What did I miss?

Am I some kind of a moron?

I mean what in the actual fuck? I’m supposed to be good at this.

I’ve got an unreasonably large percentage of my net wealth in crypto and it just declined by a bit over half.

It wasn’t that long ago that I was wildly bullish.

And that wasn’t just a hunch or a feeling. There was a shit-ton of data backing that up.

And I’m not a blind perma-bull. I watch this market like a damn shithawk

Altcoins were rising even faster than BTC and ETH.

The bitcoin chart looked like this… a bullish structure making higher highs and higher lows.

So… either I screwed the pooch in a big way… 

Or something else changed that I didn’t count on…

So let’s figure that out, and see if I’ve behaved like a cockholster and deserved to get smacked down.

First… Was there anything at the old tops that looked like a market top?

What did I miss?

When Bit-corn hit 65K it felt optimistic, but well short of the kind of FOMO that usually marks idiots getting in and markets making major tops.

Let’s look at the on chain market top indicators

Tops usually happen on euphoria, euphoria happens when people are making a lot of money.

Net Unrealized Profit/Loss measures how much money, on average, each trader has in paper profits (as a % of market cap)

So either the crypto market made a top that looks NOTHING like anything ever before, or there's something dodgy going on.

Next one - MVRV Z Score. A Z score is a standard econometric technique for noting extremes… the Z score of the ratio between market value and cost basis has picked every single previous top and never missed one.

Didn’t call a top… weird.

You think that’s weird? How about Dormancy Flow (read about it at the link, but it’s based on the idea that short term traders puke out at bottoms and long term holders sell at tops)

It says we are at a bottom not a top - and I tend to agree. That level of fear, panic and despondency is what I’ve associated with every market bottom I’ve ever seen.

The whole bull market has arguably been driven by a supply shock, where exchanges are running out of coins to sell, driving prices higher.

Until the last couple of weeks that supply shock was well in play

This literally makes no sense.

But it’s nothing compared to this.

The indicator that cannot be faked, misinterpreted or gamed is the number of bitcoin wallets with actual real money in them.

Usually at market tops people give up on crypto, take their bats and balls and go home and do something else for a few years.

And yet today, after the crash, we have more funded bitcoin wallets than any other time in history. WTF?

See how bizzaro world this is?

Look at the exchange transfers. People have to transfer coins to exchange to sell them… so you can see big transfers on exchanges at tops.

And at market bottoms when people plan to hold for a longer period of time they pull their coins off exchange.

No other way to interpret this other than bullish.

You see what I’m getting at here?

If you ignored the fact that the crypto market just melted down… the fundamentals (on chain) are wildly bullish. 

Not just neutral, but amazingly bullish.

And yet we CRASHED.

Sentiment is as negative as I’ve seen it in 8 years in crypto.

I’ve got a theory

Where would we be if UST hadn’t been attacked, and LUNA hadn’t market sold 4 billion worth of BTC?

I mean if you consider the LUNA fiasco like an asteroid strike… where would we be without it?

The fundamentals are still in play, right?

But the sentiment has changed.

I think there’s a chance… a slim chance… but a chance nonetheless that we paint a V bottom.

We have precedent.

In March 2020 the stonk market crashed the crypto market

That crash (which sucked ass) had really nothing to do with crypto and after shaking out all the weak hands it proceeded to rally all the way to 65K in basically a straight line.

And let’s be honest… it’s the Nasdaq which dragged this down

The indicator is the correlation between NQ futures and BTCUSD, you can see that it’s maxxed at 1 for the whole of the crypto down cycle.

So… stonk bubble popping and fears about rising interest rates and the Fed brought crypto back to earth…

And the LUNA attack happened at the market’s most vulnerable time (the best time to make a power move play like that).

So a double asteroid strike.

And without that we’d be in a totally different market.

Now I’m not one of those permabull idiots. This IS bad, it’s real bad, and I think the highest probability is that we are close to a bottom and we have a very choppy period ahead.

But I can’t totally rule out a savage face melting V bottom rally.

It’s happened before, 2 years ago, when the exact same thing happened, right?

Something to think about.

Scott