️ Crypto Will Crash Unless This Happens... (Data Inside!)

[00:00:00]Don't be fooled. This bare market has to continue unless one of two scenarios plays out. Now, when do bare markets turn around? It's either when valuations are extremely cheap and it might make sense to buy against the current momentum or alternatively if we see a forced liquidation event. If the sell-off is so quick that people are struggling to get some liquidity and then for example during co when Bitcoin crashes by 50 60% in the span of 48 hours then we might turn around very quickly. But one of those two scenarios has to be true. We either bleed down until prices are low enough or we crash very quickly and then we can potentially bounce fast. If neither of those two things are true, then the bare market is likely just going to continue. That's what I strongly believe. This here is the realized price and this is the measure of where we are potentially cheap in Bitcoin. So that's the valuation argument. It can take a very long time until we hit those low levels.

[00:01:06]The realized price is the average price that a market participant has paid for Bitcoin. Today's price is just the recent transaction. The realized price looks at all of the wallets, looks at when did the Bitcoin move the last time, and then averages out that cost basis.

[00:01:23]On average, it took a bit over a year until we turned around when the bare market hit. That was true with Mount Gaus and Silk Road. That was true after the ICO bubble. And that was also true with Terra Luna, Three Arrows Capital, and FTX. Now, we did have one very sharp turnaround, and that was here. And that was CO. In less than a month, we went down by more than 50%. And intraday, we even went way lower than this. This is only the day end closes. Currently, the realized price sits at $53,000.

[00:01:58]And again, in the past, we had to go below that. That's when then on average the selling pressure eases, right? When the average Bitcoin holder is in losses, there is less selling because the argument goes like this. when on the one side we've got an asset that is kept in its new supply that only grows currently by 0.8% perom at the same time we've got fiat currency that grows by 6.8% 8% perom then of course over time Bitcoin has to go up. Now if you are currently in losses in unrealized losses we might just wait out those losses. This happens with pretty much any asset class right?

[00:02:33]If you buy a house and that house is currently in the negatives and you don't necessarily sell that house unless you turn into positives again. If you're not forced to sell, you will just keep the asset and wait for the monetary devaluation to do its thing. Bitcoin's value days destroyed multiple is very low and it's low since Bitcoin hit $96,000.

[00:02:56]So the decline since the middle of January to today was not the long-term holders or rather the whales with their dormant Bitcoin suddenly reactivating their supply. That's what value days destroyed measures. We're looking at all of the Bitcoin. Check for how long have they not moved. And when then a lot of Bitcoin that hasn't moved for a long time, suddenly does move. That's probably a sell signal, right? That's when the whales suddenly reactivate their Bitcoin to sell it off. That's historically the behavior that happened when we hit new all-time highs, right?

[00:03:29]That's when the very convinced OG's exit. But we don't see any of that selling pressure over the last 6 to 7 months. Here's a slight derivative of that indicator. This is the Coin days destroyed. It's not the value days destroyed. That's US dollars. Coinbase is just measuring this in Bitcoin.

[00:03:46]Again, the dormant Bitcoin is not what's currently getting reactivated and suddenly pushing down the price. This is active Bitcoin being pessimistic about the market. And I see this as a positive sign because it means that the decline is probably temporary. Right? If all the OGs would suddenly sell off their Bitcoin, then maybe the market as a whole becomes fragile. But if it's just the very active, nervous, speculative money that's pushing down the price, and that money at some point might come back as well. My thesis is that the reason why Bitcoin is performing that poorly recently is because a lot of the speculative money just went over to artificial intelligence stocks. Now imagine that money was to come back either because AI stocks don't rally that much or maybe because the valuation of Bitcoin is low enough then we do get the turnaround and it always seems like we never get a turnaround that Bitcoin is over when we are in a bare market.

[00:04:44]Just have a look at prior bare markets and just see what has been written about it. Check older videos on other channels. Check what they said when Bitcoin hit 16K after FTX collapsed. Did they really expect that Bitcoin comes back to 120K? Most people did not expect that. And the same will happen again. We will go lower potentially, maybe below the realized price. Then at some point when everybody is out of the market, when the speculative money is not active anymore, that's when we turn around.

[00:05:14]That's when the long-term holders continue to dollar cost average into the market, form the bottom. The short-term holders, they are not selling anymore.

