STH Cost Basis: Make or Break

ETF Tracker Update: Morgan Stanley

Dear Bitcoiners,

The make-or-break moment for Bitcoin continues. Sentiment is extremely bullish, yet the reality is that Bitcoin is still sitting right below the STH cost basis. Still, there are valid reasons why Bitcoin could push through:

• Unprecedented demand from STRC

• Negative funding rate

• ETF inflows, especially IBIT

Bullish sentiment might make you believe a breakout is a given. However, this rally faced little resistance and was mainly about filling the supply gap. The real resistance starts at the STH cost basis.

If you haven’t read last week’s newsletter, it remains highly relevant.

Reject or Break Through?

Live chart freely available:

Reject or break through, that is the question. I’ve discussed many times how this past bull market was different, with much more structural institutional demand. It has been the least retail-driven cycle, and therefore we’ve had a very distributed top.

The same applies to the bear market. Structural demand has continued, ‘crypto’ is out of the picture, and there is much less degeneracy. It is therefore much more probable we won’t reach the deep undervalued levels seen in previous cycles.

That doesn’t mean the bear market is over. It means that if Bitcoin rejects here, we are more likely to see another phase of sideways chop rather than a long period below the Realized Price.

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Structural Demand

We continue to see structural demand for Bitcoin. Treasury companies, specifically products like STRC, and ETF flows are of major importance. These gateways literally did not exist in previous cycles and are now the main source of demand!

In the coming months, we’ll start focusing more on products like STRC and its derivatives.

ETF Tracker Update

The other source of demand, and of major importance, are ETFs. Therefore this week the ETF Tracker got an update. Morgan Stanley has been added!

Over the past months, data for some ETFs was not updating correctly in real time. All these issues have now been resolved.

Moving Forward

Together, we’ll closely track how Bitcoin responds to the STH cost basis. If it rejects, we have a pretty decent picture of how things could play out. Just read the newsletters from the past month.

If Bitcoin is able to break through resistance and turn it into support, we’ll have to take a more bullish stance. It would signify a new era for Bitcoin, breaking away from the 4-year cycle.

I shared the reasons why this might happen, and honestly, that would be exciting to see play out. But I do not want to be prematurely bullish. The resistance is real, so let’s first observe how Bitcoin responds.

Announcement

Exciting changes are on the way, I’ll share more in the coming weeks.

I’ll also be at Bitcoin Las Vegas next week. If you’re going to be there, send me a DM!

I hope you enjoy the ETF Tracker update and found these insights useful. As always, let me know what you think in the comments. 👊 🧡

Until next week! 🫡

-Root