1. The sacrifice of the Bitcoin leverage ape contributed to the violent rebound. Can BTC continue to rise without thinking in the future? ?

1) Friends who have watched our video yesterday know that after Bitcoin absorbs US$3 billion of seller pressure from Germany, Bitcoin will be able to break through the record high in the future; but will the market really rise so mindlessly as expected?

The video we reviewed yesterday paints a fairly positive picture and I believe it sets up a positive future for us.

That being said, until we convincingly see a clear of the $64,000-68,000 short term holder cost basis, we plan to be prepared to add to some of the remaining red candlesticks while waiting for the market leverage apes to liquidate again.

We all know that the nature of this market is not to make money for everyone.

2) While we are not necessarily out of the woods in the short term, we are seeing a nice showing of realized losses for a large number of investors; first we see the MVRV ratio has retested its 365 day average.

I use this indicator as a "high weight" indicator to tell me when a large number of investors are holding large unrealized losses. So far, it seems to be performing well, with many similarities to the 2017 ATH breakout and again in 2019-20.

3) Currently, the market appears to be in a healthier state than in 2019. The proportion of global profit-taking supply has also rebounded from the long-term mean, when a quarter of supply was below the take-up price. We saw examples of this in mid-2016, 2020, and again in 2021. Note here how conditions deteriorated to a pretty bad state in 2019, which in turn triggered a longer mini bear market that lasted for several months.

That being said, I don't particularly want to see this indicator trading well below the blue mean line, even though this is a lower probability outcome.

This illustrates an important lesson I've learned about markets: by the time you see it in the headlines, it's already priced in. It also shows that lower prices are often the catalyst for higher prices.

4) Back to the point For short-term holders, they are at a decision point where the price is hitting the bottom line of their average cost basis ($64,000-68,000). We would not be surprised to see volatility at this position. So we keep asking ourselves:

If we bought Bitcoin for less than $55,000 (which we did at Windrush) and people were panicking about the German government putting pressure on the market, would I flip and sell it at $64,000 to make a quick buck? … Not sure who would, to be honest.

5) At the same time we also look at the performance of STH-SOPR, which is completing a short but sharp downward cut to the breakeven level of 1.0.

My explanation is as follows:

As the market dropped below $60,000 (which is a good thing), the top local buyers (STH) panicked.

Our initial reaction was bearish, with investors “selling off,” suggesting more concern (caution) ahead.

This manifested as a “mini-capitulation” event, the deepest we’ve seen so far in the 2023-24 uptrend (which is great to see).

Subsequently, STH-SOPR quickly climbed back above 1.0, indicating a level of seller exhaustion near the lows (which is nice to see).

In many ways, this was a near-perfect textbook final shakeout, very similar in nature to the $57,000 drop we explored in April;

Supporting this thesis is the ratio between actual profits and losses in Bitcoin across the market, not just short-term holders. We see this ratio hitting a perfect support level, which is exactly where bullish uptrends tend to find support.

6) At the end of this round of analysis, the ever-reliable leveraged apes who spent too much time trading based on headlines and not enough time trading based on sound analysis simply decided that the German government would zero out Bitcoin.

We are here to thank them for their sacrifice!!

6) Conclusion

Overall, we really like the Bitcoin price and on-chain data. We remain vigilant and do not FOMO in the short term, just buy low;

We have not given up on the idea that we could see another “gut” move lower, we just have to wait for the right moment when short term holders are liquidated.

At the same time, unfortunately, we are still in an era dominated by political processes, so I will remain vigilant and prepared in case the next decade happens in a week.