The Bitcoin market's momentum has slowed, and water is slowly creeping higher atop The HODLers Wall. This months Q&A gave us an opportunity to assess conditions at this critical decision point.
Thanks James! You have a notably more neutral tone on this call than Hodlers Wall and Water at the Top of the Wall. Not bearish, but Checkthebull seems more tame today. I'm still quite bullish on Q4 due to the analysis you provide as well as classical TA.
I was reviewing the LTH Supply chart and noticed that the 2017 and 2022 tops were marked by steep drops in LTH supply, around a 25% drop in LTH during the Q4 top in 2017 and a 15% or so drop in Q1/Q2 2022 'true' cycle top.
However, the two local tops this cycle are much shallower. The ETF inspired local top in Jan 2024 had a 10% drop in LTH and the Trump election win to tariff tantrum drop in April had 8% drop in LTH supply. This recent chopsolidation to mild ATH in August is a meager 3.1% drop in LTH. MVRV Z-score also in a very narrow range, super mild compared to previous cycles. As you've said, numerous metrics are coiling up and ready for volatility, and with such muted onchain metrics, the probability favors the bull's IMO. LTH aren't really selling yet. Or am I misreading the charts?
G'day Jason, and you're thinking about LTH supply the right way. This cycle has been very different in the sense that there have been waves of LTH sell-side, but then the buyers of those sold coins are hanging onto them.
As a result, LTH supply recovers much quicker. So not only are we getting a story about the sellers on the way up as LTH supply declines, we're also getting a story about the buyers when it heads higher again soon after.
My instinct here, is that we have two things in play:
- Near term uncertainty, and I think weakness in BTC is a function of both capital rotation, but also concerns that the wider market is in a strange place.
- Long-term conviction is unaffected, and many are accumulating because they know the fire-hose of liquidity will come to the rescue should the cracks widen.
This feels right to me, where even if we trade lower, it's the liquidity response that follows which is what I have my eye on.
Amazing insights once again 👏
Thanks James! You have a notably more neutral tone on this call than Hodlers Wall and Water at the Top of the Wall. Not bearish, but Checkthebull seems more tame today. I'm still quite bullish on Q4 due to the analysis you provide as well as classical TA.
I was reviewing the LTH Supply chart and noticed that the 2017 and 2022 tops were marked by steep drops in LTH supply, around a 25% drop in LTH during the Q4 top in 2017 and a 15% or so drop in Q1/Q2 2022 'true' cycle top.
However, the two local tops this cycle are much shallower. The ETF inspired local top in Jan 2024 had a 10% drop in LTH and the Trump election win to tariff tantrum drop in April had 8% drop in LTH supply. This recent chopsolidation to mild ATH in August is a meager 3.1% drop in LTH. MVRV Z-score also in a very narrow range, super mild compared to previous cycles. As you've said, numerous metrics are coiling up and ready for volatility, and with such muted onchain metrics, the probability favors the bull's IMO. LTH aren't really selling yet. Or am I misreading the charts?
G'day Jason, and you're thinking about LTH supply the right way. This cycle has been very different in the sense that there have been waves of LTH sell-side, but then the buyers of those sold coins are hanging onto them.
As a result, LTH supply recovers much quicker. So not only are we getting a story about the sellers on the way up as LTH supply declines, we're also getting a story about the buyers when it heads higher again soon after.
My instinct here, is that we have two things in play:
- Near term uncertainty, and I think weakness in BTC is a function of both capital rotation, but also concerns that the wider market is in a strange place.
- Long-term conviction is unaffected, and many are accumulating because they know the fire-hose of liquidity will come to the rescue should the cracks widen.
This feels right to me, where even if we trade lower, it's the liquidity response that follows which is what I have my eye on.
Thanks for the detailed reply, much appreciated!