Today is Tuesday, August 13, 2024. The key price point for Bitcoin is $64,000. From a technical analysis perspective, the current market conditions are not ideal. Bitcoin has seen a death cross, which is when the short-term moving average falls below the long-term moving average. To be honest, even on the daily chart of Bitcoin, we have recently seen a death cross. Bitcoin's 50-day moving average is moving downward, crossing the 200-day moving average. In addition, Bitcoin's price tried to stand above the 200-day moving average, but failed. The market in the short term is full of uncertainty. The third quarter of this year is already halfway through, and there is not much time left in the third quarter. Let's keep an eye on the future development of Bitcoin.
The Bitcoin market is currently in a downturn, which is likely to continue for some time. The short-term holder NUPL indicator has shown a state of capitulation, which has many similarities with previous cycles. In 2019, we saw a small peak, but then Bitcoin's performance was not satisfactory for a long time. If calculated from the time span, the small peak at the end of June 2019 marked a turning point in the Bitcoin market. In October 2020, the price of Bitcoin began to rise sharply.
For more than a year after that, the price of Bitcoin has not broken upward. The turning point started in October 2020, and what happened in October 2023 last year? Currently, the hype around spot ETFs is driving the bull market in the first half of the Bitcoin price. In March, the price of Bitcoin was pushed to a high of $73,000. The short-term holder NUPL indicator is also currently in a state of capitulation, which shows that the downward trend of Bitcoin prices remains. Judging from the current market situation, the price of Bitcoin may continue to fall, but at the same time it will attract more investors to enter the market and drive the price back up. However, there are still risks in the Bitcoin market, and investors should be cautious about investing.
October is considered a good month because Bitcoin may see a sharp rise in this month. Bitcoin will get a better price in October, but there is a high probability that there will be another crash in September, which will completely destroy the confidence of retail investors and pave the way for the arrival of a real bull market. Although each cycle does not necessarily repeat itself exactly, there are indeed many similarities between each cycle.
For example, Panda recently mentioned the RHODL ratio indicator in a tweet, which measures the activity of Bitcoin holders and the sentiment of the Bitcoin market. Currently, 114 days have passed since the halving, and a top signal may appear 500 days after the halving, indicating that Bitcoin may reach its top in October or November 2025. For those who quietly bought Bitcoin in the bear market, they may have to wait another year before shipping.
The first phase of asset distribution has ended. This refers to the gradual selling of long-term investors and the influx of short-term investors into the market, a process that was completed earlier this year. Next, we may see the second wave of distribution, which was said to have occurred 165 days after the halving. Now more than 110 days have passed, which is two months later. It is expected that in the next two months, we may see another wave of distribution. The timing of this process is in line with the current mainstream expectations of the market and the current expectations of Bitcoin prices. It is worth noting that in the previous Glasnow Weekly Report, they showed the realized market value wave chart. Here we are referring to the group that holds the currency for no more than 3 months, which is the most active group in the market. If you can see these groups influx into the market and trade on a large scale, it is always accompanied by a sharp rise in Bitcoin prices. Since March, they have been inactive, as shown by the orange peaks starting to get shorter.
The funding rate in the futures market can also reflect this. In the fourth quarter of this year, with the arrival of new FOMO (fear), a large amount of funds will flow into the market. If the market shows an orange peak similar to the past cycle, it means that the Bitcoin bull market may have reached its top. This is an obvious signal to withdraw, because those experienced people will not shout "Bitcoin bull market is coming" at the top of the bull market. Instead, they should send a signal that the bear market is coming. Of course, for those who hold the currency for 3-6 months, the realized market value and wave chart show that these people should have entered the market after the ETF was approved at the beginning of the year, which is an obvious upward trend. If we observe the real long-term investors, that is, those who hold Bitcoin for more than 6 months, we are currently in the mid-term consolidation stage of the bull market. We will also see the second wave of distribution in the future, and the price of Bitcoin will of course continue to rise.
In addition, the hunting ground indicator VDD multiple is also an important tool for measuring the selling intensity of long-term holders in the market. In past market cycles, such as 2012, 2014, 2017, and 2021, the rise of the indicator usually marked the end of the market cycle. According to historical patterns, the market often ends after the indicator has overheated many times, which is when we see the overheated red peak. In the current market cycle, there has only been one overheating. Therefore, investors can judge whether the market has reached an overheated state based on the changes in the VDD multiple indicator, so as to better adjust their investment strategies.
