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In this episode of the “Fed Watch” podcast, Christian and I sit down with Dylan LeClair, Head of Market Research bitcoin magazine pro, Every week, he and Sam Rule write almost daily updates for clients, and once a month they release a major bitcoin market report. bitcoin magazine pro The “May 2022 Report” that we’re covering for the most part in today’s episode.
You can view the slide deck we used for this episode here, or you can view all of the charts at the end of this post.
“Fed Watch” is a macro podcast for bitcoiners. Each episode, we discuss current macro events from around the world, with an emphasis on central banks and currency matters.
market cycle
Before we get into the awesome chart that LeClear brought up, I’d like to know where he sees bitcoin timing its market cycles. I ask somewhat frankly, if we are in a bear market, because we are certainly not in a decline of 80-90%.
LeClair responds by saying that we are in a classic bear market, not necessarily a classic one. Bitcoin bear market. He pointed out that the upside of this cycle did not have the typical parabolic blow-off tops that we have previously seen in bitcoin, as well as more technical and fundamental support in the mid-$20,000 to $30,000 – so the drawdown pressure would also be limited. LeClair also said that the average user cost base was hit by the wick at recent lows. Overall, there is significant support under the current price and it remains to be seen whether there is enough bear momentum to break new lows.
Finally, on questions of market-cycle timing, LeClear points to a very minor market development: collateral types on exchanges have mostly changed from bitcoin in previous cycles to stablecoins like Tether (USDT) and USDC now. . In other words, cash deposits on major trading pairs and exchanges have shifted from bitcoin to stablecoins. In the past, the most important trading pair for any altcoin was Vs BTC, which has now turned to a stablecoin like USDT. This is a significant change in market dynamics and will likely lead to more stable prices for bitcoin, as less bitcoin will be forced to liquidate in the hyper-speculative shitcoin bubble.
bitcoin magazine pro chart
“This is Coinbase Spot Volume, the major US exchange, and Perpo [perpetual futures] Quantity aggregated across a bunch of different derivatives exchanges. What we can see are various volume spikes. Historically, when bitcoin is trading at that size, it signals some kind of market up or down, some significant change in market structure.” — Dylan LeClaire
Bitcoin Perpetual Futures and Coinbase Spot Volume
The next chart shows the difference in market structure due to stablecoins. LeClear says that 70% of the derivatives market was still collateralized by bitcoin around the summer 2021 selloff. Today, it is much smaller than that. Therefore, when the shitcoin bubble bursts, we should expect fewer liquidations in bitcoin, and that is exactly what we see.
Bitcoin long liquidation shrinks due to stablecoin collateralization
what’s great about bitcoin magazine pro Newspapers They not only look at the bitcoin market but also look at how macros can affect bitcoin. The next two charts are about CPI and interest rates. LeClair does a great job breaking these down during the podcast.
Year-on-Year and Monthly Changes in the Consumer Price Index
Consumer Price Index year-over-year versus 10-year Treasury yield
I ask LeClear about his thinking on Federal Reserve monetary policy, and he focuses his analysis around real interest rates. To reduce the massive global debt burden, he says, real rates will have to remain negative. So, if the Fed hikes up to 3.5%, the CPI would have to stay above that for real rates to remain negative.
It is then followed by CK’s preferred indicator, the Meyer Multiple, or 200-day moving average, divided by the current price. When the price is below the 200-day moving average, the ratio is below 1 and has historically been a good way to time the market.
Bitcoin price weighted by Mayer’s multiple
One of the most comprehensive informational charts on bitcoin magazine pro Next, and that is reserve risk.
“The reserve risk chart basically weighs the Hodler conviction with price, whether it is strong or weak.”
bitcoin price weighted by reserve risk
Our last chart for the day is Realized Price, and this is LeClear’s favorite. This is a great way to remove the noise and volatility of the bitcoin price and focus on the trend.
“One of the nice things about the transparency of this network is that we can see when every bitcoin has been transferred, or ever mined. We can also [assign each UTXO a price of when it last moved] To come up with what we call Realized Price. […] We can see when everyone is underwater on average. – LeClaire
bitcoin realized price ratio
Bitcoin regulation from Senator Lumis
At the end of the show we wrap up with a discussion on draft legislation recently proposed by Senator Loomis, which outlines a new framework for bitcoin and calls the bill a “digital asset.” In fact, they do not use the words bitcoin, ethereum, blockchain or even cryptocurrency at all in the draft.
Suffice it to say, we teased some of LeClair’s thoughts and went back and forth with the livestream crew, but you’ll have to listen to hear that whole practical discussion! We dive into the impact on the bitcoin market, exchanges, and future bitcoin spot ETFs!
It does for this week. Thank you readers and listeners. If you enjoy this content please subscribe, review and share!
This is a guest post by Ansel Lindner. The opinions expressed are solely their own and do not necessarily represent those of BTC Inc. either . reflect the thoughts of bitcoin magazine,
