What is the bull case for Bitcoin? What are the bear cases in 2022? On-chain analysis can help address these questions with a concrete answer. Expert opinions vary, but this tool will find out if you’re right.
“bull talk meaning” is a term that has been used in the stock market for decades. It refers to the idea of buying low and selling high. “Bulls” are investors who believe in a company’s future while “Bears” are those who believe it will not succeed.
We largely mentioned in our last on-chain market research that bitcoin needs to retake the $53k level, which is the cost base for short-term holders. We not only failed to achieve that critical threshold, but we also observed a drop to $41k. Previously, in December 2021, there was a significant build-up of open interest, resulting in substantial negative volatility.
The market responded in unexpected ways as a result of the FED announcement. The Federal Reserve was expected to hike interest rates, as many investors expected. As a result, their holdings will shrink, and banks will decrease bond purchases. What no one expected was for all three to occur at the same time.
In addition to monetary tightening, the administration failed to meet its 400,000-job objective in December. They were only able to create 199,000 new employment. Though this has a significant impact on the unemployment rate, it is not a promising omen for the next year.
It’s also crucial to comprehend how the new variation, Omicron, would affect the FED’s interest rate hikes. If there is a delay, risky assets such as bitcoin may move in the other way. But what if they aggressively shrink their balance sheet and raise interest rates with a shorter time lag? In such circumstances, navigating any financial market, including cryptocurrency, would be incredibly tough.
With bitcoin, we must keep an eye on the crypto perpetual futures market. We can tell that high volatility is on the way, and leveraged markets are under pressure. However, we are unaware of market players’ positions. We need to look at financing rates to solve this risk management problem with bitcoin. For the last several months, we hoped to see a mix of positive and negative financing rates. However, it was essentially a straight line. So, unlike the one we witnessed in late July 2021, there was no sign of a brief squeeze setup.
So, despite the fact that large liquidation events have occurred in recent weeks, we cannot infer that the market is no longer prone to dramatic movements, at least in the near term. The stablecoin market interest is still at its all-time high, so we have a long way to go before the futures market sees a full flush out. Because bitcoin is a risk on/off asset, I highlight the equities side of markets. There is a substantial link with other financial markets now that it has been institutionalized.
We may look at the following on-chain measures to get a sense of the general market mood.
In/Out of the Money on a Global Scale
When bitcoin went on a run and touched a new all-time high of $69, the bulk of the market assumed BTC will approach $100,000 before the end of 2021. As a result, we saw a lot of purchasing around the mid 60s. As a result, more than 34% of active addresses are in danger of being lost permanently. If we can regain $53k, these losses will rapidly convert into profits.
Long-term investors own a large portion of the supply.
The graphic below was created by Checkmate, a well-known on-chain analyzer. This is a crucial statistic for determining how long-term investors spend and acquire. They are the ones that laid the foundation for bitcoin. So, if anything is fundamentally incorrect, we may use this measure to confirm it. Currently, there is no significant increase in LTH’s supply. For a brief time in Q4 2021, BTC was distributed, lowering LTH’s total supply by 1.11 percent. This has likewise to a halt. So the major point here is that long-term investors are not selling at current levels and are gradually building up their holdings.
Over the last year, a large number of cruisers and traders have become holders, increasing the concentration of BTC ownership. At the present, more over half of BTC addresses are holders, while fewer than ten percent are traders. It’s also worth noting that the number of traders has dropped dramatically in the previous two months, indicating that the majority of the market isn’t seeking for bitcoin traders in current unstable market.
Rate of Hash
Because of the recent halt of mining activity in Kazakhstan, I’m included this graphic. We need to observe any substantial influence on the bitcoin network since it is one of the top mining locations. We saw a little drop to low 160m TH/s. But it’s nothing major. Given the total collapse in June 2021, this is a very positive omen. We recovered perfectly and reached an all-time high of 210m TH/s.
Case of the Bull
Case of the Bear
Karthikeya Gutta, a crypto writer and freelance contributor for ItsBlockchain, was born and raised in India. With in-depth analysis and research, he covers all facets of the sector. His enthusiasm for blockchain and the crypto ecosystem stems from his belief that it has the potential to transform the world and benefit millions of people.
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The “red bull second driver” is a cryptocurrency that has been discussed in the past. The coin was created by Red Bull and it was meant to be used for advertising purposes. In 2022, the company will discuss its bull & bear cases with on-chain analysis.
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