Bitcoin - Crypto investing and trading discussion

Bitcoin Rallies 58% in Last 20 Days
Mon, Aug 9, 2021

Bitcoin made a low of $29,307 back on July 20th, which was down 54.8% from its record high made on April 14th. In the 20 days since July 20th, Bitcoin has now rallied 58% to cross back above $46,000. (Remember, a decline of 50% means you need a rally of 100% to get back to prior highs.) As shown below, Bitcoin crossed above a key resistance level in the low $40,000s on its move higher over the last few days, which leaves quite a bit of space between its current level and the next areas of resistance above.



The chart below shows the rolling 3-month correlation between the daily price of Bitcoin and the S&P 500. Just a few weeks ago, this correlation reading got as low as -0.67, although it has been bouncing higher over the last couple of weeks.

 

Bespoke's Weekly Equity/Crypto Sentiment Survey
Fri, Sep 3, 2021

This week we launched a new weekly crypto sentiment survey to track sentiment towards the space. There are already plenty of stock market sentiment surveys, but sentiment survey data in the crypto space -- bitcoin, ethereum, NFTs, etc. -- is few and far between.



The new survey will be sent weekly to our Think BIG mailing list that has thousands of potential survey participants that have an interest in financial markets simply based on the fact that they joined our mailing list by visiting our website. We will collect responses from Tuesday through Thursday each week and publish the results on Fridays.

In the survey, we ask whether the participant is "bullish or bearish" on seven things over the next 12 months -- 1) the entire crypto space, 2) bitcoin, 3) ethereum, 4) NFTs, 5) the S&P 500, 6), US Tech stocks, and 7) Chinese equities. While we are mainly focused on collecting sentiment towards the crypto space, we thought including sentiment on equities was beneficial so that we could easily compare the two over time.

Below are the results from the first run of our new weekly survey. Participants are actually most bullish on US Tech stocks out of this group with a bull/bear spread of +51.3%. The S&P 500 also leaned heavily bullish with only 5.8% of respondents saying they were bearish over the next 12 months.

Sentiment towards the entire crypto sector leans bullish with bulls coming in at 56.6% and bears coming in at 18.9%. The bull/bear spread for bitcoin was +23.8 ppts, while the bull/bear spread for ethereum was considerably higher at +47.1 ppts. Notably, participants are much less bullish on the NFT space with just 22.1% bulls and 36.9% bears. Chinese stocks also saw bulls and bears come in exactly equal at 37.4% each. If you'd like to help us measure crypto sentiment going forward, you can join our Think BIG mailing list and take the survey starting next week.

 

Bitcoin Seasonality - Following a Difference Path
Wed, Sep 8, 2021

September has historically been a weak time of year for the stock market, but with the growing popularity of crypto-currencies, we wondered what the seasonal trends have historically been for bitcoin. The chart below shows a composite of bitcoin's median YTD performance over the last ten years for every day of the year. Generally speaking, bitcoin has generally started off the year slowly. Based on the last ten years, its median performance during the first quarter of the year has basically been flat but then starts to accelerate to the upside in Q2. Strength has generally continued in the first half of Q3, but then the period from mid-August through mid-October has been the weakest time of the year when bitcoin's median YTD change falls from over 120% to below 85%. While Q4 has historically tended to start off slow, the year has typically finished on a high note with steady gains from late October through year-end.



In terms of consistency, the chart below shows the percentage of time from every calendar day of the year that bitcoin has experienced positive returns over the following month (four weeks). Historically speaking, from 2011 through 2020, bitcoin experienced positive one-month forward returns the most frequently right around tax day as it traded higher from 4/14 over the following four weeks in all ten years. As for the current period of the year (second red dot in the chart), in the four-week period following 9/8, bitcoin has had positive returns 60% of the time.



Whenever we discuss market seasonality, we always stress that historical patterns should only be used as a guide. Just because something happened one way in the past, doesn't mean it will follow the same pattern in the future. Along these lines, bitcoin's performance in 2021 is a perfect example of not following the historical pattern. The chart below is the same as the one above, but also includes bitcoin's performance so far in 2021. Compared to the historical pattern, bitcoin's performance in much of 2021 has nearly been the exact opposite. Rather than starting off the year strong, bitcoin came out of the gate strong in 2021 and more than doubled before the end of Q4. Beginning in mid-April, when bitcoin has historically seen the highest consistency of positive returns over the next month, its price peaked and quickly gave up most of its YTD gains. In mid-July, bitcoin's price finally bottomed out and started to rally right up through Labor Day weekend when it briefly traded above 50K before falling over 10%. If there's ever a time of year when bitcoin bulls don't want bitcoin to follow the seasonal script, it's the next few weeks.

