Bitcoin has recently hit multiple all-time highs, accompanied by several downward corrections. However, this seems to have not shaken the market’s belief in BTC, as the market still believes that BTC will continue to rise. This article is sourced from a tweet by Alex Thorn, head of Galaxy Research, and is compiled, organized, and written by Foresight News.
Summary:
Bill Ackman, the Wall Street giant, made a mistake? Bill Ackman: Considering buying Bitcoin! Coin price may skyrocket to infinite highs.
Background:
Ethereum jumps to become the 20th largest global asset, while Bitcoin remains in 9th place with CEX’s highest daily trading volume in 2 years.
It was a foggy morning in New York City, and some of us felt as if we were in a haze due to the storm in the cryptocurrency market yesterday (Note: This article was released on March 6th, after Bitcoin broke the historical high of $69,000 and then fell over $10,000).
This morning, I have some new thoughts on the Bitcoin revolution and its intrinsic value. But before we discuss that, let’s clear the fog and talk about what happened in the cryptocurrency market yesterday and what it means for the bull market.
On March 5th, the price of Bitcoin on Coinbase reached $69,324, breaking the previous all-time high set on November 10th, 2021. Subsequently, Bitcoin experienced a $10,000 fluctuation and is currently trading at $67,000.
Yes, after 846 days, Bitcoin is back. Physical gold and digital gold have both reached new all-time highs. This is the first time that BTC and XAU (spot gold) have reached new all-time highs together, but it will not be the last.
However, Bitcoin is still not suitable for beginners. After reaching a new all-time high, Bitcoin immediately plummeted by 14.3%, with the lowest point dropping to $59,224, causing a long and short explosion in the futures market.
Within just one hour from 2 PM to 3 PM Eastern Time in the United States, $400 million worth of Bitcoin long positions were liquidated, further intensifying the capital withdrawal. In the past 24 hours (until 7 AM on Wednesday, March 6th, Eastern Time), the amount of long liquidations on cryptocurrency futures exchanges exceeded $800 million (if short liquidations are included, the total amount exceeds $1 billion).
However, all of this is in the past now, as the current trading price of Bitcoin is back to $67,000, which is actually $4,000 higher than the opening price on Monday morning. Volatility has returned, and when we overcome the “Wall of Worry,” volatility may continue to exist.
Translator’s note: The metaphor “Wall of Worry” comes from a widely circulated saying on Wall Street, which refers to the combination of various concerns that can cause panic among investors, such as economic recession, inflation, political or geopolitical issues.
Regarding the background of the last time Bitcoin broke the all-time high: Bitcoin’s journey was not so easy. In 2020, it took 16 days for Bitcoin to finally break through after reaching the previous ATH (around $20,000 on December 17, 2017).
In fact, after two touches of the high, the trading price of Bitcoin once dropped by 12.33%, but it rebounded afterwards.
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From a psychological and technical analysis perspective, the previous all-time high is an important resistance level, which is completely reasonable. Specifically, my mom told me that she sold some Bitcoin yesterday at a price of $68,850.
I don’t know how she managed to sell it at the exact high point; she definitely isn’t a diamond hand enthusiast like me. Regardless, I can’t let go of my chips.
But some long-dormant Bitcoin (old coins) did wake up yesterday, and their selling may have caused the intraday top. On-chain data shows that a large amount of Bitcoin mined in 2010 was transferred on-chain yesterday, and we assume that these Bitcoins were sold. Everyone has a psychological price, and if it’s the same person and they indeed sold the Bitcoin, they might have wanted to sell and exit at the 2021 high.
I guess you can be a diamond hand for 14 years and then find your hodlings To The Moon. The characteristic of every Bitcoin bull market is that old users transfer coins to new users, which is why Bitcoin holders become enormous. (I should point out that this holder could easily consolidate the Bitcoins they mined into a new custodial wallet; at least I haven’t seen any on-chain evidence indicating that these Bitcoins were sent to cryptocurrency exchanges.)
In fact, if we look at the Coin Days Destroyed (CDD) indicator, we can see that the movement of dormant Bitcoins often marks the peak of a bull market or the bottom of a bear market.
This indicator takes the token amount in a transaction (or all transactions on a given date) and multiplies it by the number of days since the last transfer of these tokens. For example, if I buy 1 Bitcoin today, put it in a cold wallet, and then transfer it on-chain 300 days later, the contribution value of this transaction to the CDD indicator is 300. With the recent increase in Bitcoin prices over the past few weeks, we can see higher CDD values.
