to the hot threshold. This will probably be the final top of this cycle.  

Being mentally prepared for unexpected developments is always necessary.

Jay Powell remains calm about the US economic outlook, despite the Fed holding interest rates steady and acknowledging signs of a cooling economy. US economic data has disappointed since May, with full-time employment declining and credit card delinquencies rising. Recent economic growth has largely relied on government spending and public sector jobs, while consumer spending has outpaced income. Leading economic indicators and the market are signaling recession risks. The Fed may have been too slow in cutting interest rates, leading to excessive demand restraint. Economic momentum loss could quickly become a self-reinforcing spiral, increasing unemployment, delinquencies, and bankruptcies. Recession warnings are flashing and should not be taken lightly. Geopolitical turmoil in the Middle East also contributes to market anxiety as retaliatory actions in the region could impact overall market sentiment. The upcoming US presidential election in November adds to this uncertainty. Cryptocurrency market sentiment is further unsettled by large Bitcoin movements from MtGox and the US government, following a price drop due to the German government's net selling in June. One fundamental indicator based on historical price data, the Pi Cycle, with 111 and 365x2 moving averages and the (MA365)x2/MA111 oscillator, has confirmed a similar downward momentum to late 2020. While historical patterns do not guarantee future outcomes, warning signs of a potential downturn or prolonged sideways movement should not be ignored. Based on the 4-year cycle and STH Realized Price and Realized Price data, preparing for unexpected developments is essential. For instance, during the significant downturns from October to December 2019 and May to July 2021, Bitcoin prices dropped to the Median RP area before recovering and reaching new highs. While there is no guarantee of absolute accuracy, being mentally prepared for unexpected developments is always necessary.   

BTCBitcoinBearish(Nuanced)Bitcoin

7/8/2024 on

What happens to BTC and the crypto market

Bitcoin and cryptocurrency investors have continued to face downward pressure since the beginning of Q2, including concerns about potential selling by creditors of the Mt. Gox exchange, which has an approximately $8 billion hoard of the most prominent digital asset in the market (Chart 1). In addition, the historical lesson of high central bank interest rates continues to overshadow investment decisions in high-risk assets. Although US stocks continue to accelerate, the correlation between Bitcoin and SPX's index has dropped to its lowest level since January 2022 (Chart 2), which shows that the lingering riskiness of the cryptocurrency market is still quite a painful issue. In particular, the momentum of the digital currency market has decreased sharply after the excitement from spot ETF approvals has reduced, and the level of investment from small individuals has not shown a breakthrough, which is the primary energy source for previous bull runs. The evidence is that the percentage change rate of Active Supply data by quarter has decreased sharply since the peak in late March (Chart 3). The percentage decrease shows the cautious sentiment and (or) lack of interest from F0 investors. The appearance of spot ETFs is mainly aimed at investors in the US, and these investors, although strong, only account for a part of the global market. No one knows how many are new waves or are still just veterans trying to accumulate more assets with both right and left hands. (CEX, DEX + ETFs). However, the bearish sentiment doesn't tell the whole story; the on-chain metrics of long-term holders are a sign that they are not yet content to distribute most of their holdings; if the 4-year cycle is a significant effect, then the 2-3 year investor cohorts are still holding on, I predict that it may be for the last bullish waves of this cycle. (Chart 4)