 

Bitcoin Drawdown Nears 20%
Fri, Nov 26, 2021

Like just about all other risk assets this week, it's been a rough one for bitcoin. As of Friday morning, the world's largest cryptocurrency was trading down over 7% to the low $54K range. After taking out its spring highs in late October and then making a higher high in November, bitcoin has seen a sharp and swift pullback in the last few weeks falling nearly 20%. Even after the current pullback, the uptrend from the summer lows for bitcoin remains intact as a break of that trendline wouldn't come into play until around the $50K level.



As anyone even paying some attention already knows, volatility is no stranger to bitcoin. While the current pullback is nearing the 20% threshold, in the last year alone, bitcoin has seen a number of pullbacks from record highs of similar or even greater magnitude. As shown in the chart below, if the current pullback reaches the 20% threshold, it would be the fourth pullback of that magnitude or more from a record high in the last twelve months. Of those three prior pullbacks, the first two bottomed out at declines of less than 25%, but the most recent was much deeper as bitcoin was more than cut in half from its April closing high to its July closing low.

 

El Salvador Hurt By Bitcoin
Mon, Dec 6, 2021

On 6/5, El Salvador passed a bill that made Bitcoin legal tender in the nation effective 9/17. Since passing the bill, the country hosted a Bitcoin Week, which generated excitement from the crypto community in which he and political/industry leaders spoke about the logistics and benefits of legalizing Bitcoin as a legal tender. During Bitcoin week, El Salvador's leadership unveiled its plans for 'Bitcoin City', which will be funded by issuing a $1 billion Bitcoin Bond. The city (and the Bitcoin mining inside of it) will be powered by geothermal power generated from a nearby Volcano.

Over the weekend, El Salvador's President, Nayib Bukele took to Twitter, stating that "El Salvador bought the dip" and added that he trades cryptocurrency for his country through his phone. Although Bitcoin enthusiasts view this adoption as revolutionary, the investing community has taken a different view. Since the country officially announced that Bitcoin would become legal tender, its bonds have declined in value. As one example, the price of the country's 7.65% bonds maturing in June 2035 has plummeted by 37.5%. Investors are wary of the idea of tying a country's assets and balance of payments to an extremely volatile asset, and that has caused the yield on the bond shown below to rise nearly over 600 bps from under 8% to over 14% now.





The cost of insuring against default for El Salvador's debt (credit default swaps) has risen significantly since the nation legalized Bitcoin as legal tender, and CDS spreads have more than doubled over the period. Will this dissuade other countries from using cryptocurrencies as legal tender?

 

Bitcoin Oversold for a Month Straight
Tue, Feb 1, 2022

Bitcoin has rallied over 10% since the low a little over a week ago, but that still leaves the world's largest cryptocurrency down over 40% below its all-time high set back in November. In fact, the past few months have seen Bitcoin trade in a steep well-defined downtrend which the rally over the past several days rally has now run up against.



While that downtrend line has the potential to act as resistance, the steep drop has resulted in Bitcoin consistently trading at oversold levels (measured in standard deviations from its 50-DMA). In fact, today marks the 30th consecutive day in which Bitcoin has traded at least one standard deviation below its 50-DMA.



As for the consistency of oversold readings, there have only been ten streaks including the most recent one in which Bitcoin has been oversold for at least 20 straight days. The current stretch is now the longest since December 2018. Other than that streak, only those ending in January 2015 and July 2018 also extended for at least 30 days.



While the current streak is not over, in the table below we show the performance of Bitcoin after the end of those past streaks of oversold readings that went on for at least 20 days. As shown, the end of those streaks have typically seen a bounce in the week after with positive returns two-thirds of the time and gains that are in line with the historical average. One month later has typically seen the crypto fall further, though, with positive performance only a third of the time. Three and six-month performance have been more consistent to the upside with positive returns nearly two-thirds of the time but average and median gains that are smaller than what Bitcoin has averaged across all other three and six-month periods since 2014. One year later has been a similar story with below average forward returns but a very high consistency of positive returns.

