Where is the Low-Cost Bitcoin Buying Point

Cryptoquant said in its last article that there is a high possibility of a decline in the price of bitcoin as the buying signals of institutional investors such as coinbase mass withdrawals are stagnating. Bitcoin, which had moved sideways at the $40,000 line after the article went out, fell about 25% to around $3,800, and as of 10 pm on the 17th, it is moving sideways around $35,000.

The decline was compounded by various reasons, including the strong dollar index (DXY) on the New York Stock Exchange. In terms of on-chain data, one reason can be attributed to the fact that the selling price of miners was remarkable.

Just before falling from around $40,000, Cryptoquant CEO Ju-young Ju said through his Twitter that miners are selling at the same level as in 2019, and it is highly likely to form a local top.

In fact, according to the Miner Position Index (MPI), the 30-day moving average index at this time is confirmed to be 2.2 or higher. It is similar to the peak of the bull market in 2019 and the first short-term high in 2017. The miner position index refers to the value obtained by dividing the amount of bitcoin leaked from the miner’s wallet by the one-year moving average.

The price of bitcoin fell to the $30,000 level amid the chaotic market, which repeated sharp rises and falls during the week. However, CEO Ju Ji-young explained that it is very unlikely that the price will drop below $30,000.

He predicted on Twitter on the 13th that no matter how much bitcoin falls, it will not fall below $28,000. This is because, when looking at the recent outflow to Coinbase’s custudy wallet, between $30,000 and $32,000 can be regarded as a section of bulk buying by institutional investors.

On the 2nd, the coinbase bitcoin withdrawal amount reached 55,000, the maximum in the past three years. When a large coinbase withdrawal occurs, bitcoins are usually transferred to a custodial wallet for over-the-counter (OTC) transactions. The price of Bitcoin at this time is 32,000 dollars.

Bitcoin outflow trend of Coinbase exchange in the last 3 years. It is estimated that the all-time high volume on the 2nd was moved to the custudy wallet for OTC transactions. Source = Cryptoquant
Bitcoin outflow trend of Coinbase exchange in the last 3 years. It is estimated that the all-time high volume on the 2nd was moved to the custudy wallet for OTC transactions. Source = Cryptoquant

How long will the upward trend of Bitcoin, which started in earnest since the second half of last year, continue?

It is often said that Bitcoin is digital gold, which will replace about 10% of the gold market cap. The current market capitalization of gold is about $10 trillion, and the market capitalization of Bitcoin is $675 billion, which can be considered to have already replaced the market cap by 6.5%, but this is an incorrect calculation method.

There are cases in which bitcoin is inaccessible due to the loss of the private key by the holder, and there are cases in which hundreds of thousands of bitcoins are legally bound due to an accident such as a hacking in the exchange like the Mount Gox incident.

If you multiply the market cap by multiplying the price at the time the bitcoin moves on-chain, the real market cap is currently around $2274 billion. It is 2.2% of the gold market cap. If the inflow of funds from institutions that believe in the narrative that’Bitcoin is Digital Gold’ continues, and the real market capitalization of bitcoin replaces up to 10% of the gold market cap, the bitcoin price will be around $150,000.

In the short term, prices may continue to decline and sideways in the bitcoin market unless there are clear institutional inflows, such as large coinbase withdrawals and large grayscale purchases. However, in the long run, a clear upward trend seems to be dominant. Now is the time to find the low-end buy section from a long-term holding point of view rather than trading.

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