This is my study of Bitcoin's market cap gain per dollar of net capital captured. It's presently sitting at $3.30 of price gain per dollar invested.

Some interesting findings below...

Reflectivity is increasing over each macro cycle! This is the tendency of HODLers to hold onto their coins harder as price increases.
I had expected reflexivity to increase during the mania phase of BULL markets, but it looks quite constant from the last two cycles.

This tells us that mania phases are driven by equally significant capital instead side effects of supply drying up.
This cycle in interesting; reflexivity is increasing rather than static compared to last cycles.

While we now need more capital invested to get similar % gains in price, the effect of HODLers holding onto coins tighter is magnifying "number go up" per dollar invested.
Methodology for this study here described here.

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More from @woonomic

9 Oct
I'm retracting this statement. It was originally based on estimates by @fundstrat for every dollar going into "crypto" in 2018.

It doesn't look like the right number for BTC from a quick glance at the data. BTC is very liquid.

Here I'll lay a method to estimate it.
Realised cap approximates the total capital current investors paid for their coins by peering into the blockchain and using the time (and therefore price) at which the coins moved into their wallets.

Right now Bitcoin's cap is $202b for $116b of capital invested.
So all-time impact is $1.70 per dollar invested.

For the impact of the latest dollar, we need to take the current slope of the market cap (change in cap) and divide by the latest slope of the realised cap (change in money invested).

Depending on market phases it changes a lot.
Read 5 tweets
7 Oct
When coins on spot exchanges drop, it's a sign that new buyers are coming in to scoop coins off the markets and moving them into cold storage HODL, we are seeing new HODLers right now. Very macro bullish.
It's even more exaggerated with global exchanges.
First scoop up of coins coincided with WSJ press coverage of Bitcoin as a legitimate investment vehicle off the back of the Winklevoss ETF news. It fueled the 2017 bull market.

The latest coincides with @michael_saylor's timeline of research into buying Bitcoin for $MSTR.
Read 5 tweets
5 Oct
1) Spot price: $10k. Futures price: $10k. Resistance is $10k.

2) Traders squeeze futures past resistance, shorts liquidate; cascade of buying. Futures jumps to $10.5k.

3) Market neutral arb: I buy $10k spot & short $10.5k futures until they balance. Spot markets get bought up.
It's important to understand that what goes up, must come down (vice versa), as there's no net capital flowing in from this zero sum game.

Only spot investors injecting new capital can impact the organic valuation of BTC.

Derivative traders only add short term price whipsaws.
Squeezes define most aspects of BTC's price chart as we are in the era of derivatives volume dominance.

You can see these barts on every time frame. I've marked in yellow the stop-loss levels, look at the volume bars showing the cascade of buys as shorts get liquidated.
Read 4 tweets
30 Sep

We're seeing a spike in activity by new participants coming into BTC not yet reflected in price, it doesn't happen often. This is what traders call a divergence, in this case it's obviously bullish.

Chart by @glassnode
We're seeing another impulse of coins changing hands completing.

My interpretation is that the last pulse was take profit, halting the downward move; this impulse should be the one that drives us upwards.
The other interpretation is it's an impulse to push us downwards, but that seems unlikely given OBV (an indicator looking at volume movements) is showing quiet accumulation is taking place.
Read 6 tweets
28 Sep
My 3rd and last tweet on BTC's de-coupling from traditional markets via it's own adoption s-curve of HODLers.
We're at the early adopter phase in Western countries, some higher inflation countries are now broaching early majority according to this chart from Statista.

(And yes, the high monetary inflation the world is undergoing right now is growth steroids for BTC HODLer adoption.)
There's more active onboarding happening now than at the mania phase of the 2017 bubble. You can look on-chain, you can talk to wallet providers, you can talk to exchanges.

Read 10 tweets
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.
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.
Read 4 tweets

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