For the first time in Bitcoin’s history, we’ve seen nine consecutive weekly declines and so when we first looked at that. I think that the tendency was to say that’s really negative and my question to the team was well could it be oversold could the rubber band The stretching here or is there something wrong Bitcoin and Ethereum along with? The rest of the crypto market has continued to be crushed the week after weeks and seemingly the beginning of the year. In fact, it has been, so bad that Bitcoin broke a record for consecutive price declines with nine weeks in a row of lower prices. This has never happened before in the entire history of BTC.
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In her latest interview, Cathie Wood who has been notoriously bullish on both Bitcoin and Ethereum explains her thoughts on what is going on. And if investors have caused to panic, she also explains a support level that she and her analyst Arkham best are keeping a close eye on. I will cover some of the latest on-chain Bitcoin data to see what holders have been doing with the recent price declines.
I’d like to talk about Bitcoin as I mentioned. We’re launching the Bitcoin monthly and very excited about it because we think the market needs this and Yasin Almandra who’s our lead crypto analyst leading our crypto effort David Powell Mos. Many of you may know him from his on-chain analytics work. He’s created many metrics that many people are using these days. So, we’re so happy to have him on board as well in this report. You will see that for the first time in Bitcoin’s history. We’ve seen nine consecutive weekly declines and so when we first looked at that. I think that the tendency was to say that’s really negative and my question to the team was: well could it be oversold? Could the rubber band be stretching here or is there something wrong? And we don’t know the answer to that, so we put that in neutral category. You’ll see. We’ll put each of these metrics in bullish bearish or neutral. But, we do know what happened in the last month is that the blockchain Terra blew up and Luna is worthless. I think I’m correct in saying that the market cap of that ecosystem. At one point was around 60 billion dollars with a lot of well-known advocates for it. I was surprised because algorithmic stable coins don’t make any sense to me. I have a background in economics and I think you need the backing of something in order to have a stable coin. And this did not and so I it didn’t surprise me to see the number. I think this is the number of Luna outstanding go from in in the span of a week something like 350 million to six and a half trillion. And I think it maybe even got to 20 trillion, so that’s hyperinflation.
There was nothing backing it and I can say we would never have touched it nonetheless that turmoil that. It didn’t create a systemic risk and we’ve been paying attention to the other stable coins out. There are they going to so-called break the buck, so that expression came about after the reserve fund a money market fund during 0.009 broke the buck people holding that money market fund were going to get less than a dollar back for every dollar they put in. And, of course, the fed had to come and rescue that fund because that was going to become systemic in the 0809 meltdowns. But, the just the idea that such an instrument could exist has probably given the fed more regulators more ammunition to regulate in this space. And the fed could be involved in the regulation. There were about three billion dollars of Bitcoin used as collateral they had been building it up in the last month. And so we believe all of that was disgorged at one point.
That’s one reason that the Bitcoin has gone down from for in the last month just from forty thousand to thirty thousand another reason is the high correlation with the NASDAQ now interestingly in the last week or so that correlation broke down a bit. The NASDAQ had a few really good days Bitcoin did not, so there’s something else bothering Bitcoin. It is down 57 since its high at almost 70 000 in November. Its 200-week moving average is 22 000, so today we’re at 29 000. I think it’s 200 week moving average is at 22 000 and rising now. The reason that particular number is interesting to us is we initiated our first Bitcoin position at back. Then it was the 200 week moving average, it was in the 225 to 250 dollar range, so we’ve come a long way since then. But that has proven to be a nice support, so that’s also interesting a couple of other points. I’ll just highlight and you can see in the report it appears that the short-term holders. You can see everything in this ecosystem. The transparency is amazing; this does appear according to our metrics that short-term holders have capitulated. That’s very good news in terms of putting in the bottom long-term holders at an all-time high at 65.7 percent. That means they’ve been holding Bitcoin for at least a year. That is that we’ve got some very strong holders or holders here that’s also very good news. Although, we might see some long-term holder capitulation to mark the bottom um and then the last metric that I’ll feature there are many more is that of the futures. Bitcoin futures are selling at a discount to spot Bitcoin during those times. We expect volatility now. We don’t know if it’s up or down, but you can see from other metrics in the piece that we’re thinking right now.
Our judgment call is the next big bout of volatility in Bitcoin will be to the upside. Nonetheless, we are on guard for the Terra disaster. It was a fiasco for crypto I think in terms of raising or giving regulators even more incentive and reason to come in and regulate a little bit more with more of a heavy hand than we would anticipate. So, take a look at the report. It will be coming out monthly. There’ll be a little summary of what we think are the most important developments during the past month. And again Bitcoin blockchain technology is very transparent. ARC Invest is very transparent. And we will be out there giving you our point of view and explaining. What we believe is going on every step of the way we give our research away. So, you understand why we’re invested how we’re invested there’s Cathie wood with the suggestion that holders have capitulated and that if we haven’t put in the bottom yet. We are close to it. This is very interesting because I’m not sure. if you guys remember it but Cathie was one of the only people. I saw that very accurately called the bottom of the July crash. Last year is she right again we will have to wait and see some interesting on-chain data out from ARC invest themselves is some data on long-term Bitcoin holders. As we can see, holders of BTC have never been more long-term focused with just under 66% of the total Bitcoin supply has not moved in over a full year. Despite the record-breaking poor price action, high conviction holders continue to just stack Bitcoin and DCA.
This article is a transcription of a video made by Jamie Tree
Original video: https://youtu.be/cmsoqPEgyco