$57k Bitcoin & Miner Mania
After a monster rally in all things Bitcoin to start the week, let’s dive in on some charts and some additional considerations.
I know, I know. I’m going to start sounding like the boy who cried wolf soon - if I don’t already! 😬 Yes, I’ve been anticipating a pullback in the price of Bitcoin ($BTC-USD) before the halving. No, that pullback has not manifested in the way I have expected.
Of course, it’s entirely possible that the 21% drawdown in the two weeks following the spot ETF approvals was the pullback and it just didn’t last as long as I wanted it to. I have to admit, I was thrown off guard by just about every Bitcoin-proxy in the market mooning Monday. Bitcoin rallied over 5% and is continuing so far in Tuesday’s session. But the Bitcoin equities did even better:
Coinbase COIN 0.00%↑ closed up 17%
Marathon Digital MARA 0.00%↑ ripped 21%
CleanSpark CLSK 0.00%↑ had a daily candle that looks like an elevator to the sky
What the heck is going on? First, here’s an updated look at US-based spot ETF flows since mid-January approvals:
Obviously the amount of investment demand for these products has been impressive with just under 118k BTC of net investment flow adjusting for the Grayscale fee-migrants. Nominally, this BTC is currently valued at $6.4 billion while the actual dollar flows into the spot ETF products have been closer to $5.6 billion. Not too shabby. Also noteworthy; my pick of the Fidelity Wise Origin Bitcoin ETF FBTC 0.00%↑ as my preferred spot fund looks good as each of the other new funds in the top 5 by AUM have already hit their waiver limit. Fidelity’s was a set date and is still ongoing.
Bitcoin Fundamentals
Bitcoin is now up 48% in one month. This rally has been absolutely incredible. Bitcoin is now overbought on daily, weekly, and monthly time frames and has OI near 2021 highs. We could get into the weeds with TA but I’m going to instead focus on what I think are more important metrics to consider at this juncture. I think we need to look more at the cyclical ratios and metrics to gauge just how much room we have left to run. Here’s the MVRV Z-score:
This takes the market value and the realized value - the average price at which all coins were last moved - and applies a standard deviation calc to determine when BTC is overvalued or undervalued. The Z-Score, seen in orange above, is currently reading 1.87. We generally haven’t hit the cycle price top until MVRV Z-score eclipses 7.
Next we have long term holder balance, or “hodlers:”
These are on-chain addresses that have held their BTC for a least a year. At 13.6 million BTC, hodlers have a commanding share of the coins in circulating supply. Notably, hodlers have historically sold into the Bitcoin price frenzy that generally follows each block reward halving. They haven’t started meaningfully distributing yet so price has a long way to go if these ETF products keep eating supply. Here’s an interesting chart that I think speaks to the lack of a meaningful retail frenzy (at least on-chain):
This is the ten year trend in miner volume share of on-chain addresses. I think there are a couple of ways we can look at this. On one hand, it seems to indicate retail investors have completely missed out on this rally. Who could blame them after getting burned by so many frauds during the last cycle?
However, it could also be an indication that Bitcoin’s incremental retail investor simply isn’t going to be on chain any longer. This is seemingly corroborated by the spot ETF flows. Money is coming in. Price is going up. But it isn’t generally happening on chain. I’m not actually sure this is all that bullish for miners in the long run and I’ll detail why shortly.
Finding Winners In The Mining Space
The miners had themselves a session to start the week, my friends. It’s not easy to find a public miner that wasn’t up at least 12% Monday but the trend in recent months has been interesting. Here’s your top ten sorted by 1-month performance:
We’re starting to see the market favoring certain names as others lag peers. Take for instance the aforementioned CleanSpark and Marathon Digital. CLSK made a new 52 week high Monday. MARA is withing striking distance of its own 52 week. Then we have a name like Hut 8 HUT 0.00%↑ which is still 60% off its 52 week high.
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