Theranos Vanilla Ice Fyre Festival Enron Gene Parmesan Famous fakes and fraudsters have come and gone throughout the years and hold up a mirror to society. They show us what we’ve been blinded to or the truth we’ve been distracted from. Crypto is no different. Any asset class has its false narratives, pump and dumps and market manipulations. But what if there was a fakeout for an all-time high? What if the top of the bull run in November 2021 was manufactured and wasn’t brought about by market fundamentals but instead by whales? It’s called the False Top Theory, and it’s setting the stage for a possible supercycle.
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Let’s get it! April 2021, Bitcoin reaches a new all-time high of $63,000, profits are taken, and a bounceback follows. In May, Bitcoin reclaims $50K and is in reach of $60,000 when the bottom falls out. Elon Musk spread some Bitcoin FUD, and the price craters, diving to $29,000 after a few weeks. Retail is wrecked, and the price of Bitcoin stalls during the summer. We enter a bear market after having the shortest bull run on record and wait for a new bull run. That’s not what happened. But maybe it should have. Because what did happen is we hit $69K in November, crashed again and have slid backwards ever since. There’s a theory I want to share with you that $69,000 as the top in November was a fluke. A fraud. A fake. That we’ve been in a bear market since June of 2021 and the truly parabolic moves for Bitcoin haven’t even been seen yet. I’m calling it the False Top Theory.
What happened during the summer of 2021 was that whales were accumulating Bitcoin at a rapid pace while retail was sitting on the sidelines. But it wasn’t just whales buying. It was institutions. And there was a good reason for it. The Bitcoin ETF. The exchange-traded fund. The next leg up for Bitcoin adoption. It’s been the goal of the Winklevoss twins since they first started Gemini. It’s the mechanism that will onboard trillions of dollars of liquidity. Just listen to what Michael Saylor had to say about it. So what you have is a universe of people that can own certain types of securities and certain types of properties by charter, and then you have– and then you have a universe of securities and properties of Bitcoin that are being offered as the banking sector and the financial sector evolves.
When the sector evolves, when we have a Bitcoin ETF in the US, billions and billions of dollars will flow into Bitcoin that under no circumstances would have found their way into Bitcoin otherwise. During 2021, the SEC had changed its tactic somewhat. Instead of clamping down on everything Bitcoin-related, Gary Gensler stopped taking bribes and gave regulators a yellow light to start some ETF approvals. There had always been talk of ETFs being approved, but the idea that more might come and that maybe even a spot ETF could get approved started to get Wall Street buzzing. Just a quick note, there are several kinds of ETFs. Most of them are spot, which means you purchase assets on the market. The Bitcoin ETFs that were being considered by the SEC and approved were futures ETFs. It has less of an effect on the immediate Bitcoin price than a spot purchase since, actually, nothing is being bought. It’s a derivative. Bitcoin ETF is just synthetic Bitcoin. It’s not real supply leaving the market. So it’s fatally flawed.
I do feel like it’s fatally flawed. And especially for Bitcoin, which you can hold the spot asset. It’s not like oil or livestock or something that’s really difficult or impossible or illegal to hold. It’s more like gold that’s pretty cheap and easy to store. It’s Bitcoin you can easily get the spot asset. And unfortunately, the cost for Bitcoin futures is more like oil that’s really expensive! So it makes no sense at all. What the market needs and what I, Michael Saylor and many others want is a spot ETF for Bitcoin. But instead we keep getting these futures ETFs. They’re dicey, to say the least. But that didn’t stop the ETF whales from starting up a price run in late September of 2021 in addition to El Salvador taking a few hundred Bitcoin for themselves. But the market started to react in September because rumors were swirling that three futures ETFs were going to be launched in the fall. Nerds started looking into the blockchain for answers and found that whales had been pulling Bitcoin off exchanges at a steady rate all summer.
Was it an expectation of a “buy the rumor, sell the news” event? Well, these ETFs were futures contracts, so no Bitcoin is being bought and stored by Valkyrie and ProShares. The data is still murky, but it’s possible that the second top was really a confluence of institutions trying to flush out their pandemic stimulus and turn a profit before the end of the year and the ETF announcements were the cover. The theory gets even more compelling when you look at how public interest in Bitcoin is correlated with Bitcoin’s price. There is up to a 91% correlation between Google searches for Bitcoin and crypto and Bitcoin’s price. But look at this chart.
The interest spiked in late 2020 through the May crash, tracking along with the run up to $64K. But then in the summer, it dies off and has stayed down even after the recording of this video. So what is driving up the price? False Top Theory, anyone? It may be the case that the 2021 bull run was the shortest ever and the combination of stimu checks, great resignation, work from home, PPP loans and galactic printing from the Fed meant that the price of Bitcoin was overheated and moved out of sync with the Bitcoin cycle fundamentals. The real top should have been in November, but instead it was cut in half, mostly from whales, but also by the flood of memecoins entering the market, siphoning off capital from the altcoins it should have gone to. I’m going to keep my ear to the ground and see how this theory may shape the rest of this bear market. But if this really was a false top, then the gains for Bitcoin in the next bull run are going to be as real as ever. In a future video, we’ll be explaining how this could lead potentially to the largest Bitcoin supercycle in history. Sounds exciting.
This article is a transcription of a video made by BitBoy Crypto
Original video: https://youtu.be/Dod86OwRQBY