Thread by @dilutionproof

1/27 1st day of the month.. #Bitcoin market analysis time! 🥳

This edition, I'll look at 3 questions:
- Why did we dip (again)?
- Is there still demand?
- Is there still room for growth?

A relatively long 🧵 this time, but I think you may just like it 🤫

2/27 Alright, lets first just look at the price chart

#bitcoin started the month strong, rallying to a new ATH at ~$64.9k, but then dropped to ~$47.0k (-27.56%), where it found a lot of confluence for support (e.g., Fibonacci, UTXO realized price, whale inflows, NVT Price)

3/27 Upon writing these monthly analyses, I'm spotting a trend: I'm writing about a dip each month 😅

If anyone has an explanation for why the #bitcoin price dips near the end of each month, I'm all ears 👂

@WClementeIII also noticed this:

4/27 So why these dips? Multiple angles to take.

First: Price ramped up FAST this cycle in comparison to 2017

#Bitcoin Price Temperature (BPT) reached a 🌡️ of 6 multiple times at an earlier post-halving date than the previous cycle

Some price exhaustion could be expected 🥵

5/27 As price ran up, more market participants became excited about #Bitcoin and took on leveraged bets at an increasing rate, causing open interest on futures to skyrocket

Not just the #bitcoin price (& 🌡️) needed to cool off - so did the leverage in the system (which it has)

6/27 The amount of pain of those degenerate gamblers that aped long on leverage during this parabolic rise is visualized in this long liquidations chart

Lesson: when everyone & their mom is long, it pays to be short - especially if you're a 🐳 that can help push the price down

7/27 ..which is exactly what happened 🤷‍♂️

I wrote a 🧵 about it using @whale_map data, to show that the dip started with a large, somewhat old (Aug '20) whale taking profits, creating a cascading effect of profit taking towards younger whales that even capitulated at a loss

8/27 I concluded that thread with a chart of the Spent Output Profit Ratio (SOPR), that had just reset back to 1

This means that on average, the last sold coins were neither in profit nor at a loss - an indication that the 'profit taking potential' turned neutral (which is good)

9/27 Around that same time, the #bitcoin price was touching @woonomic's NVT price model, which had worked as a support during the previous bull runs as well

10/27 There was also a large drop in hash power on the network due to power problems in China, that caused the @woonomic's hash ribbons to compress, creating a miner capitulation signal on @caprioleio's indicator - which also is bullish

11/27 Since then, the #bitcoin price bounced back resiliently, even closing the month off at ~$57.8k, which is barely even a red candle (-1.7%)

What is encouraging, is that this rise was accompanied by large exchange withdrawals - the big boys are buying right now 👀

12/27 Perhaps an even more comforting thought; this last price rise was not accompanied by a rise in funding rates, which is a sign that it was spot-markets driven

The apes that went long & got rekt are now either on the sidelines or learned their lesson and bought spot 🧠

13/27 So what is the market sentiment like, currently?

I held a Twitter poll last week and the results were clear; respondents were indifferent short-term, but very much bullish on #Bitcoin mid- to long-term 🐂

14/27 So is there still demand for #bitcoin then?

Short answer: yes

Slightly longer answer: lets look at some trends

The declining exchange balances since last year's COVID-19 market panic is perhaps the most famous one, and overall still is intact 🤩

15/27 A similar pattern can be witnessed at the balances of Over The Counter (OTC) trading desks

The supply shortage is real; there is a decreasing amount of coins circulating on the market, which means that price must go up to entice HODL'ers to sell

Chart via @mskvsk 🎩

16/27 That trend becomes even more clear when you see that the liquid market supply has decreased on a daily basis all year so far, and thus the illiquid supply (coins in the hands of HODL'ers with no history of selling) keeps growing

Charts via @WClementeIII 🎩

17/27 A similar pattern can be witnessed with miners, that were taking profits in January but have stopped doing so since late March - and have been accumulating ever since

If these guys aren't taking care of the supply shortage, who will? 🤔

Chart via @WClementeIII 🎩

18/27 The answer is clear; if not for newly created #bitcoin, existing coins need to become available to the market to meet the new demand

The problem is with that is that HODL'ers are not selling - they are buying 😯

Again, chart via @WClementeIII 🎩🍺

19/27 So that must mean that an increasing number of addresses are accumulating right now, right?

Corrrrectemundo! ✅

Again chart via @WClementeIII 🎩 (if you are not already following him at this point, you're doing it wrong)

20/27 Right, but those addresses can all belong to a single 🐳. Are there actually new entities coming to the network?

Yup - more than ever 👀

Chart via.. ah you know who 😉 (last one for now, I promise!)

21/27 Another encouraging signal that demand is lining up: the stablecoin reserves on spot exchanges are currently relatively high, which is potentially a signal that dry powder is ready to buy the next dip - or perhaps FOMO in if price runs away from them 😬

22/27 What about the room for growth?

Like we saw with the BPT, the Market Value to Realized Value (MVRV) Z-score recently reached relatively high levels, but has dropped, after #Bitcoin's realized value itself went up

If this cycle is like the previous ones, there is room left

23/27 Similarly, the Puell Multiple - a metric that quantifies to what extent the daily coin issuance is increased in comparison to its 1-year moving average - was at relatively high levels, but recently dropped after the hash rate drop on the network

24/27 Less convincing is the status of @hansthered's Reserve Risk that quantifies to what extent long-term holders are selling

Some HODL'ers were taking profits during this run but in comparison to previous cycles, HODL'er conviction is still high (waiting for higher prices?)

25/27 @PositiveCrypto's Realized HODL Ratio uses a different approach to actually tackle that same angle - HODL'er confidence

As expected, the RHODL Ratio paints a similar picture - still room for growth in comparison to previous cycles

Click below to read the last 2 tweets 👇

26/27 To close off my monthly analysis thread, I like to use my #Bitcoin Halving Cycle Roadmap chart

As the #Bitcoin Price Temperature 🌡️ cooled off towards green, it is now lagging behind most of the other price models that are visualized here

(When) will it catch up...? 👀

27/27 To conclude:
- Compared to 2017, the bull run was intense; some exhaustion was normal
- The market was (over)leveraged, but now less so
- The demand for #bitcoin appears strong as ever
- If this cycle is like the others there is room for growth on most market cycle metrics