Buying The Blood - Bitcoin (Data Inside)

[00:00:00]I have been showing this chart several times on the channel. The reason why I do this is because it's so important.

[00:00:05]This is the average cost basis of the market. What did the average market participant pay for Bitcoin? And historically, we only tended to turn around in a bare market when we fell below that. In other words, people were in net unrealized losses. Now, the story here is clear. We have to wait until we fall at least below $53,000 in Bitcoin.

[00:00:26]However, there's more to it because some metrics already tell us that now might be a good time to start dollar cost averaging. What we see over here, that's a 200 week simple moving average for Bitcoin. Now, historically, we bounce off exactly from that level. Only with the last cycle, we fell below it. The story around this indicator is that Bitcoin should always appreciate over the course of four years because of the h havinging because the number of BTC that gets issued on the blockchain gets cut in half every four years. That's programmatically written into the code and the next h havinging will be in May of 2028. So a bit under two years from now. So that was the official story why Bitcoin's price should never fall below the 4-year moving average. But the model broke. We actually did fall below this.

[00:01:19]The 200WE SMA was at $24,000 and we fell to $17,000.

[00:01:25]Now, there are several ways to look at this. We could either say, okay, this model is completely useless now. Or we could say maybe this is a good indicator to show us where Bitcoin is cheap and we simply just had cheaper Bitcoin because of systemic collapses, right? We had three arrows capital, we had FTX. Before that we had Terra Luna. So those were special times and nobody says that we can't see another black swan event during this bare market. I actually expect that something at some point will blow up. But let's say there is no black swan. Let's say we just recover because the short-term tourists are out of the market and the long-term holders continue to dollar cost average into the market. If that's actually how this all plays out, then now is the right time to buy. Historically, it was great to buy whenever the price was below the 200E moving average and currently that moving average is at $62,000.

[00:02:20]We are hovering extremely close to that potential floor indicator. There are other metrics, right? For example, this here, the Bitcoin rainbow chart. So, this is just a logarithmic line with some padding around it. It's not perfect. It has been adjusted several times. We can see how in the past we tended to be within the range. Recently we did fall slightly below it and this time we fall below this even more. I would not be surprised at all if this indicator has to be adjusted one more time. Still we do see that Bitcoin clearly is not extremely expensive. Now and so that's what I mean when I say that those models are useful but they're clearly not perfect but they can guide us in a certain direction. If we are considering to do any trades in Bitcoin, we should rather trigger the buy button and wait for several years than triggering the sell button now because that would have been the right decision one year ago, but not now. There are clear improvements. For example, this is the number of wallets that hold at least one bitcoin. This goes up longterm, which is great because it shows us there's more and more adoption of the Bitcoin network and the BTC is getting spread out among more and more participants. That's what we want for the robustness. But there's also something interesting over here. Check out this time. When Bitcoin goes up, the number of addresses with at least one Bitcoin is not necessarily going up. But when Bitcoin crashes, that's when this rallies very, very quickly. In other words, people are getting smarter.

[00:03:53]People are buying Bitcoin into their wallets when we are not at the all-time high, but rather the opposite, when we are in a bare market. And the great thing is that right now we tend to slowly creep up again. It's very slow, but it is a real effect. If we continue on that path, then of course, Bitcoin has to bottom out at some point. Yes, the short term doesn't look great. The stable coin market cap still continues to go down, and I don't think that this bare market is over. But what I do think is that buying now with a time horizon of two years or three years or four years is probably a very good idea.

[00:04:30]Buying now with a time horizon of 2, three or 4 months is probably not that great. Now, I don't have a crystal ball, right? I'm simply just sharing the data as I see this. The short-term momentum is not great. Money is still flowing out of the market. But at some point, valuations will be low enough and all of this short-term selling pressure will be out where then all of this pressure will be gone because it's just the short-term traders that push down the price. It is not the long-term holders, the long-term dormant Bitcoin that gets reactivated.

[00:05:00]They are just waiting on the sidelines until the price recovers again sufficiently. And I do think that the price will recover. The circulating supply of Bitcoin brings constantly. And what doesn't shrink is the number of US dollars that are floating around. People that are acquiring their Bitcoin and moving it into cold storage into their wallet. They are the smart participants.

[00:05:22]The fact that you're still watching crypto videos that late into the bare market, it tells something about you. It tells that you're not just following the hype, right? You're looking for the opportunities where most people aren't looking. Most people don't want to have anything to do with crypto. But then once we recover again and then Bitcoin is at 150 or 200K and you bought the Bitcoin for 60, 50, 40K, that's then when everybody will tell you, "Wow, you've been so lucky." But really, it's not just about luck. Luck is one component, but skill is another component. It's always both. I will make a follow-up video on exactly that topic.

[00:05:57]If you don't want to miss that, feel free to subscribe over here. A like would be very much appreciate as well.

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[00:06:04]This is where I share my own trades.

[00:06:06]I've been outperforming buying and holding Bitcoin over the last 5 years.

[00:06:09]So, feel free to check out the data in the pinned comment down below. Thanks for watching and see you next time.

[00:06:14]Cheers.