With volatility compressing to just about nothing, it is almost time for some catalyst unknown, to fire up the Bitcoin markets once again. The question is, what could it be?
The answer is we do not know, but given sovereign bonds and Forex trading like shitcoins hasn’t been enough to do it yet, perhaps we have to look internally. So today we explore what is going on across four sectors that generally matter for Bitcoin onchain performance:
- Onchain activity –> a proxy for demand
- Miners –> the currently extremely stressed supply side
- Exchanges –> a view on the supply and demand balance
- HODLers –> the last guys remaining
What I see across these is that Miners are the most likely ‘catalyst’ given their leveraged up business models (a 2020 hangover), alongside seemingly persistent increases in hashrate and difficulty.
They currently have around 78k BTC in reserve, which is around $1.5B worth at today’s prices. Now i’m actually not too concerned about that volume, what concerns me is the combination of massive forced sell-side INTO fairly weak and thin orderbooks.
The onchain activity angle is pretty light, and despite all the HODLer attempts, we are still trading at the lower end of this price range. There are no reinforcements, and that means $1.5B worth of sell-side could create some short term havoc.
That said, despite some headwinds, I still remain more bullish than bearish. I see very constructive fundamentals and what looks like a loaded spring on the supply squeeze front. It will happen, and is a function of when not if in my view.