At weekly close, we have a VG of only 3.56, indicating BTC is getting closer to OBTC. This has been the swiftest capitulation from a VG of ~9 or ~8 in history, at least since we started tracking OBTC and VG retroactively (2012).
It is also the lowest VG we’ve ever had in a macro bull market, if we are indeed still in a macro bull market. By this time, we have a fair amount of data, so let’s consider what’s the most likely scenario:
- If we’re in a lull sideways phase of a bull market, these are at historically unprecedent levels of undervaluation.
- If the bull market is over and we’re in for a sustained bear market, VG has already collapsed to ~3.5, leaving very little room for sellers. Remember, at first capitulation after macro top, we’d expect VG to be more like ~5-~6. Given that we haven’t had a strong bounce to test VG ~7 after a macro top at all, it suggests the market is too oversold already
- A quick bounce and resumption of the bull market as we’ve seen in 2013 or 2017 is now ruled out, as we have been cleanly rejected off VG ~5.
On the balance of evidence, my very speculative conclusion is that the most likely scenario is sideways movement and a slow grind up towards prior ATHs. Fundamental factors like positive news can easily speed things up for a more familiar V-shaped recovery. A sustained bear market seems unlikely at this point — as mentioned above, a VG of 3.5 so quick after hitting VG ~8 to VG ~9 suggests a heavily oversold/capitulated market with few sellers left to justify a long-term bear market. Of course, this is highly speculative as we’re deep into uncharted waters here with no historical precedence, and as it goes, anything can and will happen in BTC land.