 

Speculators Bullish on Bitcoin
Tue, May 24, 2022

Bitcoin has been relatively flat in the past couple of weeks in the wake of the TerraUSD blowup. That is also in spite of further declines for equities which have been highly correlated to cryptos lately, especially on an intraday basis. As the two largest cryptos—Bitcoin and Ethereum—have traded more or less sideways, speculators appear to be getting a little more bullish. As we do each week, in last night's Closer we highlighted how positioning data from the CFTC's Commitments of Traders report showed speculators are positioned net long (meaning there is a higher share of open interest that are long the future than short) in Ethereum and Bitcoin futures. The latest data as of last Tuesday showed a net 7.93% of Ethereum futures were long. That was down slightly from the prior week but remains one of the strongest readings since the data began roughly one year earlier. Bitcoin open interest is similarly net long, with the latest reading rising to the highest level since November 2019. That means the highest share of speculators are anticipating higher bitcoin prices since before the pandemic when the crypto was trading below $10,000; nearly a third of what it is at today. Open interest back then was also a fraction of what it is now as well.

 

Cryptos Reach Historic Oversold Streak
Mon, Jun 27, 2022

Cryptos have started off the new week with more declines as Bitcoin is down over 2.5% today and Ethereum has fallen nearly a full percentage point more. For both, those moves drive them deeper into oversold territory, which as we discussed in last Friday's Crypto Report, is already an extended streak of oversold readings. For Bitcoin, today marks the 17th straight day trading at least one standard deviation below its 50-DMA. While it stands out from all oversold streaks going back to 2014, it is not the longest streak on record or even in recent months. In fact, before a brief stint within neutral territory, Bitcoin traded over one standard deviation below its 50-day for 25 straight days ending May 29th of this year and that followed another 32 day long streak that ended in February.

Although its history is not as long as Bitcoin, Ethereum has been trading in oversold territory for an even more impressive length of time. Today is the 54th oversold day which has far surpassed the previous record of 38 days. To add injury to insult, the prior record streak occurred earlier this year as Ethereum is now trading at a third of the price it was trading at to start the year.

 

Bitcoin to Ethereum Ratio in Freefall
Tue, Jul 19, 2022

Risk assets have found some stability in the past month, but one asset that has been absolutely flying higher in Ethereum. The past week's rally has risen to a remarkable 51% for the world's second largest crypto bringing its market cap up from $126 billion to $187 billion. In that same span, Bitcoin has only gained 15.5%. After those moves, Bitcoin has returned to its 50-DMA while Ethereum has surged through the line.





Given that massive outperformance of Ethereum, the ratio of Bitcoin to Ethereum has collapsed. In fact, the ratio has now fallen for seven days in a row, tying three other streaks (September 2019, February 2020, and April of this year) for the longest streaks of consecutive days of declines.



The ratio has fallen considerably as well as consistently in the past week. Exactly one week ago, the ratio hit a near term high and has dropped 23.5% since then. As shown above, that brings the ratio down to the rough uptrend line that has been in place since late last year. Since the start of our price data for Ethereum in November 2017, there have only been a handful of other periods in which this ratio has fallen as sharply; meaning times when there has been similar underperformance of Bitcoin relative to Ethereum. The most recent of these was a little over a year ago in May 2021.



Below we show the performance of Bitcoin and Ethereum during each one of those one week declines of at least 20% in the ratio without another occurrence in the prior three months. This most recent drop in the ratio is only the sixth time such a move has occurred. Performance this time around has been middling relative to these other instances with Ethereum's 43.9% rally through yesterday when the ratio crossed the 20% decline threshold roughly inline with the median performance of other instances (43.4%). Bitcoin on the other hand has actually been doing a little better with its 12.6% rally larger than the median of 9.8%.

As for where the two largest cryptos head from here, historical performance has been mixed. Overall Bitcoin has more consistently moved higher across the following year. One year out has perhaps been the period with the most dramatic outperformance of Bitcoin. Although it was only higher 60% of the time, Ethereum was only higher one year later once following the January 2021 instance.

 

SEC Loss Supercharges Bitcoin (GBTC)
Tue, Aug 29, 2023

Bitcoin is surging today as news hit the tape that a judge ruled in favor of Grayscale over the SEC in an appeal to convert its Bitcoin Trust (GBTC) into an ETF. As a result, the Grayscale Bitcoin Trust (GBTC) is currently trading higher by over 16% on the day. After trading below its 50-DMA since 8/17, today's jump has sent it back above that moving average and up to the high end of the range it has occupied since the spring.



