Bitcoin Bear Market 70% Drop Kills BTC ‘Tourists’ As Metric Screams Buy
Bitcoin (BTC) speculators have disappeared from the market and their spirits “ruined”, says popular analyst Philip Swift.
In a chirping On December 14, the co-founder of trading suite Decentrader flagged the potential maximum risk return for BTC at current prices.
Swift: “Euphoria destroyed” from Bitcoin bear market
BTC/USD is around 70% below its recent all-time highs, and the pullback has washed out many short-term investors.
The FTX scandal sparked an even stronger capitulation, one that is ongoing as the fallout sends jittery investors into a panic.
For Swift, signs that the speculator’s “euphoria” is now gone from Bitcoin come in the form of the popular HODL Waves metric.
The HODL Waves group traded coins by age – how long they were last dormant before leaving the wallet. The resulting data shows the extent to which long-term or short-term holders trade.
A further iteration of the metric, Realized Cap HODL (RHODL) Waves, additionally weights these bands by realized price – the price at which each bitcoin last moved.
“So RHODL waves tell us the cost basis of bitcoins that have been held in wallets for different time periods. Each time period is represented by the waves on the chart,” Swift explains in a description on his dedicated on-chain data resource, LookIntoBitcoin.
Currently, RHODL shows a distinct minority of coins moving on the network soon after being used in a previous transaction. On the contrary, transactions currently involve coins that were last moved 6-12 months ago as the most common age range.
On an accompanying chart, the darker the color of the wave, the more recently the coins involved were last moved.
“The euphoria of bitcoin tourists has now been completely destroyed,” Swift commented.
He added that under such circumstances, the risk-reward ratio (R:R) for investing is at its most attractive, based on historical trends from RHODL Waves.
“Realized Cap HODL Wave’s warmer colors show periods when participants are euphoric,” he wrote.
“We are now at cycle lows … aka max r:r opportunity.”
From capitulation to accumulation
Swift is not alone in seeing potential bullish signals from Bitcoin as 2022 draws to a close.
Related: Bitcoin Bear Market Will Last ‘Maximum 2-3 Months’ — Interview with BTC Analyst Philip Swift
In the latest edition of its weekly newsletter, “The Week On-Chain”, research firm Glassnode highlighted the ongoing trend from “capitulation” to “accumulation” of BTC investors.
It did so via the UTXO Realized Price Density metric, a similar tool to RHODL Waves that provides insight into seller intensity based on coin age.
“After each market stage down into 2022, we can see the density of coin redistribution (and thus re-accumulation) has increased,” it wrote, noting that the drop from $24,000 produced $18,000 particularly strong re-accumulation.
An accompanying chart showed those investors who bought the macro peak of each BTC price, particularly in late 2017 and through April 2021.
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