Early thoughts on #BlackWednesday

This is my first mid-day update, but extraordinary days call for extraordinary measures!

Anything can happen with Bitcoin, and it usually does. This is without doubt the greatest single day capitulation since Black Thursday on 12th March 2020, and indeed, possibly the third largest I can remember (the third one being the vicious mid-bull sell-off in 2013). In hindsight, when VG broke below 6, the writing was on the wall, but I failed to read the situation because it did not fit any historical pattern. Indeed — Bitcoin remains a nascent asset and will throw many curveballs along the way.

As I’ve been noting lately, we’re definitely in uncharted territory here. The first few months followed a textbook bull market pattern, with local highs and local corrections. But what has been unprecedented is the nearly ~3 month sideways movement in the $1T market cap range. That had no historical precedence, and without that, we didn’t have much guidance on how it would end. Now we know. Here are a few possibilities:

  • It’s the double cycle, or multiple cycle, as we have discussed previously. In this scenario, one possibility will be moving sideways for quite some time before we see a recovery to new ATHs.
  • It is indeed the end of a macro bull market, but I’m not comfortable about this— we need a blow-off top to have a definitive transition into a bear market. As we say, we haven’t had that last hurrah up past VG ~9 — instead, we have been hovering around the VG ~7 to VG ~8 mark for a long time, too much of the market is currently at loss for this to signal a bear market.
  • It could very well be just an anomalous event, just like Black Thursday.

The next few days will be critical — will be updating every day now.

OBTC is an attempt to value BTC using on-chain activity. I’m just a bitcoin investor, not a professional quant, please do not take this conjecture too seriously