Market Lab Report / Dr. K's Crypto-Corner
by Dr. Chris Kacher
Bitcoin Bull Market Over?
Many have asked if we have hit a market top in crypto. BTC and other major leaders like LINK, SNX, and AAVE seem to be struggling.
Based on my metrics, we have not hit a major market top, but a minor top within a bull run. This is our fourth minor top this year. Minor tops occur with regularity during bull runs where bitcoin can correct by as much as -40% and alts a lot more as correlations remain high. Other coins such as ethereum and alt coins get pulled down along with bitcoin. Usually, it is negative news or profit taking or whales gunning for complacent investors especially in the futures markets that cause the correction. Indeed, nearly $10 B in liquidations occurred shortly after the April 13 breakout in bitcoin. Two major tells were excessive futures open interest and elevated funding rates.
Some of the other metrics I use that can cause swings in price including Grayscale lockup expirations, major mining pool activity, Coinbase premiums, and the flow of bitcoin, ethereum, and USDT onto and off of major exchanges, all of which are viewable on the blockchain. This gives me insight into whether there is a big bout of buying/support or selling ahead which can cause a correction of several percent or more in bitcoin within a few days or less.Monday's bounce in bitcoin is no coincidence as a number of these metrics converged, thus boosting the odds that bitcoin had found a low.
If we take the 50,000 foot view, one can see that U.S. households using various pioneering technologies from 1860 to 2020 take on the shape of an S-curve. People tend to be skeptical at first, which represents the bottom of the S where adoption is slow, then once great utility emerges, a sharp rise in mass adoption takes place forming the long nearly vertical part of the S. Finally, the market becomes mature and more saturated which represents the nearly flat, top part of the S. The crypto market is just launching into the steep part of the S curve, so as I've been saying, the real acceleration in the cryptospace has just begun.
Life Expectancy of Reserve Currencies
The monumental rise in price of bitcoin is a direct consequence of QE-fueled debt and historically low interest rates which is tanking fiat across the globe. Britain's reserve currency status lasted 105 years. France's reserve currency status lasted 95 years. Spain's reserve currency status lasted 111 years. USA's reserve currency status is on year 99. Logically, Bitcoin should be next. But when it comes to authoritarian governments steeped in thought control and bureaucracy, logic is last in line.
The Mobile Tsunami
Nevertheless, a mobile tsunami is coming. Mobile devices will economically empower the masses. The Coinbase IPO propelled its app into soaring, record breaking usage. In its first week as a public company, Coinbase’s four main apps were downloaded about 2.7M times total, 2.3M of which were for its Coinbase - Buy & Sell Bitcoin app. All of its apps, except Coinbase Card, broke their lifetime records for single-day downloads and daily active users (DAU).
This surge of activity spurred downloads across other platforms. In fact, the Binance app was downloaded more than Coinbase. Other popular platforms such as eToro, Trust, and Crypto.com also had surges in downloads.
Binance isn't far behind fintech giant PayPal in terms of new user acquisition. Over the last 30 days, Binance was downloaded 7.3M times compared to 9.2M times for PayPal.
These stats imply 10M new bitcoin holders per month, and with this number accelerating each month, more than 250M by year end. Within five years, bitcoin should reach a billion people. By then, bitcoin should be well above $1,000,000 and the cryptospace should have a valuation in the tens of trillions.