Perhaps more impressive, the nearly 17% gain as of this writing puts GBTC on pace for its largest single day gain since July 26, 2021. Back then it had risen 24.27% in response to rumors (which never came to fruition) that Amazon would begin to accept bitcoin as a form of payment. Looking back further, only a handful of days since the start of 2020 have seen larger moves as today ranks as the 26th biggest single day gain in the trust's history.



Again, it has been over two years since the last time GBTC rose over 15% in a single session. While not to say GBTC (and bitcoin more broadly) has not had its share of rollercoaster swings in that time, the 526 trading day gap between 15% one-day rallies is the largest streak without a 15% move in GBTC's history dating back to 2015.



In the chart below, we show the daily volume (as well as volumes on a 50-day rolling average) over the past five years. As hopes for crypto have been tarnished by a number of negative catalysts, the past two and a half years have seen activity in GBTC fall dramatically versus the early 2021 peak. However, the surge in activity today has already seen over 14 million shares trade as of this writing. With a few hours still left to go in the trading day, it is shaping up to at least be GBTC's busiest day since last November when FTX collapsed. Although the swing higher on strong volume has been impressive, and today's news does provide some hope for crypto on the regulatory front, one day does not make a trend.

 

Bitcoin Grows Up
Thu, Oct 5, 2023

When you think about volatility in various asset classes, crypto is typically considered the most volatile, and based on how it has traded over the last seven years, the reputation is well deserved. Since the start of 2017, when bitcoin’s price first crossed above $1,000 through now, bitcoin’s average daily percentage move has been 2.7% (chart below). This year, though, the average daily percentage move has been significantly less at a subdued 1.57%, and just recently, it's average daily move over the prior two months dropped below 1%. That's less volatile than the treasury market! There’s still three months left in the year, but barring some major volatility, bitcoin is on pace for its least volatile year in terms of day-to-day volatility on record. As the years have progressed, bitcoin has clearly become a more seasoned asset class.



Another illustration of bitcoin’s growing ‘maturity’ is how closely it has traded to its 200-day moving average recently. While the largest cryptocurrency experienced a sharp decline in mid-August, it has closely hugged its 200-day moving average (DMA) ever since.



In fact, for 59 days now, bitcoin has traded within 10% (above or below) of its 200-DMA. That's a record. After years of bouncing off the walls like a ten-year-old on a sugar high, bitcoin looks like it has grown up!

 

Bitcoin: 52-Week High Two Years After a Record High
Fri, Nov 10, 2023

Even for a volatile asset class, it has been quite a week for crypto-related assets. With a gain of nearly 8% for the week, Bitcoin rallied to 52-week highs and crossed above 35K, 36K, and 37K in the process. Year to date, the largest cryptocurrency is up over 125%, but looking at the chart below, all of the year’s gains have been confined to a handful of trading days in January, March, June, and now.



Ethereum had an even bigger week, rallying by over 14.5% and nearly doubling the gain in Bitcoin. Unlike Bitcoin, Ethereum was trading just shy of its YTD high from back in April.



The fact that Bitcoin is at 52-week highs today is ironic given the fact that its all-time high of just below $69K was exactly two years ago today. Given where prices are now, it doesn’t seem likely that those highs will be tested again any time soon, although stranger things have happened.



The chart below shows Bitcoin’s drawdowns from all-time highs over time. Perhaps the most notable aspect of Bitcoin’s rally is the fact that even after rallying more than 100% this year, the current drawdown of 45% is deeper than the average drawdown of 40.4% for all days since 2016. Just to get back to that historical ‘average’ drawdown, Bitcoin would need to rally back above $40K.

 

Bitcoin Getting Back Up There
Tue, Jan 9, 2024

While most areas of financial markets are lower one week into the new year, bitcoin is already up double-digit percentage points. Since bottoming in late 2022, bitcoin has now rallied just under 200%, and as shown in the chart below, its price is starting to get back up to levels that have only been seen for a brief period of time back in 2021. In fact, at $46,800, bitcoin has only traded higher on 6.14% of days since the start of 2017 when it first crossed above $1,000.

