BITCOIN - Mega Chart

11. Juli 2022

This is my Bitcoin Mega Chart.

Price can be volatile (hasn't it always been that way?)
but at the end of the day patience and time together with Technical analysis always wins.

There are many factors that indicate this bear cycle could at least be coming to a halt.

All market cycles are unique, but the human response to profit, loss and incentives can be strangely predictable. The trick is knowing what to look for in the data, on-chain.

It is well known that Bitcoin volatility specialises in shaking out weak hands. The market often rewards long term holders who exercise patience, and punishes more inexperienced market participants and late bull cycle entrants. Long term holders recognise this and tend to wait for peak market hype before realising profits on expensive coins.

This creates a cyclical transfer of Bitcoin wealth.

As hodlers distribute coins into new hands, the supply of young coins will swell in volume. The Realised Cap HODL waves are an ideal tool for tracking this wealth transfer via the expansion of young coin supply. We can see in the chart below during the late stages of the 2013 and 2017 bull markets, the height of young coin bands (warm colors) spiked in three distinct instances. These peaks generally corresponded with the major rallies and corrections.

In the current bull market, we have seen the first major spike in young coin supply. What is interesting is the warmest colors (Youngest coins) have not spiked as high this cycle. This likely reflects two phenomena:

Increased conviction of coin holders (including new institutional buyers) as the Bitcoin thesis is tested and proved on the macro stage.
Greater access for speculation via off-chain derivatives leading to young coins having a smaller on-chain footprint.

With this wealth transfer in mind, we can observe the proportion of old coin supply (1y-2y, blue) and compare it to the young coin supply (1w-1m, orange).

At the end of bear markets (green zones): 1y-2y coin supply is at a maximum and 1w-1m coin supply is at a minimum. This is the hodler accumulation we discussed earlier.
At the end of bull markets (red zones): 1w-1m coin supply is relatively high (as more new speculators enter) whilst 1y-2y supply has declined significantly due to old coins selling into market strength.https://insights.glassnode.com/bitcoin-onchain-market-cycles/

The supply and demand balance of the Bitcoin market is an extremely dynamic system, despite being cyclical in nature. Whilst the programmatic halving cycles may make it seem 'obvious', it remains difficult to pinpoint which stage of the bull market we are in. On-chain metrics provide tools and insights into macro changes in spending patterns and conviction of hodlers, speculators and miners.

When it comes to bull markets, there is an array of metrics and useful indicators, but a few patterns are important to pay attention to:

HODLers (old coins) distributing their wealth,
New speculators (young coins) increasing their positions,
Miners reaching peak profitability.
All market cycles are unique, but the human response to profit, loss and incentives can be strangely predictable. The trick is knowing what to look for in the data, on-chain.

Or to keep it simple:

I see BTC close to 20k a bargain. Time to work hard in the next months and accumulate more for myself. Then again that is a personal opinion. DYOR

One Love,

The FXPROFESSOR