Bitcoin made complex

21 sept 2023As someone who has been around Bitcoin a long time, I find it interesting to see people try and find their own "edge" from how they utilise on-chain metrics, to liquidity maps and sometimes even deeper with things like the energy consumption or BTC mined.

The last couple, most recent years - Bitcoin has been moving towards it's institutional position and that has been something incredible to watch first hand as it slowly unfurled.

The logic can be simplified and following the larger players and their intentions can be very lucrative. The major issue with statistics and metrics is that these can also be spoofed, manipulated and written in ways favourable to the cause. **Caveat - not always, but can be **

What gets me is when a local 'influencer' comes up with why Bitcoin will ping some arbitrary figure just because it sounds rounded. I haven't once heard someone say, it's likely to hit $237,500 followed by some logical argument.

Here's some simple logic.



Bitcoin's market cap. At $69,000 we saw a cap of 1.3T roughly. To obtain this number you can do the math by knowing how many coins in circulation and times that by the price. This of course will be ever changing, new addresses and price fluctuations coupled with more coins until 21m is hit. So you can be rough on your calculations without stressing.

Here is a snapshot of the coins in circulation

Take this now with the current price lingering around $27,000 you have a market cap.

Why does this matter? Well, it doesn't really, other than to guestimate what kind of additional money in-flows would be required to make Bitcoin as valuable as the influencers claim.

Let's use the current number 19,491,306

Times that by the price claimed and you can guestimate a Market Cap.

19 million, 491 thousand, 3 hundred and 6 times $250,000 (often used figure)

The question then becomes - where does the additional money come from?

-----------------------------------------------------------------------------------------

In this image, you can see the steady growth of the tokens/coins in circulation


Or here the transactions per day.


How about the energy consumption?


You see, none of this actually matters when analysing the charts.

Instead, understanding the picture painted by the larger players in the game, can give you hints as to where and why next. You take the snapshot of the COT (Commitment of Traders) report.


This has allowed me to assess every major move in the Bitcoin chart, the logic for each swing is smacking you square in the face.

These moves are not as random as you think.



The market is simply an algorithm seeking liquidity. Nothing more complex than that.

Instead these clowns come up with figures like $250,000 and quotes like 98k next month and 135k the month after, without any logic or rational as to how or where the money is coming from. Instead of moving up to $135,000 the price drops to $15,500 that's an awful lot to be wrong. Why? ZERO logic or clue as to what actually moves the market.

Imagine selling at the top?!


If the smiley laughing emoji hadn't have been used, it could have been one awesome call!

Instead of looking in the wrong places, learn to understand where and why. Here's another interesting topic on this point.

Anyways, enjoy the rest of your week!



Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.