Bottom Prediction & Low Consolidation Phase
Treasury Companies Dampening the Bottom?
Dear Bitcoiners,
We officially moved into the Low Consolidation phase. This happens when the Short-Term Holder (STH) Floor moves below the Coin Value Days Destroyed (CVDD) metric.
I discussed this in a newsletter nearly two months ago:
“The prudent approach is to turn bullish once Bitcoin breaks above, retests, and holds the STH cost basis as support. If we do break above, this could resemble a 2019 scenario. With indicators like the ISM PMI moving above 50, that scenario is not impossible. However, based on current price structure and on-chain signals, the behavior still closely resembles previous bear markets. Historically, this phase is followed by rejection at resistance and a final move into low consolidation.”
We got that rejection and the move into low consolidation, historically one of the best entry zones for Bitcoin.
👉 Key insight: With the STH Floor moving below CVDD, CVDD takes over as the global floor. In the entire history of Bitcoin, it has only traded 18 days below CVDD.
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Quick Update
Lately, I’ve been posting more regularly about Digital Credit. This is not because I want to promote the use of Digital Credit, but because there have been such bad takes about it that I felt the need to step in.
Whether you are a fan of Digital Credit or not, the truth is that it is playing a major role in the adoption of Bitcoin. I am a Bitcoin maximalist at heart, but I believe Digital Credit is a natural part of Bitcoin’s game theory and a bridge for capital to flow from an inflating dollar into a scarce asset: Bitcoin. Of course, it uses fiat structures, hence the pushback. But that is also exactly why it matters.
Understanding this game theory led me to my sponsor Roxom, who are building Bitcoin-denominated markets and the tools a Bitcoiner needs to use the fiat system to their advantage.
Create a Roxom account and get access to Bitcoin-denominated capital markets, including digital credit instruments that can pay income in BTC. Click here or use code ROOT.
In a newsletter from February, I discussed how Long-Term Holder sell pressure has been a driving force of this bear market and one of the main reasons we had so much trouble pushing further than the $126k ATH.
A major reason is that the rates and ease of borrowing against your Bitcoin were underdeveloped. A quote from that newsletter:
“Borrowing against BTC remains expensive and constrained compared to traditional assets. However, with efforts to reverse policies like Choke Point 2.0 and regulatory clarity from legislation such as the Clarity Act, the foundation for more open banking access and lending infrastructure is forming.”
This week, Roxom launched a new product to borrow against your Bitcoin at 7.25%, the best rate I have seen yet, and with no rehypothecation. Like any loan, there is obviously risk involved, and I am not advocating that you should take out a loan. But having these tools available can result in less overall sell pressure from Long-Term Holders.
Low Consolidation Phase & Bottom Prediction
We’ll continue analyzing the low consolidation, CVDD’s price level, and Bitcoin’s full history, with access to the full chart. We’ll also use one of the best on-chain metrics, combined with statistical analysis, to predict Bitcoin’s bottom.
