Bitcoin is ranging within deep value territory. The only relevant question is simple: when will this shark tank environment give way to an unyielding rally? In this edition, we’ll cover today’s low-time-frame levels of interest, and look at bigger picture indicators, which realistically carry more weight than this choppy state of affairs.
In this issue:
- Bitcoin analysis
- On-chain indicators
- Latest happenings
- Listening material
Bitcoin/dollar closed the week at $19,290, down -6.2% week on week. Prices have reached comically low levels, and it seems like all those who said they would buy are now waiting to buy lower. After 7 months of brutal downwards price-action without a single sustained relief rally, one really begins to wonder what it will take to break the spell.
For high-time-frame levels of interest, check out last week’s newsletter as nothing has really changed, and I’d like to avoid fluff or filler content.
On lower time-frames, BTC/USD has yet to dictate whether it will set a Monday range to work with, or if it will begin this horrendously overdue high time frame relief rally or short squeeze (call it what you will).
For now, the BTC market is still in a low-liquidity PVP situation where no stop loss is safe. The long-US weekend means volumes will come back online tomorrow. (Happy July 4th to all American readers!)
As discussed in the telegram channel, a deviation below last-week’s low could provide a high-risk-reward setup with a tight invalidation. On the flip-side, provided prices remain above the intra-day pivot ($19,200), low-time-frame setups are bullishly biased in my view.
On a quarterly basis, low-leverage (or spot) long-term (1x-3x) plays with plenty of room to the downside could prove to be very rewarding in the coming 6–8 months.
Bitcoin’s MVRV Z-score assesses whether BTC is overvalued or undervalued relative to its fair value. These value areas are shown by red bands (top) and green bands (bottom). Bitcoin is in the green zone (values less than zero), indicating the asset is significantly undervalued.
MVRV Z-score is calculated by the difference between total market cap and realised market cap, divided by the standard deviation of the market cap.
Net Realised Profit/Loss (NUPL)
NUPL takes into consideration the difference between unrealised Profits and Losses to determine whether the BTC in circulation is in profit or loss. Currently, NUPL is indicating capitulation is underway. This is historically the best time to buy. In the last bull market cycle, NUPL never reached the greed zone.
NUPL is currently -15.7%; lower than its valuation during the COVID-19 crash, but higher than prior market cycles (2010–2018).
Entity Adjusted Dormancy Flow
Dormancy is a lifespan indicator that measures how many coin days are destroyed per transaction on a specific day. High values mean that old coins are moving, while low dormancy means that new coins are moving. The entity-adjusted dormancy flow is the ratio of the current market capitalisation and the annualised dormancy value (measured in USD).
This on-chain metric has almost perfectly timed every market bottom since 2011. Whenever there is a substantial decrease in spending from long-term holders, or “old hands,” the indicator falls below the 250,000 threshold, representing an excellent buying opportunity, historically.
Today, the entity-adjusted dormancy flow sits at an all-time low of 132,180, probably signalling the imminent end of this long-term downtrend.
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- Russia Faces ‘Forced Default’ Due to International Sanctions.
The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service or financial advice. While I cannot promise perfection I do my best to be honest and transparent.
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Originally published on Revue: 04/07/2022