[00:05:22]And then we bottom out. That's the valuedriven story. That's the most likely scenario. That's if we don't see an external shock like CO. But there's also of course a possibility that something in the financial system blows up that suddenly we get a big crisis and that that then spills over to Bitcoin or to crypto as a whole. we see a similar crash to co and if that crash is quick enough and it creates a lot of liquidations let's say on the derivatives market on the perpetual futures market then that in the end that for selling could bring in a lot of attention and then a very quick rebound now let's see who bought and sold over time based on wallet size so that's over here the small wallets that's at the bottom when this is red then all the wallets that have less than one BTC they offloaded their balance went down. When this is blue, then they added to their wallet. We can see that the smaller wallets, relatively speaking, are adding more and they were very bearish just a few months ago. It seems like whenever Bitcoin crashes, once the price consolidates, that's when the retail investors come in. That happened over here. It happened over here and now again. Now, last time after the accumulation, we saw quite aggressive selling over here and over here. That's not what's currently happening. We don't see any accumulation anymore, but we also don't see any selling. I see this as a positive sign. Now, the problem is there's a lot of data points and a lot of headlines that are nothing but distraction. For example, the Bitcoin ETFs. Everybody talked about the Bitcoin ETFs and how we now have outflows.

[00:06:56]That's in June and that's in July, but really the metric doesn't matter that much. So, again, this is the ETF change.

[00:07:03]So, Bitcoin is leaving the exchange traded funds. But then have a look at the realized cap change in comparison.

[00:07:10]That's now the onchain balance movements. They are much more important as in when people realize losses when they are giving up. That's potentially when things can turn around. In other words, the realize price is going down, right? People are selling now at a level that's below their entry point. But it tends to be a quite weak selling, right?

[00:07:32]As said, whenever the price is currently below the average cost basis, we tend to see just the capital freezing up. That's then when some long-term holders buy into the asset again and create a flaw.

[00:07:45]It's not like nobody ever realizes losses. But just have a look at how quickly and how strongly profit gets realized versus how reluctant the market is to realize losses. Usually the vast majority of investors just waits out losses on assets they are long-term bullish on. That's what's happening with Bitcoin as well. People are currently realizing losses, but they're realizing those losses at a much slower pace compared to when they realize profit.

[00:08:14]And those loss realizations, they are a much stronger effect on the price compared to the ETF balance changes.

[00:08:22]That's why it's so important to look at the data. That's why it's so important not to just follow the headlines. It's way more important to figure out what actually drives prices. And I'm still surprised that not more people talk about this here. This is the stable coin market cap relative to the US money supply. And since Christmas of last year, we see loss realization. The realized price is going down. And since then, we also see how the inflows have stopped. Money is not getting into the system anymore. Rather, the opposite.

[00:08:53]money is currently flowing out of the system. And this is not a very volatile metric, right? When this is going up, crypto prices tend to go up. When this is going sideways or down, crypto prices tend to go down. And so that's why I think this bare market is not yet over.

[00:09:07]We aren't yet below the realized price.

[00:09:10]And while some retail investors have bought the dip, that does not mean that the dip can't continue dipping. As long as we don't see money entering the space, it's very hard for prices to sustainably go up. Think about this on a micro level, right? If a household is not able to increase their income, it's unlikely that they are going to increase their savings month over month. Thus, it's unlikely that whatever they are buying will go up in price over time. We need more capital in order to achieve higher prices. Currently the capital that's available in the space in the form of stable coins is going down. I am waiting until the short-term holders have completely given up. This is the realized huddle ratio. So this measures long-term trading versus short-term trading. When this is very high, it's mainly short-term traders that move Bitcoin. When this is very low, it's mainly long-term holders or the dollar cost averages that determine the Bitcoin price development. The market is cooling off and it's cooling off since we hit roughly 100K. As the market cools off, the price tends to go down as well and I want us to be at least in the green zone again. Now, this metric is not perfect either. We might see higher lows. Still, the green area is my reference point.

[00:10:28]The market has to cool off even further once we are in the green zone. And at the same time, the long-term holders haven't given up. So the valid strike multiple stays low. Then there's really no more potential sell pressure. The short-term holders, they're completely out of the market. The long-term holders, they rather tend to accumulate over time. And so that's then when I believe the bottom is in. There will be a follow-up video on this channel with even more data. If you don't want to miss that, feel free to subscribe over here. A like would be very much appreciated as well. If you want to know my active trading, if you want to see what kind of performance I make, then feel free to also check out the premium membership. There is a 7-day money back guarantee, okay? So, don't like premium.

[00:11:07]Just message me within the first seven days and you'll get refunded, no questions asked. See you next time.