 

Seasonality of #Bitcoin Update: 2024 $BTC Tracking

My 9/26/23 groundbreaking seasonal #BTC study w/ @crypto_birb on September 26,2023, right at the seasonal sweet spot predicted Q4 rally. $BTC delivered and ripped higher from October to early January. The big SEC spot Bitcoin ETF approval was a classic sell on the news event. In 2024 Bitcoins is once again tracking seasonals. This suggests a rally to mid-late-Feb then dip to Ides of March ahead April 2024 halving.

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Bitcoin Reclaiming $50,000
Mon, Feb 12, 2024

Although it has pulled back as of this writing, at its highs today, Bitcoin reclaimed the $50,000 level. That was the first time the world's largest crypto currency has traded above that threshold (on an intraday or closing basis) since December 28, 2021. As shown below, following the record high set in November 2021, Bitcoin cratered 76.5% over the next year. Since its bottom in November 2022, the crypto has managed to rally 214%. A significant portion of those gains have come since last summer with steep increases in the price of Bitcoin from October through December and another sharp push higher in the past few weeks. In fact, as recently as January 25th, it was trading below $40,000. But nearly three weeks and $10,000 later, Bitcoin is looking to join the 5.5% of days in which it has formerly traded above $50,000.

 

A Full Deck for Bitcoin
Wed, Feb 14, 2024

The price of bitcoin took out its early January high and topped $52,000 for the first time since December 2021 today. Bitcoin’s price traded at a short-term peak in early January just as the ETPs tracking the largest cryptocurrency started trading. From that high on January 11th, prices pulled back over 21% in less than two weeks which, even for bitcoin, is a steep decline in such a short period.



As bitcoin pulled back from that early January high, it looked as though its price would follow a similar path to the one it tracked following other approval milestones. In December 2017, after bitcoin futures launched, prices almost immediately peaked and plunged more than 80%. Then again in October 2021, when the bitcoin futures ETF first launched, prices peaked shortly after once again, resulting in what was ultimately another decline of close to 80%.

As we noted a couple of weeks back, the one difference between the launch of the bitcoin ETPs in January and the other two periods was that while bitcoin’s price was at or right near record highs at each of those prior two points, it was still down over 30% from its all-time high. While “investors” may have been enthusiastic ahead of the launch, the level of excitement was not nearly as strong as it was in late 2017 and late 2021. Even after today’s run to multi-year highs, Bitcoin is still more than 25% below its all-time high.

 

Crypto Digging Out
Mon, Feb 26, 2024

After some weakness overnight, prices in the crypto space have seen a significant turnaround today. Bitcoin, for example, has rallied nearly 5% from its lows earlier in the session and has now rallied to new 52-week highs. When the Bitcoin ETFs were first launched back on January 11th, prices immediately dropped by more than 20% in what looked like another sell-the-news event surrounding a Bitcoin milestone. As shown in the chart, though, in just the last month alone, the largest cryptocurrency has rallied more than 25%.



The rally in Bitcoin has also helped to dig it out of the hole it has been in for more than two years now. After falling just short of $68,000 per coin in November 2021, bitcoin declined by more than 75%, but after more than tripling in less than 15 months, it is now just a little bit more than 20% from its prior all-time high. Will 2024 be the year?



Even more impressive than the recent rally in Bitcoin has been Ethereum’s run. Over the last month alone, the second-largest crypto has rallied 39%. That’s more than Nvidia (NVDA)! Despite the monster rally over the last month, though, Ethereum remains 35% below its November high of $4,800.

 

Bitcoin Elevates
Mon, Mar 4, 2024

As we discussed in the Morning Lineup today, equities' sleepy start to the week serves as a sharp contrast to surging Bitcoin prices. As of this writing, Bitcoin is up 6% on the day bringing it right above $67,000 for the first time since the record high from 11/8/21.



As Bitcoin nears a new record, we would note that the current streak of 847 calendar days without a record close is the second longest streak next to the recovery from the late 2017 peak.



As shown in the first chart below, the rapid rise in Bitcoin prices this year has resulted in prices flying above the 50-DMA. Currently, Bitcoin trades 2.6 standard deviations above its 50-DMA. That is extremely overbought, albeit the spread eclipsed 3 standard deviations as recently as February 28th. As shown, these have been some of the most overbought readings in the crypto space of the past five years, but historically that isn't necessarily a bad thing. Whereas the standard theory is that an asset trading well above its moving average would suggest that it is due for some downside mean reversion, the opposite has historically played out for Bitcoin. As shown in the table below, the best average forward returns for Bitcoin have typically occurred when it has been the most overbought rather than oversold.