I wrote this yesterday (19th/20th May) but somehow forgot to publish it!

BTC: $37,642
OBTC: $25,577
VG: 4.24

We have never seen a situation quite like this. At a VG of 4.24, we’re under our VG ~5 threshold, so it’s pretty clear that the bull trend is over in the short term. This is well below anything in the 2017 bull market. However, we’re also seeing a VG profile that indicates this is not how any sustained bear market began. At a VG of 4.24, not enough of the network is at profit to kickstart a macro bear period.

We have talked about the similarities with 2013 before, and this is another parallel. While we definitely did not get the top April 2013 had, VG did drop below 5 for a short period of 7 days in early July 2013. The difference now is that 2021’s move under VG ~5 came with a swift capitulation after months of hovering in the traditional bull market range of VG ~7 to VG ~8; while in 2013, it was more of a slow drop over months to that level. Definitely not quite the same, but this is the closest we have to historical precedence.

So, what happens next? It’s very hard to say, because we’re definitely in uncharted territory here. However, I’m personally mildly leaning towards this being more like 2013, and we do indeed move sideways and slowly grind upwards from here. At the same time, it’s important to note, as I do over and over again, BTC is still a nascent asset and anything can happen. It’s absolutely prudent to tread caution here.

Worst case scenario, VG ~0 now stands at $25,577 (same as OBTC). Any capitulation under that will be a golden buying opportunity.

If we can get back above VG ~5 in the next 7 days and stay there, it’ll certainly be an encouraging sign. VG 5 currently stands $41,000.

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