Willy Woo Profile picture
15 Sep, 10 tweets, 3 min read
This is an on-point Q right now. Short answer is yes on-chain is relevant as whatever investors are doing, whether it dumps or pumps, for reason A, B or C, then it shows up on-chain.

Let's do a long form thread on this topic, let's call it "The history of BTC price correlation"
A couple of years ago Bitcoin was marketed as the new uncorrelated asset, thus fund managers really needed to have it as part of their portfolio else they would not have a portfolio that would be hedged for all situations.
BTC was uncorrelated because there was a firewall between traditional macro investors and Bitcoiners. That's to say cypherpunks, tech-heads, purveyors and consumers of illicit drugs, and die hard libertarians are NOT typically the guys moving money in macro markets.
In 2017 that started to change, when @tylerwinklevoss and @winklevoss attempted their launch of a Bitcoin ETF, for the first time Bitcoin was covered in the Wall Street Journal as a legitimate investment asset rather than something dark only the edge of society was into.
From that point onwards we saw the of an influx of high net worth individuals allocating exposure into BTC. Ever so slightly, correlations to traditional markets started here.
But mainly BTC's price is just a hockey stick, just like any other high growth / high risk technology on a path to change the world.

So there you have it, a high growth technology investors classify as risk-on, that happens to mimic gold.

A risk-on safe-haven. LOL.
So then COVID hits, and everyone is risk off. High net worth players and funds adjust their models and assumptions; they sell off their risk.

BTC dumps and for the first time establishes a high correlation to stocks, and traders currently trade to this self-fulfilling prophecy.
At a certain point when Bitcoin gets big enough (I'd say above $1T), it will shed its risk-on factor, then its fundamental gold-like properties moves front and center. We get a decoupling from stocks.
BTC will find a new correlation in due time.

You can think of all asset classes as buckets that investors pour their value into, they move allocations from one bucket to the next depending on the season. Assets are correlated because value moves from one to the next.
Eventually even our 4-year cycles will get locked into the gravitational pull of the ~10 year cycles that macro markets exhibit.

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More from @woonomic

23 Sep

This latest pull back did not come with the usual movement of coins on-chain, the sell-off therefore was fueled from coins on exchanges. Without large volumes of coins moving from wallets I cannot see sufficient sell-side supply to push prices down with much gusto. Image
It was wise to move to USD over the weekend just on the view that stocks looked very week in its technical setup, which did play out and did pull BTC downwards, but certainly the large swing trades happening with coin movements from wallets is still in bullish mode.
While I've heard talk of bearishness down to even 7k, I don't see fundamentals supporting this as a likely event.

On spot markets (Binance listed below), we have plenty of bids below this level and a liquidity gap above through to 10.8k-11k. Image
Read 4 tweets
18 Sep
Some takeaways from @APompliano's interview with @michael_saylor, CEO of MicroStrategy, after their 38,250 BTC buy ($425m).

Plot goes: "I'm a good thinker and a large financial player, this what I found researching Bitcoin coming from outside of the industry"

Read on...

Michael trained as a rocket scientist, MicroStrategy sells business intelligence software for large clients.

A very engaging interview. He reminded me of this character (The Big Short).
They had a $0.5b of spare cash on the books with no need to deploy it in the foreseeable future.

Meanwhile the assets you really want (real estate, ivy league education, etc) were inflating against their USD stockpile at a real rate of 7% per annum.
Read 12 tweets
16 Sep
Simple 128 Day MA back test since 2012.

1 BTC turns into 10.5 BTC.

Assumes spot selling to USD when crossing below MA and 0.2% fees.

I'm just answering the Q, not recommending HODLers trade.

You would have had to stomach a loss of up to 38% of your BTC at times doing this.
Correction. This is a 1x margin long-only strategy.
This is the correct model. Sell spot to USD when 128 DMA crosses under.

The original chart was a 1x margin long on BTC when crossing over. Few could have done that as margin trading was unavailable in the early days (unless you did it via a cash loan by traditional means).
Read 4 tweets
14 Sep
Macro update:

Another impulse of coins changing hands has completed, the next directional move over the coming weeks is likely upwards. It's very unlikely we'll see any kind of a catastrophic dump in price from here.
BTW, the previous chart was an expansion of this tweet from over a week ago. "Local on-chain switching bullish"

I'm still cautious of another short term dump to fill the gap but so far it's looking like it's been front run for liquidity which is strongly bullish if we break resistance here. There's a lot of bids in the spot orderbooks wanting to snap up the gap in the mid-high 9000s.
Read 6 tweets
25 Aug
Macro update.

While the longer time frame on-chain structure is bullish, we are seeing a large number of coins being moved on-chain, which usually means a reversal of direction, we just peaked in coins moving, last move was bullish, suggests next move is bearish. Image
This is supported by on-exchange movements. OBV which tracks hidden accumulation/distribution via volume movements is showing a hidden sell-off. Image
I tweeted 2 weeks ago that dominance may reverse in coming weeks and I'm seeing this may be taking place around now.

In other words. BTC pulls back. Alts pull back more. BTC dominance increases.

Trade with care if you're in alts for the next few weeks.
Read 6 tweets
10 Aug
Yes. The bull market really started April 2019. What’s started recently is the early main bull phase, it’s Q4 2016 all over again, but different dynamics and themes at play.
One of the themes is the legitimisation of BTC for large institutional funds, and also the easy accessibility to buy crypto for the masses with the likes of square cash, paypal, and not to mention the one I’m working on LVL which is real regulated banking integrated with crypto.
ETH has reinvented itself as a platform for DeFi instead of ICOs. It’s on hyperdrive with the uniswap froth, some may say it’s just another platform play for ponzis but I can’t discount the experimention is an interesting gain for crypto as a whole.
Read 4 tweets

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