Hope everyone had a nice weekend. As we know, bitcoin had a large -26% drop from $58K to $43K in it’s 2nd pull back in this bull market. See below for more details.
So what happened? Most of the drop was caused by the futures market getting liquidated as it was over-levered. Additionally, retail buyers also experienced FUD (Fear Uncertainty Doubt) as they sold their positions on exchanges.
What happens next? Right now the on-chain data is telling us that the market is still very bullish. Institutions are buying. High net worth individuals are buying. Coins are going off of exchanges and into cold storage at the same pace. Retail is continuing to come into the market in droves by user count. In other words, the fundamentals continue to look good. The perpetuals futures rate continues to flatten in the cooled off zone. So we’ll see if/when the futures rate picks up again.
Our favorite on-chain analyst, Willy Woo, is saying that the price floor is $40K and he wouldn’t be surprised if we see prices get to near level over the next 3-4 days time horizon. He then predicts that price momentum will continue upwards after that because the fundamentals haven’t changed much even in the face of the -26% draw down. There is also a probability that institutions and high net worth individuals front run the $40K bottom price and never let the price hit this level.
Other risks we see are with bond yields and whether the 10-year treasury yield will continue to go up this week. If the 10-year continues to rise by 15+ bps this week, then we expect choppiness across most asset classes, especially growth stocks. We will see how this may affect bitcoin, as this is the first time bitcoin has experienced this type of macro economic situation.
More Bitcoin Resources
If you’d like deeper analysis below are a few of our favorite resources over the past 5 days.
Willy Woo deep dive into on-chain data on YouTube - Willy Woo spends a little over an hour analyzing the trends he’s seeing with his on-chain data.
Uncharted Weekly SubStack Article - Co-founders of GlassNode dive into this weeks on-chain data to uncover what is going on behind the scenes. The most recent article is Unchained #4. It’s a good one for sure.
Chart of previous pullbacks from All Time Highs since the beginning of Bitcoin.
As a friendly reminder, we’ll only be publishing once per 5-7 days so that we can spend more time doing deep analysis and provide more insight into the future.
Hope you all have a good Sunday and start to a new week.
Thanks,
Bitcoin Daily