The Week in Charts: Issue #50
The charts and themes from the past week that tell an interesting story in crypto and investing…
1. Part 2
Analysis of on-chain data and market trends suggests we're likely in the current market cycle's second stage, or perhaps the late-bull phase. This aligns with the growing consensus view based on various research reports and discussions I've encountered. It's gratifying to note that I anticipated this opportunity, having discussed it in Issue #48 a month ago.
Aside from that, the recent $20 billion increase in stablecoin market capitalization from its lows signifies a significant influx of new capital, potentially from both traditional and crypto-native investors. Stablecoins often serve as the initial gateway for newcomers to the cryptocurrency space, with Tether (USDT) playing a dominant role on centralized exchanges and USD Coin (USDC) leading the charge on decentralized platforms. The observed supply growth in both these stablecoins over the past months further strengthens this perspective.
This dynamic – a correlation between stablecoin supply and overall crypto market liquidity – is a topic I've explored extensively. An expanding stablecoin market cap can be interpreted as a rising interest in cryptocurrencies, alongside a pool of capital primed for deployment, potentially driving prices upwards. Conversely, a shrinking stablecoin supply might indicate a withdrawal of capital from the market.
The MVRV ratio currently sits at a level that could be indicative of our position within the market cycle (for a deeper dive, refer to Issue #48).
Three months after the launch of Bitcoin spot ETFs, an intriguing development has emerged: the flow of capital into these ETFs appears to be correlated with the price of Bitcoin itself.
We're currently observing potential support around the $57,000 price point for Bitcoin (BTC).
There are two main possibilities for the near-term price movement:
● Rangebound Consolidation: Price action might remain rangebound for the next month as the Short-Term Holder Realized Price (STHRP) catches up to the current spot price.
● Downward Correction: Alternatively, a price correction towards the $57,000 level could occur, followed by a resumption of the uptrend.
2. Send it to zero
Bitcoin's dominance over Ethereum for the past three years, even during a period of Ethereum's supposed "ultrasound money" narrative, presents an intriguing anomaly. Historically, Ethereum has exhibited a tendency to outperform Bitcoin in bull markets while underperforming in bear markets. This current cycle, however, marks a deviation from that pattern, with Bitcoin leading the charge in both upward and downward trends.
Given Ethereum's "ultrasound money" thesis, a significant outperformance relative to Bitcoin was anticipated this cycle. However, this expectation hasn't materialized thus far. This divergence from historical trends may warrant a reevaluation of our understanding of market dynamics within the cryptocurrency space.
3. New Reads
A Deep Dive into Bitcoin Layer two (L2s) Solutions
And that's it for this week.
Have a great weekend everyone.
- Passie
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