I am definitely not going to win any popularity competitions with my comments and thoughts. But that's not the point when it comes to making money.
The main issue for me still in Crypto Land is the lack of realism. The image on the front cover was from a google search of "realism" I guess the confused face made my day. This is exactly how you need to be looking when you read these points below.
I have explained the logic of every major move over the last couple of years and this guys - is no different.
So let's start by exploring the reality of market cap for one. When you buy a stock you have a number of stocks in circulation times that by the price and you can get a market cap. Of course, unlike most companies on the exchange Bitcoin CANNOT just issue new stock. We have to remember some Bitcoin are gone and lost forever so this number will likely end up around 20million and not the full 21m.
The current Market cap is roughly 19,806,000 x $42,897.
Let's call it a little over 820 Billion.
At the ATH of $69,000 we saw $1.302 Trillion.
Lets look at what is needed and an angle of attack if Bitcoin was to hit 500k by Jan 25, 26, 27, 28 or 2029.
This is only one aspect of the story.
Prior to the ETF launch people were saying silly things like "Trillions coming in, 100k imminent"
Blackrock's largest ETF is roughly $354 Billion. This is the SP500 fund founded back in 2001. So 23 years old roughly now.
Here's the actual chart.
What does this mean?
Well, let's say Blackrock decided to close their biggest ETF and throw it all into Bitcoin. That level would still not take us back to the current ATH.
Bullish, Bullish, Bullish - we are still $25,000+ under the current ATH.
So what about other ETF's? Obviously the market is bigger than just Blackrock. Let's look at this aspect too.
Look at the end of 2021 as the ETF market collectively was at it's high. We are talking about 10Trillion in 8,552 ETF's.
I've posted several times about the current COT landscape.
Clearly social media Bitcoin is buzzing and everyone is about to become rich, it's different this time and so on. Well, COT says otherwise.
Back at the top when everyone was calling for $135,000 I said the reason for the drop would be liquidity.
So why is this different?
I said there were two likely scenario's on the table as we moved down. The first was we were in an early stage accumulation, we needed to go up to 32k and back down to the low 20's. This would allow us to travel much higher and sustain such a large move.
The second option was bearish.
Well, I guess the second move played out.
The momentum is still clearly not with us - we are still FWB:25K+ under the current ATH - not what one would or should expect after 12 Bitcoin specific ETF's obtaining approval & launching.
Look at the momentum
People seem to fall into the echo chamber and all logic leaves the building. I have been at this game a long, long time. Seen it all before and I am sure I will see it again.
This does not mean I am Bearish or anti Bitcoin - not for one second. I am one of the lucky ones in at the right time, sold a lot on the way up and happy with the current holdings.
All I am trying to emphasis here - is don't get sucked into the void which is not supported by ANY sound logic.
I recently watched a couple of video's with Warren Buffet, another with Jim Rickards.
They both explained something very interesting in a very clear way. Although Anti Bitcoin - what they said made a lot of sense. The same lesson kinda applies to things like gold.
When you buy an asset, the asset can produce for you. So assume you buy a house - you get rental income each month and with the price of the property going up over time you make gains there. Buy a business same thing - Buffet explained this using a farm as the example. Sell grains, cows or whatever you farm. Over time you still hold the asset.
This isn't true for the likes of diamonds, gold or Bitcoin.
Hence it fits into the greater fool theory.
If I sell you my last bitcoin I picked up for less than $200.
You buy it all today at $42,850. You have to find someone else willing to pay you more than the $42,850 in the future. For me, this is the main reason I don't personally care up or down or sideways here. But many in the echo chamber do.
The average price across the breakeven addresses are around 37k - this is Breakeven not profit. So imagine majority of the retail crowd with an average entry after DCA'in at 37k.
These are all things to keep in mind when your playing shorter term moves. ETF's are structured in such a way long term growth can be expected, volatility get's somewhat reduced. You noticed what's happened on the weekends since the launch?
So whilst I expect it to go up in the long run. We need a healthy pullback as to be expected. This gives more time for real accumulation to happen - but this will also put some stress on that average (BE) level of 37k.
Just keep this in mind and one more thing if you want to comment on "oh your wrong - up only" give some logic to support it or I won't bother responding. This move will take time. For me, nothing has changed since 2022. We are not ready for new highs - YET...
Anyway enjoyed or not I thought it was worth another educational post.
Stay safe!
Disclaimer This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Nicely explained, but I'm afraid there are some flaws in the explanation. Your market cap calculation does not take into account the multiplier effect. A 1 million inflow does not equal a 1 million increase in market cap, it results in a multiple of that.
