Hanging In There
The world is still working its way through the implications of a shifting global trade system, and despite Bitcoin being down from the ATH, it is still hanging in there far better than most assets.
G’day Folks,
If you can believe it, this is the 166th edition of the checkonchain newsletter, and we’re celebrating our 1yr anniversary as a business.
To each and every one of our subscribers, Alec and I want to thank you for your support. The Checkonchain project is the best job we have ever had, and you are the ones who make it happen.
12-months ago, our first edition was titled Is the Bitcoin Market Top Heavy?, and we were exploring the onchain dynamics shortly after a significant local market peak at $73k. As an analyst, I continue to reflect on the lessons I have personally learned studying the market each day, and how I can improve my frameworks and tools to better understand market movements.
‘Top Heaviness’ Definition: When too many people, buy too many coins, at too high of a price. This is a framework I developed to help identify bear market risk, and to help distinguish between a typical garden variety bull market correction, from a true bearish trend.
The 2023-25 cycle is indeed different in character to past cycles, with more periods of lengthy sideways chopsolidation, and a more institutional investor base. This means there has been more time for distribution to occur, but also suggests serious capital is flowing in to absorb BTC at increasingly high prices.
I would add in that this cycle we do not appear to have seen a massive influx of unsophisticated retail investors, arguably because memecoins absorbed a lot of those flows right off the bat.
As a result, we have to remain vigilant in our interpretation of many models and metrics, as they can be expected to evolve over time.
In this piece, I will reflect on my top heaviness framework, and explore how it measures up relative to previous bear market starting sell-offs in the past.
📈 Reminder: you can find the charts from our articles on the Checkonchain Charting Website, and a guide in our Charts Tutorial Video.
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