Bitcoin: Gold 2.0 After SEC Approved ETF Launch?
What an incredible past couple of weeks we have had in the crypto space. We have gone from speculating that the SEC would approve the first Bitcoin ETF to it being a reality. The $BITO Bitcoin Futures ETF from ProShares hit over $1 billion in AUM after only two days on the market. The fastest to such a market cap so quickly since the $GLD ETF for gold.
Maybe to many, Bitcoin is not comparable to Gold despite its main use case as a store of value. Bitcoin has many more differences to Gold in the sense that it is also more scarce, far more decentralized in ownership, and is a trust-less payment network. Time is already telling us that while the similarities are there, Bitcoin is its own phenomenon that prior generations can only compare to gold as a point of reference.
Of course with this bullish news that people in this sector have been anticipating for years, Bitcoin has promptly set a new all time high price of $67,276.79 and brought the entire crypto market cap to another high of over $2.6 trillion. All over news outlets we are hearing of firm after firm going public with their interest in Bitcoin and Ethereum.
…Bitcoin has promptly set a new all time high price of $67,276.79
We want to take a moment to congratulate all of those that have front run the largest world institutions into this generation changing technology. The best part about this is we are just scratching the surface of the effect all of this will have towards further adoption, regulation, and innovation in the coming years. Make no mistake about it, Pandora’s Box has been opened.
Some of our favorite metrics
This monthly chart for BTC could be showing us one of the greatest bullish engulfing candles in the history of crypto. In the past, Q4 has always been one of the most bullish quarters and October is sure showing us why the trend still stands. Even more bullish but not shown here is a cross on the Stochastic RSI to confirm this monthly uptrend is just in the beginning stages which is hard to believe with the given price action that we have seen. With the monthly RSI also reaching a 72, we have officially started to hit a slightly overbought area that in the past Bitcoin has sustained for over 7 months in prior cycles. It appears there are some green months ahead for the entire crypto sector given these indications from Bitcoin.
Bitcoin Mayer Multiple
The Mayer Multiple has accurately shown us when a macro top is in for Bitcoin on every break of the 200 day MA indicator. During the last peak at the beginning of 2021, price broke this indicator ever so slightly. Despite this not being the most decisive break, it still was indicative of a peak.
Where are we at now?
As you can see, there is quite a bit of room to run in price action before the peak is triggered again. We have heard price targets of $300k and higher for this run but we are using the on chain metrics to tell us the story. It does seem unlikely for a peak that high this time around but time will continue to tell.
Bitcoin vs Gold Over 12 Years
This one is in here mostly to make a point. Since the comparisons to Gold will continue as this bull run continues to get parabolic. 1 dollar invested in BTC 12 years ago would have netted you a whopping $82,146,000 while at the same time that same dollar in GLD would be worth $1.71.
Take that Peter Schiff.
Of course BTC was very illiquid during its origination and not a very sound asset at that time, it is interesting to think about all those times you heard about people buying in during those early years. One can only wonder what they are doing with that kind of return now.
Relative Unrealised Profit/Loss
Here we can see moments in the past where greed and euphoria clouded the vision of many and had unrealized their profits to that point. Bitcoin has not broken into the euphoria phase since the 2014 peak while it has come close to breaking in 2018 and 2021. Even if we do not enter this phase during this cycle, traders that took profits during these peaks were never unsatisfied with their exits after the fact. For now we have a ways to go before talking about a peak for this latest ATH break.
Reserve Risk
The Reserve Risk looks at long term holders of Bitcoin has individuals that have more experience in these markets and are better at identifying moments to sell than those that are new to the space. These moments are called Reserve Risk where it is high risk to be holding BTC as longer term holders are exiting for profit ahead of a larger long term correction. Interestingly enough, Bitcoin is not even close to meeting its reserve risk indicator thus far. Many macro indicators showed early 2021 as a sell for Bitcoin while the reserve risk revealed that long term holders have higher price targets on their horizons.
The Bottom Line:
With all of the bullish news and price action as of late, people in past cycles would be pointing to them as top signals. It is apparent that top signals this time are not celebrity endorsements, publicly traded ETFs, or even China banning Bitcoin for the upteenth time. The biggest surprise to us at this point is the room to run that Bitcoin has compared to its technical and on chain metrics. This will come as a shock to many, but not to you. As we inch closer to our macro top, we will be here to keep you updated as to when that has arrived. Until then, enjoy the ride.
