A bear market is many things to many people, but can probably be categorised into two sets:
- Pure pain for most of us
- An opportunity for a few of us
I try to put myself (and hopefully you as the audience) into the latter bucket. If you can look past the red candles, and if you have the long term conviction, bears are where generational wealth is made…just not straight away.
Markets have a beautiful skill of transferring wealth from the impatient to the patient. From the weak to the strong, and from the scams back towards quality.
So let’s put our patient, strong-hand hat on and look at the big picture. Are we seeing HODLers leaving the system?
No. If we were, Liveliness would be ripping higher. It will trend up when old coins, and large volumes are on the move. This is quite clearly not the case and in fact the downtrend is accelerating.
On the supply dynamics, we usually see HODLers in two phases, which are hilariously correct compared to the herd:
- They sell expensive coins in bulls
- They buy cheap coins in bears
Seems obvious right…much harder to execute on.
The chart below shows the flow of coins into (green) or out of (red) Long-Term Holder (LTH) status. These are coins > 155 days old and statistically the least likely to be spent.
Note how LTHs sell (red peaks) into the market strength at ATH (literally flooding the system with coins).
Next, they recommence HODLing and accumulation as price enters a bear (green peak). Their peak buying typically signals around the mid-point of the bear, up until we get a final flush out capitulation.
By this metric, we may well have already experienced the middle of the bear, and in all honesty, could be closer to the end than the beginning. I still have 20% odds that we have a scary down wick, just to cement the lows, but I believe most of the damage is probably done.
Macro and politics are ready and waiting to throw a spanner at this analysis. Perhaps this time really is different. But one thing really is not different: HODLer mentality.
My bet is on Bitcoiners over politicians, all day every day.