Hi all,
Over the past few weeks, we have analysed the Bitcoin market from the perspective that we are in some kind of ‘mutant bear market’. I prefer the term ‘crab market’. Why? In 2 years time when we reflect on 2021â2022, I think the price history will show one big sideways consolidation.
Nevertheless, when there are fewer moon missions, few green candles, and just sideways chop, it feels pretty grim. Mutant bear, crab, something in that realm is what I expect…for better or worse.
The number one reason I’m not ready to proclaim a 2018-style bear is that the supply dynamic side remains unbelievably constructive. We’re seeing more and more coins, purchased up here between $30Kâ$60K moving into cold storage and HODLed till death do them part. As I have mentioned, I see myself in the data. I see value up here and my coins are not getting sold until we are much much higher.
Maybe I’m insane…but what’s new?
Short-term holder (STH) supply historically ascends in bulls as long-term holders (LTHs) distribute to new starry-eyed buyers. After the market tops, these tourists disappear, leaving only the strongest of hands to clean up the mess. Now on an absolute coin basis (i.e. BTC volume), STH supply is near generational lows of around 3M BTC.
But we’re comparing to 2018 and 2013 here…there were SO MANY MORE COINS mined since then. So to be on par with past bears on a BTC volume basis, means we currently have a much heavier ownership by LTHs on a proportional basis (% of circulating supply). This sets the stage for 2 things:
- Most likely months more chop and sideways. A supply squeeze takes time and capital to create, probably won’t happen tomorrow…but…
- We’re coming from a much higher base. There are more strong hands, and thus fewer coins to buy than years past. When the squeeze happens, it’ll be dramatic.
