sellers

Bitcoin has lost a third in seven weeks, and folks want answers. The prevailing sentiments among the podcasts, Substack articles, newsletters and socials are:
The most recent leg down caught many folks off guard.There are plenty of technical explanations: ETF outflows, DATs < mNAV, 10/10 damage, retail focused elsewhere and end of the "cycle."There are plenty of macro explanations: Fed rate cut probability decreasing, lingering damage from the government shutdown and the Clarity Act delay.Hey, this is crypto, it draws down by 1/3 sometimes.Sentiment is max negative.Possibly setting up for a rally, but maybe not in time to save 2025.

The crowd seems to have navigated the five stages of grief and emerged humble and sanguine. (A nagging question: was there enough grief, or is this another false bottom? Did capitulation occur?)

The humility, in particular, was most welcome, and best captured in Eric Peters's superb "wknd notes." With a wink, he alludes to the most vacuous form of market commentary, "There are more #sellers than buyers."

"..what we mean when we say that markets move because there are more #buyers than sellers is that when prices start to really move, it’s okay to not understand why. We say this to remind ourselves that anything can happen. It’s a protective mechanism.”

He reminds us that humility is not only a virtue, but necessary for survival:

“Investors who blow up and lose everything tend to believe that they know exactly why a market should be moving. They may believe it should move higher, and get stubbornly longer, leveraging up even as it moves lower, and lower and lower. Or vice versa. The survivors in this game have watched enough people destroy themselves in such a way that we prefer to accept the wisdom of markets. We learn that when prices fall even as most traders/investors think they should rise, there must be a reason. We just don’t know it yet. Sooner or later, we will."

One manager's #view

It's all well and good to be humble and sanguine, but when you are running two hedge funds, you also have to make decisions. On Friday, I brought Chris Sullivan from Hyperion Decimus on for a CoinDesk Markets Outlook spot. (Disclosure: Hyperion Decimus is a client of CoinDesk Indices.)

We agreed (both being derivatives people) that market volatility, while anxiogenic, can also be exhilarating. A roller coaster. Chris sees a V-shaped event ahead, declaring that it is (or will soon be) time to "feast on fear." We also agreed that seeing more developed put skew in bitcoin in the last few weeks was a healthy sign that the market is maturing (i.e., that recent downside hedging resembles more mature asset classes). Two more observations: 1) big wallets which may have sold above 100k appear to be buying back 20% lower and 2) trend signals have allowed his funds to step out of the way weeks ago and have plenty of dry powder.

Trend has been a good friend in #2025

Speaking of trend, it is turning out to be a savior of 2025 performance.  Our Bitcoin Trend Indicator (BTI), launched in March 2023, uses a quartet of moving average crossover signals to indicate the presence and strength of trend in the price of bitcoin. It has indicated "Significant Downtrend" for 24 days. Our clients have implemented several strategies based on BTI to allocate to — and away — from bitcoin. The YTD performance of one of those appears below.

As more and more investors and advisors adopt bitcoin and crypto into long-term portfolios, a trend overlay can help "smooth the ride" and keep folks in the game. It's especially pertinent now, as concerns that self-fulfilling "end-of-cycle" behavior weigh on bitcoin's price.

Source: Binance News / Bitdegree / #CoinDesk / Coinmarketcap / Cointelegraph / Decrypt

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