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May 19, 2021 β€’ 9 tweets β€’ 5 min read β€’ Read on X
1/9 Today #Bitcoin saw its first $10k daily candle

The problem: it was to the downside πŸ“‰πŸ˜…

A 🧡 using some on-chain data to have a look at what happened, assess the damage & a possible outlook πŸ€•
2/9 Today's on-chain movements were similar to those of last week:

1) Most of the coins moving were relatively young πŸ‘Ά

2) Short-term holders are now at net unrealized loss levels not seen since the March 2020 market crash 😱

3) ..and appear to be capitulating those losses πŸͺ¦ ImageImageImage
3/9 The young coins that were likely capitulating were a possible sign of inexperienced market participants (e.g. retail) capitulating

Today we also saw a huge uptick in #Bitcoin dominance: altcoins were bleeding (much) harder

Another possible sign of retail capitulation..? πŸ‘€ Image
4/9 If we zoom in on the last 2 weeks (on a 10-min resolution), we see that over the last week, there were some huge net exchange inflows 🐳

During today's dip, there also were a few huge net outflows - a possible sign that a big entity is shopping at a discount πŸ’Έ Image
5/9 Today's $10k daily candle was breathtaking to experience 😨

Price bounced back +30% from its low & appears to be forming a beautiful capitulation wick 🌹

Can today's candle even close above its 200-day moving average? ...and who is doing that heavy buying on Coinbase? πŸ‘€ Image
6/9 As you would expect on such a bloody Tuesday, a lot of longs were liquidated πŸͺ¦

Today's liquidations weren't more extreme than those in Feb-Apr. However, these didn't come after reaching a new all-time high - but during what appeared to be a capitulation event! 😯 Image
7/9 Earlier today I tweeted that I was worried about the positive funding rate ()

This is no longer the case. Not only did leveraged longs get flushed out - the market is now net short πŸ‘€

There is now a 🐳 incentive to pump the price & liquidate shorts Image
8/9 The big question: is this the end of the bull market..? πŸ€”

We have a @glassnode, but not a crystal ball πŸ€·β€β™‚οΈ

I don't think this was it. Like I tweeted earlier today (), I would expect more HODLers selling, e.g. moving RHODL & Reserve Risk into the red ImageImage
9/9 If this indeed was not end of the bull market, it would mean that we have just experienced the largest bull market drawdown since 2013 πŸ’ͺ

These are extremely volatile times - stay safe out there (e.g., don't use leverage but just buy dips via spot or DCA)! ✌️ Image

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More from @dilutionproof

Oct 25, 2021
1/11 New @BitcoinMagazine article: Valuing #Bitcoin based on HODLer behavior

It introduces 2 new on-⛓️ metrics:
- Market-Value-to-Long-term-holder Value (MVLV)
- Market-Value-to-Illiquid-Value (MVIV)

Click πŸ‘‡ for a summary 🧡 or read the full article: bitcoinmagazine.com/markets/valuin…
2/11 Money can be defined as "the most salable good to transfer value across space and time"

#Bitcoin can be seamlessly transferred across both space and time thanks to its digital nature and 21-million maximum supply
3/11 When valuing #bitcoin, those aspects need to be taken into account

Some models focus on scarcity (e.g., @100trillionUSD's S2F models), whereas others may look at its transactional capacity (e.g., @woonomic's Network-Value-to-Transactions (NVT) Price model)
Read 12 tweets
Oct 13, 2021
1/5 The Market-Value-to-Realized-Value (MVRV) Bands are a new valuation model that iterates upon one of the most popular on-chain metrics in #Bitcoin

Learn how it works by checking out the short 🧡 below or reading the full article at @BitcoinMagazine : bitcoinmagazine.com/markets/market…
2/5 The first concept to grasp is that of Realized Value (RV), introduced by @nic__carter & @khannib in 2018

