Pretty much this.
Although this does often happen before a mega send.
Fundamentals haven’t really changed.
Imo we still top April.
Agree with that and a few other points I’ll highlight:
- Most of the recent selling is from short term holders who have held less than 155 days. Previously in the $100k range, there was also a lot of profit taking by longer term holders that kept buying-demand satisfied to prevent the price moving higher at that time, and setting up for an opportunity for short term holders to push to price down in the recent sell off.
- Bybit hack recently was the largest in crypto history and they lost over a $billion in ETH. Note this had nothing to do with the security of ETH and certainly had nothing to do with bitcoin, this was poor practice by the employees and they got phished. Regardless, this scared a lot of people across crypto and likely added a lot of selling pressure.
- General market uncertainty and downturn. Despite having its own sources of volatility to the up and downside, as bitcoin becomes more adopted by TradFi, it trades closer to the general market than in the past. An example of this is that Trump could pump crypto with a tweet on Sunday morning for it to move up, only for it to sell off Monday when the broader market is also in the red. I tend to agree there is some manipulation going on, but it’s hard to know exactly what and doesn’t ultimately matter when the goal long term holding. Bitcoin tends to see more drastic downsides than traditional assets, so if the Nasdaq is down 2%, bitcoin is down to 5-10%. The counter to that is bitcoin generally outperforms traditional markets to the upside over a long enough period. However, during a period of tariffs, uncertainty, unpredictably and a broader market that’s really only gone down YTD (except Pokémon!), Bitcoin is seen as a risk-off sell, so people dump it to cover their leverage positions outside of bitcoin.
- It’s important to remember that bitcoin’s upside happens in just 10-11 days per year on average. Therefore, it’s better to weather the volatility than to try to trade or time the market. It’s a brand new skill to learn how stomach a 25% drop and treat it as normal. A lot of the experience of holding bitcoin is a test of conviction. Most of the time, Bitcoin is chopping sideways in a range or trending down. It’s only on those few days per year that you get 10-20% gains and if you hold on long enough through those upsides, you see 100%-300% gains after a few years.
- I’ve been in since 2021 and it’s still never easy emotionally when these downturns happen, but I can tell you the one thing I never consider is to sell. If anything, I get more worried about whether I can time the bottom with buys. When the market drops like this, I smash buy every range we drop into. The lower we go the more I buy. Most long term bitcoiners do the same.
- I can’t speak to other crypto because I don’t own anything else and this also doesn’t really apply to anything but bitcoin, but the game of bitcoin is to try to acquire as much of the pie as possible, it is a zero-sum game. There are only ever 21 million units. That’s for everyone forever. 8 billion people now, billions more over the next several decades. All competing for a share of 21 million. You might wonder if we can be sure that people will still want bitcoin over time and that again comes back to education of the asset and why demand is likely to increase over time. At least for now, adoption is growing rapidly, so it’s difficult to doubt the growing demand at the moment.
- I first bought when bitcoin was $30k, and most of my early buys were in the $40-50k range. My first bear market was rough when we dipped to $15k. What got me through it without selling was more education. The more I learned and understood what I was holding, the easier it‘s been holding through downturns. Now I only see that dips are for buying. That said, I don’t believe we are in a bear market. Bitcoin always had significant drops during bull markets. If the strategic reserve goes from being a tweet to finally being an actual reality where the US starts buying, then this trend will reverse very quickly. While the world seems to hate the US at the moment, it would still be a signal to all other nation states that they need the start getting a position.
- There’s generally just a lot of bullish momentum lately to think this is anything but a shakeout. Not only the reserve, but relaxed regulation, banks now allowed to custody bitcoin and will start to develop bitcoin services and financial products, accelerated demand for the ETFs and increased corporate and wealth fund accumulation over the past year, etc.
- The best predictor of Bitcoin performance is to look at M2 money supply. Bitcoin is a global and highly liquid asset (easy to trade anytime). It is the best liquidity sponge of any asset due to these properties. It tends to lag M2 by a few months. M2 was moving down a few months ago, but since has been trending up. It’s likely that bitcoin will soak up that liquidity through this year.
- The best strategy is still just to DCA (I buy daily, but weekly is shown to be just as good an average) and smash buy when it dips.j
6 Likes
I am in the camp that the current market downturn is a bit orchestrated (albeit still unpredictable) in an effort to bring interest rates (and general demand) down ahead of the upcoming refinancing supercycle from the 0% 2020 debt financing era. I believe this will lead to more QE soon and a big jump in the m2.
1 Like
Market manipulation? Probably. Just waiting for the oil rich countries to do a massive buy out and stump the US Gov
It probably won’t happen in the short term in countries who have relatively strong currencies and stable economies, at least not until there are more major global economic signs of fiat instability or failure. i.e. due to hyperinflation, defaulting on debts etc. Events that would spur the need for a decentralized, harder currency.
If anything, other superpowers may follow suit with Trump’s play. The crypto markets were frustrated by his Executive Order on the strategic reserve specifically because the plan is not to actively use the US government budget to buy Bitcoin, but rather to find budget-neutral ways of funding additions to the reserve. It’s too passive for the tastes of active investors or BTC maximalists.
This is a smart play from Trump which favours the US economy and strength of the USD. He’s completely aware that Bitcoin (or other decentralised digital asset) would be the prevalent currency in an environment in which fiat has failed, but in turn that would mean there was a failure of the US economy. Why would a sitting President, with goals of economic prosperity in the prevailing fiat environment, devalue his own country’s currency by selling it to buy Bitcoin?
Instead, he’s allowing the US to build a reserve of Bitcoin via seizure of criminal assets or civil forfeiture procedures, and directing his staff to explore budget-neutral ways of financing further Crypto purchases. Essentially, he’s building a cost-free hedge against the weakening or failure of the dollar. A modern-day Fort Knox in your pocket, if you will.
In fact, what Trump and Musk are doing with DOGE is in some ways contra to the interests of Bitcoin enthusiasts, because the result is a much smaller and maybe non-existent deficit and ability to pay down US debts quicker, and therefore increased investor confidence in the US and a stronger (or at least less volatile) environment for fiat to exist in.
However, for me, this is where the future of Bitcoin price action can get confusing. On the one hand, you have investors of the mindset that BTC is an inevitability on the global economic stage and who buy and hold it due to the belief that fiat will fail. On the other hand, you have the strain of investors who only treat BTC as a speculative asset, without real concern for its utility, and therefore buy and sell it in a manner that reflects that. BTC can therefore, in a theoretical/abstract sense, succeed in an economic environment that either favours its utility or doesn’t.
4 Likes
Xrp just got it’s 17th ETF S1 application, from Franklin Templeton no less (BTC has 12).
I can smell alt season.