Uncharted 17: Distilled

13 June 2022

Dear subscribers,

In this version of Uncharted: Distilled, we deep dive into bitcoin’s development amidst weakening market conditions. We break down the supply and demand dynamics to determine bitcoin’s outlook in a highly correlated environment and fear-induced market.

Let’s dig in!

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Summary

Uncharted #17 analyzes bitcoin's supply and demand dynamics, from more vital interest from institutional investors to a weakening long-term holder demand coupled with short-term holder selling pressure. All in the context of less exchange activity and an intense macro environment.

• The $29k level shattered, and support is forging around $23k following a higher than expected CPI print last week.

• The relationship between bitcoin and US equities remained highly correlated, denoted by a lagging price action referenced to selling pressure.

• Meanwhile, institutional demand for bitcoin exposure increased as investors bought in at a weakness and discount.

• Bitcoin has gone mainstream, yet the fear of a recession stole the thunder impeding further capital inflows, mainly from retail investors.

• Exchange activity showed less activity in the crypto space since bitcoin’s 200-day plus downtrend, initiated back in November 2021.

• The lack of demand from long-term holders coupled with the potential short-term holder selling pressure reflected the weakness in the system and bitcoin’s sideways trend.

• The futures-to-spot volume ratio continued to fluctuate around 1, signaling less speculation and leverage in the system as Swissblock’s Bitcoin Risk Signal extended in the high-risk zone.

• Swissblock’s Altcoin Cycle Signal indicated a dominant bitcoin reinforced by a substantial outperformance against riskier altcoins.

• As higher prices begin to impact consumers and investors, bitcoin’s best bet is to decouple from US equities, especially considering that bitcoin has underperformed when the correlation to US equities has been at an extreme.