A thread presenting evidence for a mid term bottom and oncoming "echo bubble" with thorough confluence from technical analysis, onchain data, and exchange/derivatives data
/2 From a TA perspective, we have just given every person that considers technicals in their trading/investing reason to start to look for long exposure. $BTC & $ETH have broken above diagonal trendlines & MAs, started weekly momentum crossovers, reclaimed important supports
3/ The most important indicator of an oncoming rally is the weekly RSI crossover from a previous very long period of bearish momentum implying large potential energy for a move higher based on a supply squeeze.
4/ This supply squeeze is shown by various onchain metrics from BTC and ETH on exchanges (fallen past pre-bull run levels) and reduction of sell pressure from miners
5/ A large driver of bearish momentum in 2022 was overlevered miners that turned into forced sellers - needing to sell their BTC rewards & also their stockpiles. The recent trend reversal in network hashrate show that after some major capitulations, miner health has stabilized
6/ Miners no longer have the luxury of the transaction fees of a bull market and this is reflective of the bottoming process of previous cycles
7/ The USD value of supply issuance relative to its 365MA (Puell Multiple) is also in bottom territory indicating that miners able to withstand this sharp cut to their top line are quite hardy
8/ Current overall holders can also be considered extremely hardy given the aggregate holderbase has suffered an extreme amount of drawdown, but as of recent are no longer underwater
9/ Even though aggregate holders are no longer underwater, they still hold a very large amount of stables relative to total crypto market cap which can serve as rocket fuel for a trending move up
FOs, Macro funds, SWFs, Retail, Whales,, crypto funds, etc are all potential buyers
10/ Historically, we’ve seen that the largest/longest rallies typically follow periods of low volatility. As in turns out, we are at historically low levels of volatility
11/ The current state of derivatives also allow space for a rally given leveraged longs have not yet come in to push the market up. Futures basis is trading near 0, similar to just before the last bull run
12/ It's clear crypto has seen a lack of interest from the general public for quite some time. Search volumes and exchange volumes have finally fallen to 2020 levels
13/ But the recent revival in NFT activity could be the right catalyst to draw interest back into the space. NFT activity has kickstarted onchain activity which fell to local lows as excitement starts to come back to this space
14/ The activity results in potentially an accelerating rate of $ETH burn which compounds the supply side effects of Ethereum’s switch from PoW to PoS
15/ “But what about macro”
last time SPX was at these levels in previous years was around April 2020. At that point, crypto was mid bull run and was trading at $2T market cap, almost 2x current crypto market cap. There is still plenty of liquidity for risk assets
16/ With Mt Gox release delayed to September, FTX having sold most customer assets, major players liquidated and many other assets tied up in bankruptcy proceedings, supply is significantly reduced
17/ Overall market positioning (very underallocated) sets up the foundation for a large multiweek to multi month echo bubble
Double bubble was meme’d into reality - why can’t echo bubble?
This was pretty insane memecoin alpha from AVAX foundation
Whenever a big player says they are buying, it never fails to ignite momentum when market conditions are ok (CZ/Binance in March, early Saylor buys, etc). Suddenly, the technology improves
Think you see this strategy replicated across all chains/foundations in the future, just as all of them launched DeFi incentive programs
It’s a very high ROI/probability way to increase onchain activity, bridging inflows, community members, etc
It’s the same reflexive loop that chains saw with NFTs last cycle where people needed to buy the chains coins to buy the NFTs and every chain wanted NFT collections but I think there’s more power in this loop because tokens are better speculative vehicles than their NF counterparts
1/ The road ahead for Arbitrum ($ARB) - Mega thread
2021
- Arbitrum launch
2022
- Nitro upgrade for improved performance
- Arbitrum Odyssey introduced but paused
- Arbitrum Nova, a separate chain built for lost-cost transactions focused on gaming and social apps was launched
2/ 2023 was the year of big launches and announcements
- Launched highly anticipated $ARB token, with 1.162B tokens distributed to ~580k wallets
- TVL doubled since the start of the year
- 4th highest TVL chain - more than Solana and Optimism combined
- Resuming Arbitrum Odyssey
3/ But things are just getting started for Arbitrum.
Believe that these following catalysts/narrative will really kickstart the arbitrum flywheel going into 2024:
1/ At $5B and $2B TVL, Aave and Compound are currently the largest money markets in crypto
By innovating while others cruise, @RDNTCapital is the top competitor to challenge the throne and has the potential to become the new King of Money Markets in all of crypto
2/ At a glance:
-$260m TVL across Arb/BSC
-First functional cross-chain MM (lend on X chain, borrow on Y)
-Launching on ETH & zkSync next
-Safely adding more collateral like $ARB (other MMs move slowly)
-Token design optimized for demand & protocol growth
Accumulated spot position in $STX last 2 weeks as well
As an investment, it hits the sweet spots of good supply schedule, strong marketability, cheap relative valuation, important catalysts ahead, proven bear market resistant builders
Main catalyst is the Bitcoin Halving in a year and I think Hal's comparison to LDO & the merge is pretty apt
Second big catalyst would be potential catalysts for DeFi on Stacks - potentially catalzying a 9-10 figure DeFi ecosystem built around $BTC
On relative valuation, my proxy would be Lightning network who i believe if they had a token would be valued at least multi-billion FDV just based on brand value alone, regardless of usage
But if DeFi on Stacks takes off, it probably leap frogs Lightning on actual usage
$BTC Weekly RSI is in the midst of crossing the 50 level signifying a long term momentum reversal from bear to bull
Complete weekly crosses have only happened 5 times since 2015 and each cross has led to a significant rally with an average gain of 1775% from cross to top
The only cross that didn't result in a >100% gain was from Jan 2020 but this rally was likely prematurely cut short by the covid market nuke black swan
The same phenomena exists for $ETH and the implication is that it is also ready for a large momentum reversal to the upside