The current market is simply fascinating to watch play out. What I believe is happening based on an assessment of on-chain data, remains counter to the actual direction of the market pricing. Bitcoin investors remain steadfast accumulators, despite all hell breaking out in broader markets, and price punishing them on the regular.
This is driven by many factors, but the seriously murky macroeconomic landscape is front and centre. Inflation has reared it’s ugly head, and we are starting to see signs of social unrest as a result.
When the cost of living goes up, people’s wallets start to hurt, and in extreme cases, food and energy become in short supply. This is a market risk that has not been on the radar for many decades, and it is sending shockwaves throughout all markets.
With the notable exception of energy and commodities, pretty much everything is red over the past few weeks. Major tech stocks like Facebook, Tesla and Netflix are trading like actual shitcoins.
These are hundred billion to trillion dollar market cap companies…wiping out 25% in a single candle (after hours of course, when retail investors can’t do a damn thing about it).
Bond yields are screaming higher, the USD index is above 102 (DXY), and monetary tightening is happening all over the place. This makes paying back debts harder, and the result will likely be insolvency of many companies.
Then we start talking about recessions, and unemployment…all whilst the cost of living rises.
Sounds like Stagflation…and that is not a pretty picture.
With all this said, when we look under the Bitcoin hood…I still…despite all price signals to the contrary…see strength. HODLers don’t care, and what is key, is they appear to be buying more and more aggressively, as the market declines.
It has characteristics of both 2019, November 2018, and post-March 2020 all at the same time.
There were periods of RED CANDLES and MAXIMUM OPPORTUNITY.
If you have the stomach for time pain, and drawdown pain, sub-$40k BTC feels to me like long term value. And based on what I see in the data…I am not the only one with this opinion.
Stay frosty folks, anything could happen over the next few months. Will probably be a bumpy ride.