Kintsugi ResearchESG 8/2/23
KPMG released a report describing bitcoin’s role in the ESG imperative representing a major narrative shift. Tailwinds We acknowledged the energy industry beginning to embrace bitcoin and ESG validation as a critical step on the path towards more institutional adoption in our B34RM4RK3T memo a year ago. It’s refreshing to see BTC finally taken seriously through an ESG lens:Energy: renewable energy, demand response, recycled heat, and methane reductionSocial: Payments, financial inclusion, Ukr...
Kintsugi ResearchDominance
Whether you were celebrating or grieving this week, there are now undeniable tailwinds for Bitcoin and the broader crypto market. Bitcoin’s price broke out of a 10 month range and climbed to a new all-time high -- a level it may never revisit (BTC has never returned to a prior election week price).Time will tell if Trump delivers on his crypto friendly campaign promises. But any combination of these will be a major catalyst for future growth:replace Gary Gensler as head of the SECend Operatio...
Kintsugi ResearchBridges 8/15/23
While operation choke point 2.0 set the industry back months (years?) in the fallout of the FTX collapse by targeting fiat on and off ramps such as the silvergate exchange network and signature bank, there’s been a lot of news the last two weeks about new players making it easier for fiat to flow in and out of the digital asset ecosystem.PayPal, which has 400M+ active accounts, launches stablecoinVisa enables fiat payments for ethereum gas costsEurope approves first spot bitcoin ETFGnosis pay...
Kintsugi ResearchESG 8/2/23
KPMG released a report describing bitcoin’s role in the ESG imperative representing a major narrative shift. Tailwinds We acknowledged the energy industry beginning to embrace bitcoin and ESG validation as a critical step on the path towards more institutional adoption in our B34RM4RK3T memo a year ago. It’s refreshing to see BTC finally taken seriously through an ESG lens:Energy: renewable energy, demand response, recycled heat, and methane reductionSocial: Payments, financial inclusion, Ukr...
Kintsugi ResearchDominance
Whether you were celebrating or grieving this week, there are now undeniable tailwinds for Bitcoin and the broader crypto market. Bitcoin’s price broke out of a 10 month range and climbed to a new all-time high -- a level it may never revisit (BTC has never returned to a prior election week price).Time will tell if Trump delivers on his crypto friendly campaign promises. But any combination of these will be a major catalyst for future growth:replace Gary Gensler as head of the SECend Operatio...
Kintsugi ResearchBridges 8/15/23
While operation choke point 2.0 set the industry back months (years?) in the fallout of the FTX collapse by targeting fiat on and off ramps such as the silvergate exchange network and signature bank, there’s been a lot of news the last two weeks about new players making it easier for fiat to flow in and out of the digital asset ecosystem.PayPal, which has 400M+ active accounts, launches stablecoinVisa enables fiat payments for ethereum gas costsEurope approves first spot bitcoin ETFGnosis pay...
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Bitcoin is making headlines again (the good kind) after two months of face melting candles. It is up 62% since October 6th, Coinbase is climbing* the iOS finance app rankings, and Saylor and Bukele are back in the black.
*Coinbase reaching #1 is a decent top signal
There is no single indicator that can reliably predict market bottoms, but in two bottom signal pieces in the summer of 2022 I noted:
It is much harder to pinpoint a bottom than it is to identify where we are in a cycle. If you are investing on a multi-year time horizon, you’ll weather multiple cycles. So you benefit most from focusing on entry points, accumulating when valuations are attractive, and listening to the data.
Part One (June 2022)
In the last month, MVRV, a ratio of current BTC market cap relative to cost basis, bottomed out at 0.94. During the March 2020 drawdown MVRV fell to 0.85 and dipped as low as 0.7 in December 2018. A further 9% or 25% drawdown would send MVRV back to those levels.
Part Two (July 2022)
Bitcoin bottomed for the cycle in November ‘22 when FTX collapsed, just a few months after those posts. MVRV dipped to 0.75 when BTC fell below $16k on November 9th — not quite to the depths of December 2018 but deeper than the March 2020 drawdown.
