SignalQuant

The thick purple line represents the price of Bitcoin, while the thin blue line represents the taker buy and sell CVD. The “taker buy and sell CVD” shows the trend in the difference in trading volume between long and short positions. The green area is when longs exceeds shorts and the red area is when shorts exceeds longs. Although the current price is showing a downward and sideways trend, traders are seemed to prefer long positions over short positions. This is because every time this indicator hit bottom and rose in the past, the price showed a pattern of rising, whether large or small. Let's see if the Bitcoin price can overcome the US employment shock and rebound!  

The trend of stablecoin netflow on exchanges shows a strong correlation with BTC price. Over the past week, there has been a tendency for stablecoins to flow into exchanges. This may be due to the expectations surrounding Trump's inauguration, and if this trend continues, there is a high possibility that BTC prices will surpass their previous all-time highs.  

Over the past week, we've had a crisis of net outflows in the middle. But then again, we've had a steady net inflow as dollars have come into the crypto market in the end. This has allowed the price to continue to make higher lows. Its price will break the $100,000 mark at any moment without a significant correction based on the net inflows trend. My view on the trend of stablecoin's netflow from exchanges is that as long as the trend of net inflows continues, there will be no meaningful correction in price. And we will have to buy the dip even if the price corrects.  

The steady maintenance of a high level of BTC supply in profit is a big clue to whether a bull cycle is underway or not. Looking back at past cycles, BTC supply in profit has mostly remained above 80%. Of course, there have been moments when it fell below 80%(= red circles), but these were opportunities to buy the lows. In the current bull cycle, it has remained above 80% for the most part. Recent summer pushed it below 80% shortly several times, but so far, those pushes were buying opportunities.  

Stablecoins are like the blood of the coin market, especially during upward market cycles, as their increasing marketcap fuels rallies indeed. However, an increase in stablecoin marketcap alone will not cause the coin market to rise. Rather, there must be net flows of stablecoins into exchanges for the market to rise. Interestingly, in Sept, there was a high correlation between BTC price and stablecoin's exchange net flows, especially around the 10th and end of September, when its net inflows of stablecoins were positive for several days, contributing to the price rise. Therefore, I believe that the net inflows of stablecoins can be a good predictor of the future price of BTC for now.  

This data shows the BTC price action and newcomers(between 1 week and 1 month of entry) holdings over the past 8 years, and it tells us the following - In a long-term bull cycle, the price peaks (=green horizontal dotted line) when the number of new entrants crosses a threshold (=green vertical shaded box). - This is a strong sign of entry by newcomers experiencing FOMO. - Instead, the current bull cycle does not have a trend of new inflows at price tops. - Note that the spike in new inflows in '24.1Q is just a wave between longer-term cycle tops (= red vertical shaded box). For now, Bitcoin's upward momentum continues to rely on spot ETFs, but we can expect to see more upside as exiting and new investors enter the market.  

From this Coinbase premium, we can get some pretty good investment insights into how we can predict price rebounds. The pattern is that when the Coinbase premium bottoms and rises, BTC price also bottoms. In other words, there have been Coinbase premium trends in the last two years where the price bottomed four times 1) when the premium was negative and 2) when it was slowing down. Note that right now, we are in a slowdown as both conditions are met, with a negative Coinbase premium Therefore, if the price follows the previous Coinbase Premium pattern, there is a good chance that the price will continue to move sideways intermittently in the future, but there is also a good chance that the price will continue to rebound to higher lows. However, no matter how good an indicator looks, it's important to cross-validate it with other indicators, as it's hard to be confident with a single indicator.  

The recent BTC price plunge has been devastating for long position holders. As you can see above, the size of the long liquidation is by far the largest for the last year, and we estimate that the long squeeze has also been significant However, we can't easily conclude that 'now that we've had a massive long liquidation, we'll bounce back'. That's because it took a couple of months(from Aug to Oct in 2023) before the price started to bounce back. So I think we should be investing with the mindset of 'I'm going to be less greedy and more conservative for the time being'.  

The short-term average realized price(=sth price) is an important key level for the BTC price, typically acting as resistance in bear markets and support in bull markets. In fact, the sth price was a strong support for the price during the bull market in '23.Q4 and '24.Q. However, with the recent market decline, the price has fallen below the sth price and investor sentiment has become more subdued indeed! If the price does not move above the sth price quickly, it will likely turn into a resistance level for the price going forward.  

Over the past six years, the BTC price has rebounded sharply after the number of active addresses (7D MA) bottomed out [=mint shaded box]. We can witness this pattern whether the market is bearish or bullish. Its current trend seems to bottom, and if that's true, BTC price should see a significant rebound in the near future