Nothing exciting is happening in the bitcoin market.
Since falling to $10,000 last week, the digital currency has been hovering around $10k only with ‘real’ trading volume, keeping between $1 to $2 billion.
Interestingly, even at current levels, 75% of UTXs are profitable because they have a breakeven at $9,200.
50% of UTXOs meanwhile have a breakeven at $3,600, and 95% of UTXOs have a breakeven at $11,800. According to Alex Saunders of Nugget News,
“Sub $10k Bitcoin ‘feels' cheap after so much range trading & grinding higher when you remove the noise. On-chain data shows large address accumulation implying wealthy investors agree.”
Rumors of a bear market are vastly exaggerated.
Whales = a combined 1000BTC in their cluster of wallets.
Note whales in the 2019 cycle are smarter money (~$5m+ exposure) than whales 2014 cycle (~$500k exposure). pic.twitter.com/DOJWbdnpY8
— Willy Woo (@woonomic) September 9, 2020
While bitcoin whales have taken to accumulate the leading digital asset, retail traders aren’t left behind either.
Unfazed by the swing in bitcoin’s price, the number of “wholecoiner,” those addresses that are holding at least 1 BTC, have been continuously growing and hit an all-time high this week above 823,000 for the first time.
Absolute Raging Mania
While bitcoin is finding stability, the US stock market had its best day in months following Tuesday’s sell-off.
The S&P 500 closed up 2%, recording its best day since June while Dow added more than 700 points, the best one-day percentage gain since July. Tech-heavy Nasdaq, which fell 10% off its peak, recorded a 2.7% gain, marking its best performance since April.
However, long time hedge fund manager Stanley Druckenmiller says this mania is fueled by the Federal Reserve and investor speculation that will end badly in the coming years.
“Everybody loves a party … but, inevitably, after a big party there’s a hangover,” the billionaire told CNBC.
“Right now, we’re in an absolute raging mania. We’ve got commentators encouraging companies to do stock splits. Companies then go up 50%, 30%, 40% on stock splits. That brings no value, but the stocks go up.”
Although he says he has no idea where the market will go next, he believes, “the next three to five years are going to be very, very challenging.”
Bitcoin’s correlation with anything is spurious
Unlike the deeper losses, the gains weren’t as strong in BTC, which continues to follow the equity market.
A lot will depend on how $SPY holds up the rest of the week, but this is some seriously wicky action into this level.
— Jonny Moe (@JonnyMoeTrades) September 10, 2020
According to trader Qiao Wang, the digital asset is short-term correlated with stocks because “a reasonably sized traditional institution did a backtest off of 2 months (March and April 2020) worth of data and decided to trade the correlation, creating a self-fulfilling prophecy.”
As for why not retail or dollar supply/demand, Wang says the correlation is evident during the overnight hours between BTC and stock futures and the correlation being strong at a very high frequency/short time frame.
However, Jeff Dorman, CFO at Arca, says bitcoin is correlated to neither equities, gold, or oil. The correlation is spurious at best, and “this is exactly what an uncorrelated asset does — it confuses everyone.”