Crypto’s back, baby.
The moon math memes are back, and news items such as ‘Hong Kong Gaming Company Boyaa wants to Buy $100M in Crypto‘ induce flashbacks to the summer of 2020.
Not that we’re quite there yet in terms of the market cycle – still pre-halving – but the sentiment of anticipation is similar.
Back then it was the hope that lots of companies would follow MicroStrategy’s lead and put BTC on their balance sheet. Currently, it’s Bitcoin ETF fever.
In the first week of December, BTC broke out of its ascending triangle, topping out (at the time of writing) just above $44k. Only 4k to go to my price target for 2023 of 48k, lol!
But seriously. It’s of course quite possible – and it would be healthy – that we see a retracement from here, after 7 green weeks in a row.
Whenever the moon math memes are flooding your X timeline, you know that plenty of smart traders will want to take the counter trade.
To get a reality check, let’s look at inflows and on-chain data. One interesting chart is the market cap of all stablecoins combined. This has bottomed.
USDT’s market cap has reached new all-time highs. This is money waiting on the sidelines.
And it isn’t just that. VC money is flowing in again. Wormhole just raised a whopping $225 million at a $2.5 billion valuation, to name an example.
Interestingly, November was also the month in which trading volume in CME Bitcoin futures contracts exceeded the Binance BTC futures market. As the CME is an exchange where institutional investors play around, this is another signal that institutional money is paying attention.
Macro news has given us tailwinds. The mid-November inflation data for the US were good (lower than expected).
Stocks pumped; the dollar dropped – just a nice environment for risk assets like crypto.
Gold had a crazy wick, briefly reaching a new all-time high before retracing. And, most fun of all, altcoins are booming.
But let’s start with BTC.
Glassnode reports that the divergence between long-term and short-term BTC holders has never been bigger. Long-Term Holder (LTH) supply (blue) has been continuously hitting new all-time highs since November 2022.
Even though more than 80% of BTC is now in profit, these long-term holders are like: ‘We’re not selling’. You can see that in the below Glassnode graph, published on November 20.
Not only are people not selling, but they’re also accumulating across the board.
This is shown by another graph from the mentioned Glassnode report. Both small and big holders have become net accumulatoooors in recent weeks (blue color).
Michael Saylor? Not selling, buying a few thousand BTC more.
El Salvador? Same.
Your mother-in-law? Stacking sats.
All this signals a degree of supply tightness not often seen before.
Sure, at some point, long-term holders will start selling.
Traditionally, this has happened only around the time of a new all-time high. At current levels, the cohort of diamond-handed holders apparently hasn’t made enough unrealized profits to sell.
That’s what the on-chain data suggest, at least.
Binance and Bitcoin ETF News
Binance got a staggering $4 billion fine from the American SEC. CEO Changpeng Zao has to step down and risks jail time (probably will get house arrest). Binance will have to leave the US.
While this might…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
