Bitcoin Breaks ATH; Now What?

As we all know by now, bitcoin broke its all-time high (so we think). This happened yesterday, rising a few hundred dollars above $69,000. Shortly after, the celebrations came to a screeching halt as liquidations started to hit. Bitcoin fell 14% off the new all-time high, hitting prices not seen in three days.

But it's all probably fine, with Bitcoin recovering to ~$67,000 today… and perhaps gearing up for another breakout. 👀 

Analyzing Breakouts

Historically, surpassing all-time highs has been the ultimate prelude to significant Bitcoin rallies. Just take a look at these numbers @DylanLeclair_ pointed out: 

• December 2020: Bitcoin doubled in 18 days

• March 2017: It took 84 days to double

• November 2013: Just 10 days to double

• March 2013: Another 18 days to double

Some napkin math: The average time it takes bitcoin to double after hitting a new all-time high is ~32 days.

That means if history repeats itself, we could see $132k BTC by next month.

Market Sentiment:

As we’ve discussed in previous issues, this rally seems a bit muted with less hysteria overall. And that’s because, unlike past cycles, the retail crowd doesn’t seem to be doing much of the legwork. Rather, it’s the institutions via the ETFs.

This is evident when looking at several alternative data points:

• Google Trends data: Search queries for "bitcoin" are significantly lower than during previous all-time highs, indicating weaker retail interest.

• Wikipedia traffic: Bitcoin's Wikipedia page traffic also shows a similar decline compared to historical peaks.

• Social media: Crypto Twitter and Youtube engagement surrounding crypto even seems subdued compared to previous bull runs as well.

Another under-discussed aspect of this bull cycle is the noticeable decrease in marketing spend within the crypto industry. Speaking from our own experience as publishers reliant on advertising revenue, we've observed a significant downturn in marketing budgets.

With fewer promotional efforts by startups to attract new users, the potential influx of newcomers into the crypto space, and by extension, their impact on the market price, might partially explain the lack of hype.

Either way, this muted sentiment – despite us being at another all-time high – suggests a different kind of bull market, potentially driven by institutional investment through ETFs rather than retail FOMO.

Update on MVRV: 

We can’t talk about price breakouts without mentioning where we’re at on the MVRV scale. This metric, which we constantly circle back to, offers a window into the perceived overvaluation or undervaluation of Bitcoin at any given point.

Currently, the market value to realized value (MVRV) ratio sits just above 3. That means, in aggregate, hodlers are up 3x on unrealized profits. This MVRV region is historically the goldilocks zone from which parabolic moves begin to develop.

• MVRV < 1 = Bottom discovery

• 1 < MVRV < 1.5 = Bear-bull transition

• 1.5 < MVRV < 3.5 = Equilibrium

• 3.5 < MVRV = Euphoria

In other words, at a ~3 MVRV, we’re getting real close to a potential euphoric breakout. The fact that we’re at an all-time high and we haven’t even hit an MVRV over 3.5 looks extremely bullish in the short-term.

So, what should you do? Tell all your cousins and uncles who have held the bag since the last run to keep hodling.

The retail FOMO crowd, if anything, is just starting to boil – not bubble. Crazy insanity price movement – not just new all-time highs – could be on the horizon.