Other than that, a couple of factors explain why Bitcoin is not (yet) rallying to the moon. - miners selling bitcoin to prepare for the halving, they need to have some cash reserves to keep paying the bills once the production price doubles and the market price has not caught up yet. - outflows from GBTC, either to cash or into other ETF funds, people looking for cheaper management fees rather than the 1.5% Gemini charges Both of the above mainly are settled OTC, not affecting the price of BTC.
However, miners are going to stop selling around the halving, the outflows out of GBTC will come to an end and the daily supply of BTC through mining will be cut in half in a mere 3 months from now, all while the demand is probably going to ramp up. The reason for this ramping up is that a lot of financial advisors have not been educated yet on Bitcoin or ETF products, some investors and funds are just waiting to see what the price will do and will only buy once the bull run is confirmed, which in its turn will strengthen the bull run.
Don't be blind-sighted by the current price action, we're still early in the Bitcoin spring season and there might still be a few frosty days, but one thing is for sure ... summer is coming, that's inevitable.
Mayfair_Ventures
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@Nico.Muselle, Some of these things you just need to put it in a way for people to understand. The market cap is just the comparison to stocks. We all know Bitcoin is a bit more complex than that ;-) For me Bitcoin is a new instrument that is not fully institutional yet. So it will have teething problems. There are some upsides and downsides for miners for sure. Blackrock and Vanguard won't mind a 20 year growth curve on this, their bread and butter is management fee's. This doesn't help the little guy who's investing his life savings of 5k in the short run. The main challenge I see is the regulation loop holes. I believe that it can really gain traction due to as you say "financial advisors being uneducated" but these things take time. I see all too often calls for 100k, 250k even a million with zero rational or logic supporting it. We had people call for 135k at the 69k top we are still $93,000 below those predications. TIME is key. Like I said in the post, been in Bitcoin a long long time, been a trader longer than that. I have no doubts it goes up in the long run. But time to settle, shake out and create it's foundation I think, is the way it really matures for the long run. Thanks for the coins and comment!
Nico.Muselle
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@Mayfair_Ventures, we definitely should not underestimate the impact of miner outflows in the current situation. This chart says it all ... If we check the Miner Outflows over the long term, we notice that they almost drop to 0 straight after the halving ...
Mayfair_Ventures
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@Nico.Muselle, yeah 100%. The only thing for me around this halving was how much was priced in on the "fake pump" Blackrock news. Then post approval, how much impact will it have on previous patterns and cycles. It's almost a completely new (unknown) game at this stage. I think the assumption is "it's the same" is what cripples most traders. I just got this incline, even a gut feeling. This ETF situation has changed the game a lot more than we have currently seen. Either way I think it will be interesting to see what plays out. 👍
Post: ‘Noone ever bases their forecast on evidence, here is the truth’
Comments: ‘wow this posts makes crazy generalisations that also aren’t cemented in fact’
OP: ‘ok yeah well I have a gut feeling’
lol nice try op
Mayfair_Ventures
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@Nico.Muselle, IDEA - I go the JP Morgan with a business plan "Loan me 100BN dollars for 24 hours. I buy Bitcoin at 42,500 today. using a lets say modest 4x Multiplier the price shoots up over 170k per coin tomorrow. I offer JP Morgan 25% of my gains instead of overnight interest" - I CANT LOSE. Maybe Apple could do this with their war cash chest ;-)
TradingView
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Interesting and well-explained chain of thoughts. Thanks! This has been selected for Editors' Picks!
Mayfair_Ventures
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@TradingView, Thank you very much - always appreciated.
Your market cap calculation does not take into account the multiplier effect. A 1 million inflow does not equal a 1 million increase in market cap, it results in a multiple of that.
Other than that, a couple of factors explain why Bitcoin is not (yet) rallying to the moon.
- miners selling bitcoin to prepare for the halving, they need to have some cash reserves to keep paying the bills once the production price doubles and the market price has not caught up yet.
- outflows from GBTC, either to cash or into other ETF funds, people looking for cheaper management fees rather than the 1.5% Gemini charges
Both of the above mainly are settled OTC, not affecting the price of BTC.
However, miners are going to stop selling around the halving, the outflows out of GBTC will come to an end and the daily supply of BTC through mining will be cut in half in a mere 3 months from now, all while the demand is probably going to ramp up. The reason for this ramping up is that a lot of financial advisors have not been educated yet on Bitcoin or ETF products, some investors and funds are just waiting to see what the price will do and will only buy once the bull run is confirmed, which in its turn will strengthen the bull run.
Don't be blind-sighted by the current price action, we're still early in the Bitcoin spring season and there might still be a few frosty days, but one thing is for sure ... summer is coming, that's inevitable.