‘Insane evidence’ Bitcoin has capitulated in past 2 months — analysis

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Bit­coin (BTC) is pro­vid­ing over­whelm­ing evi­dence that it is capit­u­lat­ing, and it is time to flip bull­ish as a result, new analy­sis believes.

In a Twit­ter thread on Aug. 3, Charles Edwards, CEO of cryp­to asset man­ag­er Capri­ole, revealed what he called the “The 12 Bit­coin Capitulations.”

“Risk-returns skewed positively” for Bitcoin

With BTC price action recov­er­ing from mul­ti-year lows but still hov­er­ing near key bear mar­ket sup­port, opin­ions vary wide­ly as to what will hap­pen next.

Some are demand­ing a return to lev­els even low­er than June’s $17,600 trough, while oth­ers argue that a “bear mar­ket relief ral­ly” could take BTC/USD as high as $40,000 first.

For Edwards, the raw evi­dence sug­gests that the past months have been bear­ish enough, and that behind the scenes, Bit­coin has been qui­et­ly capitulating.

“The raw count of evi­dence for major Bit­coin capit­u­la­tion today is insane,” he wrote about his twelve key examples. 

“Each occur­rence alone is a rare event and adds to the prob­a­bil­i­ty that for­ward risk-returns are skewed positively.”

In addi­tion to pop­u­lar on-chain sig­nals pre­vi­ous­ly cov­ered by Coin­tele­graph includ­ing MVRV and NUPL, Edwards’ evi­dence includes macro trig­gers such as poor Unit­ed States equi­ties per­for­mance and stag­nant M2 mon­ey sup­ply growth.

“We have just seen the _worst_ infla­tion-adjust­ed down­draws in tra­di­tion­al mar­kets in the last 8 gen­er­a­tions. Enough said,” he con­tin­ued, not­ing that the S&P 500 had deliv­ered its worst returns in real terms since 1872.

S&P 500 returns anno­tat­ed chart. Source: Charles Edwards/ Twitter

The cher­ry on the cake in the 2022 Bit­coin bear mar­ket, how­ev­er, is the rate at which indus­try play­ers them­selves have capitulated.

For Edwards, bank­rupt­cy events at Cel­sius, Voy­ager and oth­ers, com­bined with Tes­la sell­ing the major­i­ty of its BTC hold­ings at a loss, is the “ulti­mate sign of capitulation.” 

“Take a look at the lev­el of insti­tu­tion­al capit­u­la­tion here,” he commented.

“Lever­age is one of the best indi­ca­tors for rel­a­tive over- and under-val­u­a­tion in Bit­coin, and many major lever­aged cryp­to insti­tu­tions have been wiped out.”

Accord­ing to sep­a­rate data from mon­i­tor­ing resource Bit­coin Trea­suries, Tes­la remains the pub­lic com­pa­ny with the sec­ond-largest BTC reserves but is now far behind leader MicroS­trat­e­gy and its 129,698 BTC stack.

Pub­lic com­pa­nies’ Bit­coin hold­ings as of Aug. 4 (screen­shot). Source: Bit­coin Treasuries

“Great accumulation zone” returns

As Coin­tele­graph recent­ly not­ed, capit­u­la­tion has also been appar­ent among Bit­coin min­ers since the dip to the low­est prices since late 2020.

Relat­ed: His­tor­i­cal­ly accu­rate Bit­coin met­ric exits buy zone in ‘unprece­dent­ed’ 2022 bear market

After ini­tial­ly sell­ing their BTC inven­to­ry, how­ev­er, min­ers have staged a dra­mat­ic about turn, new data sug­gests, in yet anoth­er sign that the worst of the capit­u­la­tion may already be over.

Beyond min­ers, the amount of the BTC sup­ply being trans­ferred at a low­er price than that which was paid for it has hit lev­els Edwards says are indica­tive of accumulation.

Bit­coin % sup­ply trans­ferred at a loss anno­tat­ed chart. Source: Charles Edwards/ Twitter

“The per­cent­age of total sup­ply trans­ferred at a loss hit 1.9% last month,” he wrote along­side a chart from on-chain ana­lyt­ics firm Glassnode. 

“His­tor­i­cal­ly, when this met­ric breach­es 1.5% it demon­strates that a large por­tion of the mar­ket is in pain. Most were also great accu­mu­la­tion zones.”

The views and opin­ions expressed here are sole­ly those of the author and do not nec­es­sar­i­ly reflect the views of Cointelegraph.com. Every invest­ment and trad­ing move involves risk, you should con­duct your own research when mak­ing a decision. 



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