In a recent collaboration with Reflexivity Research co-founder Will Clemente, David Puell of the global asset management firm ARK Invest, provided a comprehensive update on Bitcoin’s (BTC) performance and related financial indicators for August. Bitcoin experienced a significant shift, losing its 200-week Moving Average (MA) at $27,580. The realized price is a more robust downside risk support at $20,300. This change in Bitcoin’s MA is noteworthy for investors and market analysts, as it provides insights into potential future price movements.
Furthermore, on August 29, a pivotal decision emerged from a federal appeals court. The Securities and Exchange Commission (SEC) received instructions to revisit and reconsider its previous rejection of Grayscale’s application to transition into a spot Exchange Traded Fund (ETF). Consequently, Grayscale’s Bitcoin Trust (GBTC) saw its discount-to-Net Asset Value (NAV) shift from -24% to -18%.
Adding to the array of metrics, ARK, in partnership with Glassnode, a leading onchain analyst of Bitcoin and cryptocurrency, introduced a new on-chain mean metric, the active investor price. This metric revealed that Bitcoin is currently facing resistance, providing another layer of analysis for those tracking its performance.
Transitioning into the latter part of 2022 and early 2023, the realized cap drawdown for Bitcoin was recorded at -19%, marking its most significant drop since 2012. Historically, such draw-downs indicate that market exuberance has diminished, potentially setting the stage for a more stable and robust bull market.
Puel shed insights on the possible bull market, in light of the drawdown:
During the fourth quarter of 2022 and the first quarter of 2023, the realized cap drawdown was -19%, its largest since 2012. In our view, the more severe the drawdown, the more likely exuberance has exited the market—paving the way for a healthier bull market. pic.twitter.com/vuC63ihraX
— David Puell (@dpuellARK) September 6, 2023
In another notable event on August 17, Bitcoin futures experienced a rapid liquidation, plummeting by 21.7%—the steepest decline observed since December 2021. This occurrence was interpreted by many as a sentiment correction essential for market stability.
On the liquidity front, the 90-day supply of aggregate stablecoins witnessed a decline of over 20%, from $162 billion in March 2022 to its current value of $120 billion. Such a decrease in on-chain liquidity is often seen as a precursor to shifts in market momentum.
In broader economic indicators, the disparity between the year-over-year percent changes in real Gross Domestic Product (GDP) and real Gross Domestic Income (GDI) reached unprecedented levels. Additionally, the Real Federal Funds Policy Rate exceeded the Natural Rate of Interest, hinting at a restrictive monetary policy, a trend not observed since 2009.
The government statistics revealed a downward revision in nonfarm payroll statistics for the sixth month. This trend mirrors patterns observed in 2007, before the Great Financial Crisis. However, in a positive turn, total consumer spending has shown signs of revival after a year of deceleration.
In the past 24 hours, Bitcoin has experienced a slight 0.04% decline in price, currently trading at $25,740.16. The cryptocurrency reached highs of $25,953.02 and dipped to lows of $25,404.36, indicating a bearish market sentiment led by sellers.