Since then BTC is up almost 180% (vs 22% for the S&P) and decoupled multiple times demonstrating it’s not just bundled with equities in one big on/off rotation for risk assets.
History doesn’t repeat itself but it often rhymes, and as Dan showed in a recent memo, the crypto market cycle rhymes every four years.
While it’s getting harder (but not impossible) to make a case for venture scale return potential during the next cycle, Alts, still down 65% from ATH, provide high beta crypto exposure and are more likely to deliver venture scale returns.
Narratives evolve each cycle but on chain metrics like MVRV, SOPR, and LTH supply dynamics follow similar patterns as speculators push prices to euphoric levels (MVRV over 3) until long term holders start taking profits at which point a market correction resets valuations and long term holders start accumulating again.
It feels like the cycle bottom is in at this point and there are strong narrative tailwinds and institutional flows (ETFs) on the horizon. Assuming the next bull market yields a new all-time high, the question is how many drawdowns there will be on that path — there were six over 25% during the 2017 bull market — and whether anything major (macro, binance, etc) derails momentum between now and then.
So if you are feeling underexposed, it’s not too late to decide how much you are comfortable investing, buy the dips and leg into position, then hodl on for dear life … until MVRV pops above 3 and Coinbase tops the app store rankings again.
References
11/30/23
11/16/23
11/9/23
Bitcoin is making headlines again (the good kind) after two months of face melting candles. It is up 62% since October 6th, Coinbase is climbing* the iOS finance app rankings, and Saylor and Bukele are back in the black.
*Coinbase reaching #1 is a decent top signal
There is no single indicator that can reliably predict market bottoms, but in two bottom signal pieces in the summer of 2022 I noted:
It is much harder to pinpoint a bottom than it is to identify where we are in a cycle. If you are investing on a multi-year time horizon, you’ll weather multiple cycles. So you benefit most from focusing on entry points, accumulating when valuations are attractive, and listening to the data.
Part One (June 2022)
In the last month, MVRV, a ratio of current BTC market cap relative to cost basis, bottomed out at 0.94. During the March 2020 drawdown MVRV fell to 0.85 and dipped as low as 0.7 in December 2018. A further 9% or 25% drawdown would send MVRV back to those levels.
Part Two (July 2022)
Bitcoin bottomed for the cycle in November ‘22 when FTX collapsed, just a few months after those posts. MVRV dipped to 0.75 when BTC fell below $16k on November 9th — not quite to the depths of December 2018 but deeper than the March 2020 drawdown.
Since then BTC is up almost 180% (vs 22% for the S&P) and decoupled multiple times demonstrating it’s not just bundled with equities in one big on/off rotation for risk assets.
History doesn’t repeat itself but it often rhymes, and as Dan showed in a recent memo, the crypto market cycle rhymes every four years.
While it’s getting harder (but not impossible) to make a case for venture scale return potential during the next cycle, Alts, still down 65% from ATH, provide high beta crypto exposure and are more likely to deliver venture scale returns.
Narratives evolve each cycle but on chain metrics like MVRV, SOPR, and LTH supply dynamics follow similar patterns as speculators push prices to euphoric levels (MVRV over 3) until long term holders start taking profits at which point a market correction resets valuations and long term holders start accumulating again.
It feels like the cycle bottom is in at this point and there are strong narrative tailwinds and institutional flows (ETFs) on the horizon. Assuming the next bull market yields a new all-time high, the question is how many drawdowns there will be on that path — there were six over 25% during the 2017 bull market — and whether anything major (macro, binance, etc) derails momentum between now and then.
So if you are feeling underexposed, it’s not too late to decide how much you are comfortable investing, buy the dips and leg into position, then hodl on for dear life … until MVRV pops above 3 and Coinbase tops the app store rankings again.
References
11/30/23
11/16/23
11/9/23
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