This Price Range Is History
Bitcoin surged 50% to nearly $100k as fresh capital flooded in—but now prices are trapped between $93k and $104k. Is this a lull before a breakout or a prolonged sideways drift? Dive into the unfolding drama of a market at a crossroads.
Between November 4 and 22, bitcoin’s price surged 50%, rising from $66,000 to $99,000. A fierce battle to break the magical $100k threshold began. An unprecedented influx of new capital flowed into bitcoin while existing investors took profits. Every day, 30,000 bitcoins changed hands, requiring $3 billion in capital.
The price has been oscillating for twelve weeks between roughly $93,000 and $104,000, with about 80% of trading volume occurring within this range. Any moves outside were brief, and since November 26, we haven’t seen a daily close below $92,000.
It seems this price range has largely been exhausted.
In the past twelve days, the daily close landed between $95k and $98k on eleven occasions. Trading volume is at its lowest level since the election results, and investors who joined over the past half year are barely realizing profits, with their cost basis around $92,000.
Late November was different. When the price first climbed above $90,000, the average entry price for new investors was still $67,000. The Trump trade was sitting in significant profit.
By taking these profits, bitcoin’s realized value (RV) increased. Think of RV as the total amount of capital that has been invested in bitcoin throughout its history.
The chart below shows how RV has grown over time. The total RV now stands at $855 billion. This capital entered the bitcoin market as follows:
- $240 billion in the past 6 months (30%)
- $480 billion in the past 2 years (60%)
- $855 billion since bitcoin’s inception (100%)
Of all investments in bitcoin, 60% occurred during this market cycle and 30% in this weekly cycle. This might seem like an extreme ratio, but it’s still milder compared to previous bull markets:
- In 2016/2017, RV rose from $5 billion to $90 billion. At the peak of that bull market, 94% of the invested capital had flowed in during that cycle.
- In 2020/2021, RV increased from $75 billion to $460 billion. At the peak of that bull market, 84% of the invested capital had come in during that cycle.
If we reach 80% in this bull market, RV would climb to $1,875 billion. That means after the $480 billion we’ve seen so far, nearly another $1,000 billion would need to follow.
In the previous two bull markets, not only was there a much larger increase in capital invested in bitcoin, but the ratio (MVRV) between market value (MV) and realized value (RV) was also higher. Currently, it sits at 2.2, compared to around 4.0 at the peaks of earlier bull markets.
To push the MVRV up to 4.0, hype, mania, and FOMO are required. At an MVRV of 4.0, investors are, on average, enjoying 300% gains—only possible if euphoria prevents them from taking profits along the way.
If we were to reach an MVRV of 4.0 without a net inflow of capital, the price would hit $173,000. And if we also see an additional inflow of nearly $1,000 billion, we could even reach $380,000. Not impossible, but only realistic if we enter a new period of frenzy.
The fact that this price range is nearly exhausted doesn’t automatically mean we’ll break out soon. Without a catalyst to move the market, we could very well continue drifting sideways for weeks.
From a cycle analysis perspective, we expect a weekly cycle low within the next three weeks. Last week, we discussed this under the heading “base scenario: a new upward trend.”
The end of one weekly cycle marks the beginning of the next. Around that time, we typically observe the following progression:
- The market ignores good news and panics at every rumor
- The market remains indifferent to most developments
- The market embraces any hint of optimism while dismissing bad news
We are currently at the second stage. The market seems increasingly unfazed by macroeconomic data and new import duties. This sentiment extends to other financial markets as well—the dollar is weakening slightly, while stocks hover near their all-time highs.
So far, this 18% correction is quite mild. A modest dip to around $85,000 would be more in line with previous corrections, but that isn’t guaranteed. Sometimes, just the passage of time is enough to pave the way for a new weekly cycle.
We will continue with the following topics for our Alpha Plus members:
- The lowest since…
- Jerome Powell isn’t in a hurry
- The beginning of the end of the war in Ukraine?
- Two perspectives on bitcoin dominance
- Inflation: Democrats vs. Republicans