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Bitcoin Mirrors Certainty in Uncertain Markets
"The range of uncertainty is also uncertain, and it can become practically infinite." - George Soros The leading cryptocurrency and digital asset bitcoin is now facing a paradigm shift in terms of regulatory risk. However, the regulatory risk is not a direct threat to bitcoin per se, as U.S. Securities and Exchange Commission (SEC) does not classify bitcoin as a security. The SEC has mainly attacked "altcoins" and recently stated that most of them are securities. Because cryptoassets are positively correlated, the inevitable selling pressure of altcoins will also hit the king coin. Despite of all the mayhem, bitcoin is still up 55 percent this year, clearly diverging from the bearish year of 2022. At its April peak, bitcoin almost reached a year-to-date performance of 100 percent. The current selling pressure is coming from the direction of market makers, who recently dumped a huge number of Binance-related altcoins, collapsing the liquidity. In contrast to the challenging market environment, bitcoin's technical and fundamental indicators mirror strength. The spot price recoiled in late 2022, forming a technical inflection point (pink), and bitcoin has been following the rising trendline since. Praeterea, bitcoin's active addresses (blue) are rising, and they have formed a wide triple bottom structure (white), which generates a bullish divergence to the spot price. Additionally, the exchange stablecoin ratio (yellow) is reaching towards new highs, forming another bullish divergence. In the broader picture, bitcoin’s market behavior can be segmented into accumulation (turquoise) and distribution (violet) phases, which together form a multi-year series of cycles. Institutional money has traditionally favored accumulation cycles, while retail investors have been active in distribution cycles. Bitcoin’s history is also defined by halving events, which are always preceded by a pre-halving accumulation cycle (turquoise).