Dear readers,

Hope you’re all hanging in there. It’s been quite a morning. I usually preface these with a little intro paragraph about price action but I don’t think that’s necessary today. Let’s get into it.

Firstly, I want to say that previously I had said we were at or close to a bottom. I was obviously wrong. This is one of the deepest bull market corrections Bitcoin has ever had. However, the broader bull market still remains intact imo.

Exchange flows have turned short-term bearish, the highest of which they’ve been since the March 2020 crash. This seems to have started following the Elon tweets/drama. It will take some time for these coins to find a new home.

Illiquid supply also had the largest decrease since January 2018. Investors are panicking.

This morning’s drawdown to $30K came amidst a massive liquidation event of over $300M in a 10 minute period.

The majority of the coins selling are still young, AKA newer market participants getting shaken out. This is shown by Dormancy trending down.

Short-term holder NUPL has crossed into the capitulation threshold for the first time since March 2020. Max pain is near.

In conclusion, there is a lot of panic selling from newer market participants, this seems to have started after the Elon saga. The market is currently in capitulation, will take some time for coins to find a better home. This cycle is starting to look more like 2013, but of course, every cycle is different. The broader metrics are still intact, will touch on some of these in Friday’s letter with Pomp. Just wanted to shoot you guys a quick update.

I know this is a little unnerving for many, but the way I see it is that the volatility is the price you pay for the upside. I’ve personally been surprised by the move, but at this point, it’s just going to take some time for the coins being panic sold to redistribute to stronger hands. Still bullish for the remainder of the year.

Talk to you Friday,

Cheers!

Blockware Intelligence Newsletter

Capitulation, What's Next?