Translator’s note: Some of the peaks (such as the peak in early 2022) are due to special circumstances (the peak in early 2022 was caused by the US government seizing $3.6 billion worth of Bitcoin from Bitfinex hackers earlier on February 22).
When the US Federal Reserve confiscates these Bitcoins and transfers them to wallets under their control, it disrupts the CCD indicator. However, we haven’t seen a large influx of dormant Bitcoins into the market—apparently, the market needs to go higher to shake off the OG.
Yesterday, the daily trading volume of Bitcoin ETF reached a new all-time high, exceeding $10 billion. It was the largest inflow day in the history of Bitcoin ETF and the second-largest net inflow day since its listing (net inflow of $648 million).
The net inflow of Bitcoin amounted to more than 10,000 coins (more than 10 times the daily Bitcoin production of about 950 BTC). The growth rate of ETF is indeed surprising. As I wrote last week, the capital inflow is not only continuing but also seems to be accelerating. This momentum won’t stop and will continue.
Translator’s note: Without a doubt, as the bull market continues, we will climb the “Wall of Worry.”
Bull markets are non-linear and filled with numerous corrective moves. According to my statistics, from January 1, 2017, to December 17, 2017, when Bitcoin reached the previous all-time high of around $20,000, Bitcoin experienced 13 drops of over 12% (including 12 drops of over 15% and 8 drops of over 25%).
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The same story repeated in 2020. From the price low during the COVID-19 pandemic on March 12, 2020 ($3,858) to April 14, 2021 ($64,899), Bitcoin had 13 pullbacks of over 10% (including 7 pullbacks of over 15%).
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Therefore, yesterday’s price movement doesn’t make me think that Bitcoin won’t rise again. Although my readers won’t be surprised by my belief that Bitcoin will rise. We are baptizing the new friends holding Bitcoin ETF with the fire of Bitcoin volatility.
This is just the “Dalai Lama” price pattern (this is an old meme, but it does work).
For entertainment purposes, I had a debate with the same person yesterday about the intrinsic value of Bitcoin. I know it’s not an efficient use of time. Satoshi Nakamoto once wrote:
Well, I do have time. This person believes that the US dollar has intrinsic value because it has the “full faith and credit” of the US government behind it. I find this funny, not because the US dollar doesn’t have the full faith and credit of the US government or that such credit is worthless or won’t have value in the future. I can make these arguments.
But in my view, something with intrinsic value means that it can be consumed. Oil can be burned to power engines, corn can be eaten, and even gold can be made into decorative jewelry (I guess that’s technically important). Therefore, I don’t think the US dollar has intrinsic value unless you plan to burn your bills to keep yourself warm. Indeed, currency tools don’t need to have intrinsic value, and I believe that today’s fiat currencies have no intrinsic value. In fact, for money, there may be no such thing as intrinsic value, and it might be better that way. After all, money is a tool that we can use to store the results of our labor and conduct transactions across space and time without having to physically transfer our labor or property every time we want to transfer wealth.
Why complicate this tool with a bunch of other use cases that may only diminish its utility? Bitcoin just takes this concept to the extreme, almost as if Satoshi Nakamoto was thinking, “What if we could have all the attributes of fiat currency without any of its drawbacks? What would happen if we could have an alternative, easily transferable, divisible global currency, except it has no weight, is not issued by any central bank, and (by the way) has a fixed supply mathematically?”
This person wasn’t ready to accept this argument and countered me by saying:
The powers that be — the elites, entrenched intermediaries, etc. — want you to believe that the world is static, the system is secure, institutions are permanent, and everything has already been figured out and hasn’t changed. Past turmoil? We’ve solved that problem. Haven’t you read the textbooks? You can’t possibly come up with something novel that no one in the 5,000-year history of civilization has ever thought of. Reinvent money? We solved that problem on Jekyll Island in November 1910. These ideas are foolish.
The world is much more complex and much older than people realize. Revolutions are disruptive precisely because they overturn the existing order, but revolutions are only content in textbooks. If a revolution doesn’t disrupt established systems and ways of thinking, it wouldn’t appear in our textbooks.
So, everything hasn’t been figured out yet. Human progress, like the Bitcoin chart, is non-linear. We hop around intermittently as we seek enlightenment, questioning ourselves and our previous assumptions. Innovation requires discarding or at least constantly evolving past ideas. The more things change, the more they stay the same, but things do change.
Friends, please fasten your seat belts; our journey has just begun. Have faith, and if possible, keep your Bitcoin in your own wallet and enjoy the greatest game the market has ever seen.
Further reading:
Economist’s prediction: Bitcoin will not disappear! After the launch of spot ETF, the future price trend will slow down and stabilize.
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