How Determined Are Bitcoin Investors?

Bert Slagter Schrijver, spreker en analist bij Bitcoin Alpha, Descryptor & Satoshi Radio

3 July 2024

In recent weeks, the crypto market has faced headwinds from multiple directions. The resulting price drops test the resolve of investors who have recently bought in. What does their behavior say about whether we are still in a bull market? You'll read more about it in this Weekly!

This weekly in brief: 

  • Market: The crypto market moved mostly sideways over the past week, with the price of bitcoin around $62,000 and the price of ether around $3,400.
  • News: New European regulations aimed at stablecoins took effect on June 30. Circle (USDC) is the first to obtain a license. And is Michael Dell of Dell Technologies flirting with bitcoin?
  • Behind the Scenes: Recently, we hosted DUFAS members at our office for a knowledge session on crypto and tokenized assets. We look back on an interesting and successful afternoon!

Market Update

On February 28, 2024, we saw the bitcoin price rise above $60,000 for the first time since December 2021. That was exactly four months ago last Friday. Except for two days, we have closed above $60,000 every day since then. This is less than 20% below the top of $73,800.

With this prolonged sideways movement, the market is digesting the enormous price increase of the previous six months. Between October 2023 and March 2024, the price rose about 180% from $26,500 to $73,800, passing the all-time high of the previous bull market at $69,000 along the way.

During such a rise, a significant amount of unrealized profit builds up. Sentiment becomes very optimistic, bordering on overconfidence. Investors who want to sell hold off, thinking the price will be much higher tomorrow than today. Until the price increase stalls, and they sell after all.

The following correction gives every investor a chance to react to these higher prices. Some take their profits and exit, while others see confirmation of their hypothesis and enter. On balance, the price moves sideways.

Twice we were near the top of the price range, above $70,000. And now twice at the bottom. Last week, after a two-week decline, we hit $58,500, and since then, we've been hovering around $62,000.

Did we see the lowest point last week and are now rising again to the top of the price range? To confirm this, we want to see higher highs (HH) and higher lows (HL) in the short term. And eventually break above the 50-day moving average, which is now at $66,500.

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Most indicators that gauge market temperature have returned to neutral or cooled levels, similar to what we saw in September and October last year. This is a nice result of such a long correction. A sentiment reset is a good starting point for resuming the bull market.

Confidence in the bull market is being tested now. This is visible in the on-chain data. By looking at blockchain transactions, we get a picture of the behavior of different groups of investors. An interesting segment is the group of investors who have recently bought, the short-term holders (STH).

These 'recent buyers' have historically been a good indicator of short-term up- or downside potential. How these short-term holders behave depends on whether it's a bull or bear market. In a bull market, they are willing to take profits where possible but refuse to take significant losses.

At the moment, they are slightly at a loss. Their average purchase price is $64,400, and even after the recent price rise, the price is still slightly below that. If we rise above the 50-day moving average of $66,500, we will also be above the cost basis of the short-term holders. If that happens, they will confirm with their behavior that they believe we are in a bull market, as they have taken little loss even during this dip.

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News Overview

Dell Technologies, a name known worldwide, has an impressive history. In 1984, the company was founded by Michael Dell, then a young entrepreneur with a visionary approach. He started by selling computers directly to consumers, a smart move that allowed him to offer competitively priced products with custom configurations. This strategy laid the foundation for Dell Technologies' enormous success.

Recently, Michael Dell, the CEO of Dell Technologies, stirred the crypto world with a remarkable and mysterious tweet:

It seems that Dell has had regular contact with Michael Saylor, the CEO of MicroStrategy and a fervent bitcoin supporter, before and after this tweet. This has fueled speculation about Dell’s possible interest in bitcoin, both personally and for his company. Dell Technologies has a substantial cash reserve of nearly $6 billion. Could bitcoin be on their shopping list?

In the 1990s, Dell decided to invest in the emerging e-commerce market. While many companies still struggled with the idea of online sales, which were considered a farce, Dell launched a website that allowed customers to configure and purchase their computers directly. A bold move that paid off handsomely. Within months, Dell generated millions of dollars in online sales.

Dell is known for its sometimes-radical decisions. And with 58% of Dell Technologies' shares in his possession, there seems to be nothing stopping him from a trip to the bitcoin cashier.

It’s fun to fantasize about this. And if Dell decides to park some of their cash reserve in bitcoin, it would indeed give Saylor’s playbook a significant boost.

But we must be careful not to fall into a delusion by fantasizing about venerating prominent figures. In the crypto world, they – especially if wealthy – quickly end up on a pedestal. And you know what happens to people placed on a pedestal: they eventually fall off with a bang!

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Het overige nieuws:

  • More Central Banks Warming Up to CBDCs: Research by the BIS and the IMF shows that digital central bank money can improve financial inclusion and diversity and reduce the costs of issuing and using money. The IMF’s research was conducted in collaboration with 19 central banks in the Middle East and Central Asia.
  • Sony Prepares to Launch a Crypto Exchange: Last year, the group acquired the local platform WhaleFin. According to a press release, it will soon be relaunched under a new name. This includes a revamped user interface and the release of a new mobile application. Last year, Sony registered a patent for the use of NFTs for in-game items.
  • New European Regulations for Stablecoins in Force: Since Thursday, June 30, parties issuing stablecoins must comply with the MiCA rules applicable to them. Tether (USDT) has not yet obtained the necessary documents, but Circle (USDC) announced on Monday that it has received the license. Both companies previously stated that they encountered requirements that were unworkable in practice. It is unclear whether Tether is also in the running for a stablecoin license.


ETH ETF: Bullish or Bearish? | Alex Thorn & Matt Hougan

The American ether funds are about to launch. This brings considerable speculation about the amount of dollars that will flow in after the opening. Bitwise CIO Matt Hougan is known for his original insights on this topic and is a guest on the Bankless podcast this week. How much demand for these products does he see arising? And how do you estimate such a thing?

Behind the scenes

Recently, we hosted DUFAS members at our office for a knowledge session on crypto and tokenized assets. DUFAS has over 50 members, from large (traditional) asset managers to smaller and specialized asset managers.

Marcel Burger (Chief Investment Officer at Amdax) and Bert Slagter (author of the bestseller ‘Ons geld is stuk’) shared more about the many possibilities that tokenization offers for the financial sector. After the presentations, an interactive session with engaging conversations followed. We look back on an interesting and successful afternoon!

Marcel DUFAS
Bert Slagter Schrijver, spreker en analist bij Bitcoin Alpha, Descryptor & Satoshi Radio

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