Welcome To Deep Value
Utter carnage in Bitcoin markets, with prices falling precipitously towards $60k. In this flash market update, I provide my unfiltered and honest opinions about what I think the road ahead looks like.
G’day Folks,
Uncertainty and fear levels are through the roof, and understandably so.
The equity market is down sharply, precious metals are selling off, and Bitcoin has taken yet another serious bloody nose.
Whilst I had not planned a report today, I wanted to share my honest unfiltered thoughts around this sell-off, and what the probabilities indicate given the swift move down to $60k.
This is the eye of the storm.
Push through it.
There is a back-side to it.
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Disclaimer: This article is general in nature, and is for informational, and entertainment purposes only, and it shall not be relied upon for any investment or financial decisions.
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TL;DR Summary
For today, I have only prepared a video report and TL;DR (no write up), so we can get it prepared quickly and out to you all as soon as possible.
This is what I would consider to be a textbook example of a nasty-ass red candle, and it absolutely sucks to live through.
However…when we view this within the context of every previous Bitcoin bear market, and the thesis we have been laying out over the last few months, nothing that is occurring right now is technically abnormal. It is strangely consistent with prior late stage bear dynamics.
There is an important decision tree we need to start with as a base assumption:
Case 1: Bitcoin is actually dead, and headed to zero. In this case, nothing I say here matters, and it has been a fun ride. This is not my view, at all.
Case 2: Bitcoin isn’t dead, and that means this bear market has a bottom, and end date, and it will simply be a process of us navigating between here and there.
I am firmly of the conviction that Case 2 is how this plays out, because frankly, there is no evidence supporting Case 1 (despite what social media tells us). Bitcoin has this remarkable ability to NOT DIE, and I am very confident that will remain a true assumption.
So, under the assumption of Case 2, the question simplifies down to ‘where are we in this bear cycle’?
Based on long-term mean reversion models (200WMA, MVRV, True Market Mean, Power Law), we’re currently trading at levels only seen in 15% to 20% of trading days, coincident with bear market lows. That means there is an 80%+ chance that the bear case has now run its course.
Based on faster mean reversion models like the STH cost basis and 200DMA, we’re at levels with fewer than 5% of BEAR MARKET days being lower. There is a 95% chance that the degenerate traders are about to short the bottom and liquidate their accounts…again.
The conclusion to this, is that we’re in the last fifth of probable downside scenarios. THE bottom may be at lower prices, and may be at a later date. But the odds of a bear case being a wise base case at these levels, has an 80%+ chance of being on the wrong side of the probability distribution.
We have a significant amount of realised loss underway, and SOPR has been driven down to a level where only 2% of all days see larger losses. I will be tracking this closely, and we will cover it in detail on Monday.
It will take time to confirm whether THE capitulation event has occurred, but there are certainly early signs that at a minimum, we have sufficiently broken sentiment to such a degree that it isn’t far off.
Soon enough, only the high conviction HODLers will remain.
This part of the bear is the WORST chapter.
It sucks, a lot.
But unless Case 1 comes to fruition, and Bitcoin actually goes to zero (it won’t)…
…I believe the hardest part of the bear is now behind us.
Now we MUST go through the arduous process of finding equilibrium, hammering out a base, and what will likely be a transition from price-drawdown pain, into one dominated by time-pain.
Check the Analyst is willing to stick his neck out here, and say that we’re in the final throes of this bear. We probably go lower, we probably bounce higher, but the bulk of the damage has now been done.
The sage wisdom of Bitcoin that rings true the most right now, is stay humble, and stack sats.
This bear will come to an end eventually.
Welcome to deep value territory, hang in there.
Thanks for watching,
James