Hi all,
Today’s on-chain daily post looks at the state of realised profit and loss, which again, speaks to a very quiet period of time.
The market at the moment really looks like 2019. Let me start by describing what 2019 was for those of you who may not have been through it, or haven’t given it a great deal of thought in hindsight:
- Red: 2019 followed 2018…which was a hellish year. 2018 was a brutal bear and we witnessed an already year-long period of pain, capitulate by halving yet again from $6k to $3k. The bears were calling for $1k Bitcoin. I make the analogy that May to July 2021 was that capitulation in Nov 2018 to April 2019
- Green: April Fools Day 2019 broke the bear curse…temporarily, as the PlusToken ponzi in China sucked up 1% of all BTC, and the western world short the thing all the way to $14k. Everyone believed the bear was over –> analogy is August to October 2021.
- Blue: 2019 was a mini bear market that followed this ‘relief rally’. It traded sideways and down until we finally capitulated in March 2020 –> analogy is this feels like where we are right now.
The chart below shows these market phases alongside the Realised Profits metric (a version of SOPR for the whole market). The spending behaviour and realisation of profits/loss is a pretty good indicator to track market sentiment. Where we are at the moment, there is almost nothing being spent. Coins on the move are not realising profits or losses, it’s just…really flat.
Lots and lots of nothing.
Max pain right now feels like boredom. Absolutely nothing happening, and that can be very taxing for traders and investors as it tests your resolve and patience. Add in some down days like 2019, a slow bleed lower, and many folks just sell out of pure boredom.
Now, one of my personal takeaways from 2019, was that had I not stacked sats like a madman back then, I wouldn’t have half the stack I do today. It was tough, but that was where I accumulated the most of my Bitcoin in hindsight. If we return to a boring crab market, your conviction will be tested for all the assets you hold. As I’ve said before, have a plan, write it down, and stick to it.
Your future self will thank you for it.
P.S. you may have noted check on-chain had not been updated for a few days. My data API blew up over Christmas and I had to get new code built out. I have patched it now, so most charts should be back and operational.
Bitcoin Realised Profits Daily (Live Chart)