RV is the total value of all circulating coins at the last time they moved on-chain, therefore representing the estimated cost-base of all existing #bitcoin
3/5 Briefly after, @kenoshaking & @MustStopMurad divided the total #bitcoin Market Value (MV) by the RV, creating a groundbreaking metric called the MVRV Ratio

A pseudonym called Awe and Wonder then iterated upon it by standardizing it ((MV-RV)/MVsd), creating the MVRV Z-Score
Read 5 tweets
Aug 2, 2021
1/17 Cycling On-Chain #3: Squeezed Supply, Shorts and Bitcoin Lemonade πŸ‹

Read all about #bitcoin lemonade that is based on squeezing supply, shorts & weak hands in this summary 🧡

...or in more detail in the original article on @BitcoinMagazine itself: bitcoinmagazine.com/markets/bitcoi…
2/17 Last year, @Glassnode learned that when an Unspent Transaction Output (UTXO) is >155 days old, its has a relatively low probability of being spent

Based on this, they created Short-Term Holder (STH) and Long-Term Holder (LTH) supply metrics
3/17 If you divide @glassnode's LTH supply by the circulating #bitcoin supply, you get a LTH Supply Ratio that quantifies the portion of the supply that is estimated to belong to LTHs

LTHs tend to sell against market strength (πŸŸ₯) and accumulate during market weakness (🟩)
Read 17 tweets
Jul 1, 2021
1/22 This 2nd edition of @BitcoinMagazine Cycling On-Chain, "#Bitcoin Enters Geopolitics", focuses on:

1) The impact of China's crackdown πŸ‡¨πŸ‡³

2) Metrics for El Salvador's adoption πŸ‡ΈπŸ‡»

This 🧡 summarizes it; but read the article for in-depth explanations:

bitcoinmagazine.com/markets/bitcoi…
2/22 Since mid-April, China came down hard on #Bitcoin, banning its institutions to offer #bitcoin services, censoring related search results and shutting down mining operations in recent weeks

Hash rate dropped ~50%, to levels not seen since briefly after last year's halving πŸ€•
3/22 A result of the hash rate drop is that #Bitcoin blocks are coming in much slower than the usual 10 minute block intervals

In fact; block creation slowed down to more than twice the intended interval & levels not seen in >11 years, illustrating the magnitude of this drop 🀯
Read 22 tweets
Jun 1, 2021
1/25 @BitcoinMagazine just posted the first edition of a new monthly series titled 'Cycling On-Chain', in which on-chain and price-related data are used to estimate where in #Bitcoin's market cycle we are

I'll summarize the article in this 🧡

bitcoinmagazine.com/markets/bitcoi…
2/25 Just like the periods after the 2012 and 2016 halvings, the 2020 #Bitcoin halving created a supply shock that triggered an exponential price increase

However, compared to the previous one, this cycle got heated much faster πŸ₯΅
3/25 When the #bitcoin price ran towards and beyond its previous (2017) all-time high at $20k, market participants increasingly started to secure profits

After the January local top, this profit-taking has been decreasing - despite price still grinding up until recently
Read 25 tweets
May 21, 2021
1/7 Just published an article at @BitcoinMagazine that uses on-chain data visualizations to explain how #Bitcoin's difficulty adjustment mechanism works & how it relates to hash rate, block intervals, fees & the mempool

This 🧡 summarizes the article πŸ‘‡

bitcoinmagazine.com/technical/bitc…
2/7 #Bitcoin reaches its 21 million hard cap by starting with a 50 BTC block subsidy and halving that each 210k blocks, until the block subsidy falls away after 33 halvings

#Bitcoin needs block intervals of ~10 min to ensure these halvings are spread out over ~4 years. But why?
3/7 If #Bitcoin had a fixed difficulty, it would have had an adoption threshold if it started high, or quickly run through its supply issuance schedule if it started low

Relatively stable block interval times are needed to spread out miner incentives & ensure stable throughput
Read 7 tweets

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