Bitcoin Is Crashing – What’s Going On?
Typical Bull Market Pullback or Something More?
Dear Bitcoiners,
Bitcoin is crashing, nearly a 30% pullback! What is going on? Is this just a typical bull market pullback, or is there something more severe happening? In today’s newsletter, we’ll cover it all! 🫡
Announcement: Podcast Episode Coming up!
Yesterday, I recorded a 2-hour podcast with Michaël van de Poppe, sharing my thoughts, data, and charts about the current drawdown. I was hoping to share it with you today, but due to the channel’s publishing schedule, it will be released next Tuesday!
This episode will be packed with deep insights on the drawdown and market outlook—stay tuned!
Reset of the Short-Term Holder Cost Basis
After spending significant time above the Short-Term Holder (STH) Cost Basis, we’re finally seeing a full reset, and falling even further due to a supply gap.
These resets aren’t fun, as it’s easy to get comfortable with higher (slightly over-valued) Bitcoin prices, but they are a normal part of bull market corrections. However, a drop below the STH Cost Basis, instead of just consolidating, can lead to a more severe downtrend.
👉 So, is this just a correction, or is it something more serious?
Before we get into that, let’s take a closer look at the supply gap!
Bitcoin’s Supply Gap Being Filled
Since December 2024, I’ve been warning about the Bitcoin Supply Gap in the $76K–$87K range, emphasizing that this was a level we should be prepared for mentally.
After the election pump, we skipped over this range entirely. I was hoping we’d fill this gap before the inauguration, but there was simply not enough time before the event, an event that was expected to be another major catalyst.
Read my previous (highly relevant) newsletter warning about and explaining the Bitcoin Supply Gap, and compare it to similar gaps in the 2017 cycle here:
However, with no Bitcoin Strategic Reserve, the inauguration didn’t turn out to be the catalyst we had hoped for. As a result, we are finally seeing Bitcoin reset to these skipped-over levels. The supply gap is now being filled!
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