Premium members: a special newsletter just for you

View this email in your browser

Trusted by 100,000 crypto investors.

Health, Wealth, and Happiness

August 2, 2022

"She knew the power of her mind and so programmed it for success."

― Carrie Green

Founder, Female Entrepreneur Association

Welcome to the new Premium Newsletter

Premium Members (that's you!) are in for a treat.

Our blockchain analyst Vlad Vronsky is not just a whiz with market analysis; he's also a successful crypto investor.

Starting today, we'll be delivering Vlad's weekly Crypto Market Outlook: a deep dive into the market, for Premium subscribers only. Enjoy!

Crypto Market Outlook

by Vlad Vronsky

Bitcoin prices have been rebalancing this week within a large bearish weekly candle from June 13th between $22,500 and $26,500. What's going on here?

TLDR: Prices could come down to test the lower levels below $20K due to lower demand there. To induce more market demand, we may see the price reach these levels. That could be the last flush out before we start to reverse into bullish momentum.

Based off the metrics below, a longer recovery time may be required as foundational repair continues.

Investor Takeaway: Continuing to hold bitcoin in unrealized losses is a painful endeavor but expect it to continue. What you decide to do with your bitcoin is up to your risk tolerance. Can you afford to wait through a bottoming event? It’s all relative to your risk margin. I wouldn’t place any leveraged positions, right now. If you ask me, it may be time to go fishing and let the market run its cycle.

Reading the Price Tape: I like to dive into the weekly charts of the two top crypto assets (BTC and ETH). Each bar you see here represents one week (five days cumulatively). This gives us a look into the ebbs and flows of prices.

BTC weekly (courtesy of TradingView)

ETH Weekly

Crypto Market Pulse Check

The bitcoin market continues to be in capitulation this week. Many short-term holders (STHs) have been redistributing into the long-term holders (LTHs). Notable supply concentrations are observable at $20K, $30K, and $40K, which tend to align with both technical and on-chain price models, making these regions significant zones of interest.

Let’s take a look at the Entity-Adjusted Unspent Realized Price Distribution chart. It shows the redistribution of coins from lower conviction to strong conviction holders. This is a mechanism native to any market cycle where assets are transferred to more cost insensitive HODLers that invest with longer time frames and allow their coins to mature in cold storage.

What we see is a large portion of the supply is held by HODLers that are allowing coins to mature despite holding losses. Their demand inflows have centered around the psychological $20K, $30K, and $40K consolidation zones.

If the price drops lower than the highlighted price levels and tries to recover, it's possible these high supply concentration nodes will offer firm resistance when the market attempts to recover higher.

Now that we understand where supply/demand rests, let's take a look at the Long-Term Holders Spent Output Ratio (LTH SOPR) where we can see if long-term holders are making money or experiencing losses:

In the current market, long-term holders have seen their recent profitability drift significantly below their yearly performance (red) for almost 400 consecutive days. Long-term holders are now losing money. The decline has reached similar duration and depth to the 2018 bear market lows and provides added weight to the argument that the extended bear market momentum is in effect. Losses are being locked in by the LTH cohort.

Now that investors are in this bear market phase, how long will they stay here? We can get a clue about this by looking at the on-chain cost basis for long-term holders:

This chart shows the standard market realized price versus the LTH realized price. When the SMRP crosses below the LTHRP, we can see the purple shade. The duration of previous bear market low divergences has ranged between 248 days and 575 days. In the current cycle, it has only been in effect for 17 days, a comparatively short duration. This should signal that there is likely more time to be spent in these bear market conditions.

I'll wrap this up by sharing one more key chart that displays confluence in market momentum. It’s called The Market Realized Gradient Oscillator (MRGO).

This is a statistically normalized oscillator, designed to measure the relative change in momentum between speculative value and true organic capital inflows. It does this by comparing the rate of change between the market price and the realized price.

Positive values indicate constructive upwards momentum.
Negative values indicate bearish momentum.
Breaks above or below 1 indicate a changing momentum to the upside or downside, respectively.

Let’s look at a momentum oscillator over a longer timeframe: the 140-day MRGO. This gives us a high-level macro look at what’s going on:

The 140-day MRGO has seen persistently lower peaks since March 2021. It has not recorded a positive value in 2022. This suggests a macro bearish market dynamic has likely been in effect for the last 15 months.

The current extended negative value regime is indicative of the persistently negative price performance in 2022 and remains in favor of the bears at this stage.

The underlying trend continues to slowly grind higher, indicating a potential longer-term recovery is in effect. However, it also suggests additional duration and recovery time may be required.

All in all, hang in there! The bear market continues, but true believers keep believing.

ICYMI