Despite the 9 Red Candles, Bitcoin’s Fundamentals Remain Strong


The first edition of ARK’s “The Bitcoin monthlyreport contains some gems. It also includes a simple compilation of facts that paint a clear picture of the bitcoin market as it stands today. A blockchain is an immutable source of evidence, and ARK has enlisted its best analysts to review it in depth and get statistics and insights for us. Get some coffee and sit down, let’s forget the Fear & Greed index and see what the numbers really say.

On Twitter, ARK analyst Yassine Elmandjra described “The Bitcoin monthlyas, “Starting this month, ARK will publish an in-depth report on Bitcoin’s market action and share where we think the market is headed.” on ARK’s websitethey describe the new venture as: “Given the rapid pace of market change, ARK is publishing The Bitcoin Monthly, an “earnings report” that describes relevant activity in the chain and demonstrates the openness, transparency and accessibility of blockchain data.”

Related literature | Bitcoin Price Closes Two Consecutive Weekly Red Candles, First Time Since Bottom

Let’s take a look at the data and insights available in the May edition.

The State of the Bitcoin Market, with ARK

According to “The Bitcoin Monthly”:

“Bitcoin ended the month of May at 17.2%, falling from $38,480 to $31,835.”

Let’s face it, this looks like the beginning of a bear market. And the Terra/Luna crash seems to be the catalyst. However, later data shows that we may not be in one after all.

Bitcoin closed the month at 17.2%, printing its ninth consecutive negative weekly decline for the first time in history, suggesting a possible oversold condition.

Nine consecutive red candles, a new record. That’s a horrible fact, however you dress it. However, according to ARK, it suggests “a possible oversold condition”. Which is promising.

“Bitcoin is down 57% since hitting a record high in November 2021. As a perspective, the average dip from peak to trough during past bear markets is 76%.”

Does this mean it could get worse? Or does this mean we are nowhere near the bear market level yet? It definitely feels bear market, but the stats are the stats.

BTC Price Chart for 06/04/2022 on Exmo | Source: BTC/USD on TradingView.com

The Bitcoin network is strong

“Despite the ongoing sell-off, bitcoin has not broken below any major trendline. It is trading above its onchain cost base at ~$24,000 and its 200-week moving average at ~$22,000.”

The bitcoin network absorbed Terra/Luna’s massive sell-off and the ensuing market like a champ. The worst appears to be over and bitcoin “has not broken below a major trendline.”

“A record nearly 66% of bitcoin’s supply has not moved in over a year, a testament to the market’s long-term focus and a holder with stronger conviction.”

Despite the massive market movement, bitcoiners continue to HODL as if it were the only chance at economic freedom they will see in their lifetime. Because it probably is.

“Short-term holders’ positions fell -35% below their break-even price on average.”

If bitcoiners are HODLing, then who is selling all those cheap sats? Short-term holders, that’s who. And they’re not even close to breaking even. It’s a short-term massacre of retainers there.

ARK sees a way for the market to jump-start itself

Look, hear ARK out. First of all, “Bitcoin open interest in the futures market has reached an all-time high of around 450,000 BTC.” Also, “perpetual contract base usually refers to market direction. Currently, it’s trading at a bullish discount for spotting.” This is very important because, “given the high open interest, we believe the perpetual futures discount signals a potential upward trajectory in BTC’s next big price move.”

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That’s right, ARK closes”The Bitcoin monthly‘ report predicting ‘a potential upward trajectory’. rejoice.

Featured image by Ricardo Gomez Angel On Unsplash † Charts by Trading Display



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