Bitcoin Weekly Report 30th May — 5th June

The market pressures felt over previous weeks seemed to reduce for Bitcoin come the end of May. While the market remained volatile, there were movements underneath that have historically boded favorably for a bull market. That’s not to say a bull market is close anytime soon — more, we’ve seen good things come from current market conditions, particularly when considering the short term vs long term BTC holdings ratio is heading towards a historical low.

From what we have observed over the past week, we believe that the BTC market is showing signs of bottoming, and there is a demand for repairing the rise. However, in the short term, it is difficult to return to an optimistic situation in its entirety, and we continue to watch the market closely. Chain data reflects that the current selling market has peaked in pressure, and a certain amount of smart money began to enter the market to buy Bitcoin over the previous week. The selling pressure on BTC caused by the Luna event in May has largely been repaired, and deviations due to specific events do not affect the overall fundamental health of the market.

During the week beginning May 30th, the Bitcoin exchange’s selling pressure was alleviated to a certain extent. The weekly Bitcoin net withdrawal figure was at 40,000 tokens, and the BTC balance of centralized exchanges fell below 2.5 million tokens through the week.

Currently, the ratio of short-term holders’ holdings to long-term holders’ holdings is close to a historic low. Usually, this represents that the market bubble is over, most of the tokens have been transferred to the hands of small groups, and the rate of market control has increased. The supply and demand mismatches that come to fruition in these conditions will make it much easier for prices to rise.

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Technical Analysis

Enthusiasm for withdrawals on centralized exchanges increased last week. From May 29 to June 5, the amount of BTC on its exchange balance decreased from 2.529 million to 2.489 million, making net withdrawal over 40,000 tokens. The heavy selling pressure from the massive inflows of mid-May has been digested, and the market is gradually emerging from extreme panic and realizing that prices are now seriously undervalued. Buying and withdrawing action has subsequently increased.

Futures’ spreads also indicate that the market has entered oversold territory. For the first time in history, the gap between BTC perpetual futures and spot prices has been in negative territory for more than five months. Typically, futures contracts trade at a slight premium to spot prices, indicating a more bullish or speculative attitude toward forward prices, but a prolonged negative premium indicates that investors are not optimistic about future price performance — the longer this lasts, pessimism becomes more widespread.

If most of the market has joined the bear camp, the selling pressure will be gradually exhausted — when the market has no selling pressure, the price will meet the bottom.

Bitcoin that has been held for more than a year hit a new high of 65.7% last week. As of Sunday, this value was 65.5% — which remains very close to this new high. That means that nearly two-thirds of all Bitcoins in circulation have not moved in more than a year. The fact that so many Bitcoins are being held suggests that long-term investors remain confident in the market, and have little incentive to sell their chips at current prices. This will lead to a mismatch between supply and demand in the market if the trend continues. With the supply side continuing to shrink, scarcity will drive the market. Once the market lights up the enthusiasm to go long, the imbalance between supply and demand of chips should lead to a sharp rise in prices — in theory, of course.

The market has priced in the Luna Foundation selling pressure on its Bitcoin reserves, with illiquid supply of BTC back at 14.53 million — close to the all-time high. This indicates that big money has taken some of the selling pressure, as Bitcoins move into addresses that have never been transferred, or where less than 75% of the transferred amount has been transferred. This indicates that the portion of the repurchased bitcoin is currently illiquid, which will make the tradable chips even more scarce.

Currently, the ratio of short-term holders’ holdings to long-term holders’ holdings (short term/long term) is near a historically low level. Usually this represents that the market bubble has been basically completed, most of the chips were transferred to the hands of smaller groups, and the rate of market control has increased. Supply and demand mismatches will make it much easier for prices to rise in the future.

Global crypto funds increased their holdings from 854,000 to 858,000 coins between the end of May and the first week of June, before falling back slightly, indicating that global asset management funds are now more willing to buy bitcoin. The strength of this increase is still not very obvious, and should be viewed in the context of market conditions.

in the short term, it is difficult to return to an optimistic situation in the capital, and we will continue to watch the market. However, the chain data also reflects the current market selling peak pressure, and a certain amount of smart money began to enter the market to buy Bitcoins. The selling pressure on BTC caused by the Luna event in May has largely been repaired, and this deviation due to such specific events does not affect the overall fundamental health of the market.

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