We just saw the single largest 1-day drop in mining hash rate since Nov 2017. The hash rate on the network essentially halved, causing mayhem in BTC price as it crashed.
The power outage in Xinjiang (which powers a significant amount of the BTC mining network) was known before the BTC price crash. Here's local news on 15th April.
9000 BTC was sent into Binance, read that as a sell off of those coins.
I'd note that Binance serves volume from Asia more than the West. It's likely this was sent in from a whale with closer knowledge to happenings in China.
This sell down was compounded by sell off of quarterly futures (used by more sophisticated traders) on derivative markets which was already underway as early as 13th April.
The two combined sell pressures was sufficient to tip the price below liquidation levels ($59k).
This triggered a cascade of automatic sell-offs in a chain reaction.
$4.9b contracts were liquidated, $9.3b including alt-coin markets.
1m trader accounts liquidated in total.
This dip happened while unprecedented numbers of new users are arriving onto the network per day. There's been a retail influx in the last 2-3 weeks.
Strong holders are buying this dip (red = Rick Astley genre of holders)
Supply profile (price when the supply last moved), now forming the largest cluster of price discovery since BTC was below $10k. Validation of BTC as a trillion dollar asset is immensely strong.
13.5% of the entire BTC supply last moved above $1T cap.
The on-chain SOPR metric near a full reset. A classic buy the dip signal.
In simple terms, profit taking by longer term investors is completing, very little sell power left unless investors want to sell at a loss from their entry price. Unlikely in a bull market.
Summary:
- Initial sell off due to anticipation of miners going offline in China.
- Sell pressure was sufficient to trigger liquidation of short term speculator positions forcing price violently down.
How can $MSTR possibly trade at 2.7x their BTC treasury?
I suspect we are seeing the start of $5-10b of inflows in anticipation of a SP500 listing right now.
If true, then it's still warming up.
Consider 20-30% of the SP500's $50T marketcap comes from passive index tracking funds and ETFs.
Inclusion into the SP500 means MSTR gets a chunk of that money.
Inflow estimates:
$10-15b from passive index tracker funds
$5-10b additional from speculative inflows
When would it happen?
FASB accounting practices go live for MSTR on 1st Jan 2025, that's a prerequisite before a listing can take place. After that MSTR will meet most of the requirements, with the last requirement being a committee decision.
Until the start of Aug, we've been in a bearish stance with an influx of 100k coins (Germany, MtGox, DOJ) while speculation has been rife creating more paper BTC.
The price crash during the start of Aug flushed out much of the paper with a nice round of liquidations... open interest got wiped.
That's a healthy reset of open value (paper bets). It's really hard for BTC to climb when there's overheated speculation in the market.
This mid-June assessment is still in play.
BTC price action needs to get really boring.
I feel like we are 66% the way there. Much of the speculation has left, we still need more of the spot BTC to be absorbed.
Here's the 5 macro signals I'm looking closely at right now for #Bitcoin.
3 bullish, 2 bearish...
Miners capitulation is over, it's one of the most reliable bullish indicators.
Hash rate is recovering, the price and hash rate bottom coincided with upgrades to next gen hardware hitting the network.
M66s went live last week.
S21 Pros this week.
Hash rate set to scream.
Miner capitulation is a very responsive indicator. The breakout was preluded with hash rate recovery; price responded within a day. I gave early warning of this.
When it kicks in we normally have months of bullishness.
I don't usually do short time frame price action as it's the domain of gamblers. But worth a break down of what's happening given the fear in the market...
We've been flushing out the leverage, 62.5k was the target to get most of it.
...speculators kept adding to new long positions, just adding more fuel for more liquidations in a cascading long squeeze.
Bridging us down to the 58k cluster, which just got taken out.
Superimposed on this liquidation squeeze, we have a post halving miners capitulation. Miners are on a BTC selling spree to pay for hardware upgrades due to the old hardware no longer being profitable. The weakest miners closing shop and being liquidated.