In fact, this situation was caused by spot ETFs. At that time, there was a large outflow of GBTC, a closed-end Huidu Trust Fund, which caused a red signal on the indicator. In the future, we will see multiple overheating signals. After a few months of rest, the real bull market driven by global macro liquidity will inevitably begin to break out in the fourth quarter of this year. At some point next year, we may see overheating signals again. At this time, we need to consider selling Bitcoin. Because the cyclical nature of the crypto market is an inherent attribute, the market transitions from an extreme bear market to an optimistic phase, accompanied by the large-scale entry of retail investors and subsequent price fluctuations. The market is now cleaning up retail investors. The real bull market may not end until 2025. At present, we are full of uncertainty. XO mentioned earlier that Bitcoin only rebounded to more than $60,000, but the volume of open contracts for Bitcoin has dropped significantly.
The price fluctuations of Bitcoin have attracted widespread attention from investors. Since the price of Bitcoin fell, many Bitcoin bulls and bears have adopted a more conservative attitude and are unwilling to take greater risks. They usually take profits when they have a little profit, and the short-term holder group is similar. The average purchase cost line of Bitcoin is $64,500, which is also an obvious resistance level. Although there were some positive signs in the last few days of last week, Bitcoin eventually found it difficult to overcome the 200-day moving average and was rejected here. The price of Bitcoin fell all the way to $57,500. We also saw the death cross of Bitcoin, which usually indicates market weakness and downward pressure. The emergence of such negative technical signals means that Bitcoin needs to show upward momentum as soon as possible, break through and consolidate above $64,000 to avoid further downside risks. Now Bitcoin seems to be trying to regain $60,000, but this effort has not brought much effect due to the weak performance of Bitcoin prices. Therefore, investors need to pay close attention to the price changes of Bitcoin to determine whether the market has reached the bottom. Once the price of Bitcoin stabilizes and starts to rise, investors can consider re-entering the market to obtain higher returns.
The average price of short-term holders is also falling. I remember it was above $65,600 before, but now it has fallen to the $64,500 level. The gap between this and the actual price of Bitcoin is narrowing, which makes Bitcoin holders feel increasingly uneasy. However, if market conditions do not improve quickly and Bitcoin cannot rebound quickly above the key level, the current adjustment may last longer. It seems that someone is deliberately suppressing the price of Bitcoin. I remember mentioning the ASOPR indicator over the weekend. This indicator is more than one, indicating that it is profitable to sell, while it is less than one, indicating that selling Bitcoin is a loss. If this indicator sees a sharp decline, it means panic, resulting in an increase in people selling at a loss. At present, this indicator has returned to the critical point of one, and the next direction of the market is full of uncertainty.
The US political arena is also changing. Although former President Trump may be more friendly to the cryptocurrency market in terms of policy, the current situation shows that Democratic candidate Harris's support rate exceeds Trump. As a member of the Democratic Party, the Democratic Party has always taken a strict stance on regulation. Especially in the US Securities and Exchange Commission (SEC), the SEC's regulation of cryptocurrencies in recent years has had a great adverse impact on the cryptocurrency market. Inflation CPI data will be released this week. Amid the current geopolitical tensions, the sharp rise in transportation costs has become a disturbing factor. Although the rise in logistics costs was once seen as a short-term problem during the epidemic, it later became one of the important factors driving inflation and further led to the reason for the Fed's continued interest rate hikes. Although the market mainstream expects inflation to fall, it should be good news for Bitcoin in the short term. Although the cryptocurrency market may be affected by regulatory policies, the supply and demand of Bitcoin itself are still changing, which may have an impact on the cryptocurrency market. In addition, the innovation and development of the cryptocurrency market are also constantly advancing, providing investors with more opportunities and challenges. Therefore, for Bitcoin investors, it is necessary to pay close attention to market dynamics in order to make wise investment decisions.
The inflation index (CPI) will be released tomorrow, but before that, the PPI data will be released tonight. These data may cause some volatility in the market. Judging from the current trend, as central banks have already started a rate cut cycle, the Fed will soon take action, global liquidity continues to increase, and the M2 money supply is also rising. There are not many problems in this cycle, and the general direction is developing as expected. Nevertheless, it is recommended to be cautious about the data, because inflation and global macro liquidity are more important than the Bitcoin halving. In the current situation, central banks are looking to stimulate economic growth and control inflation, and global liquidity is more important than the impact of the Bitcoin halving. Judging from the current trend, as central banks have already started a rate cut cycle, the Fed will soon take action, global liquidity continues to increase, and the M2 money supply is also rising. Therefore, the price of Bitcoin may fluctuate in the short term, but the long-term trend is still upward.
