Bitcoin's Bear Trap

Louis Sykes
September 23, 2021

Is this it?

Are the bears trapped, and now we rally on higher?

As we've said for those with shorter-term time horizons, there's nothing wrong with taking a swing if Bitcoin's above these lows.

The bears in the derivs are growing too, with funding rates across all exchanges falling back into the negative territory despite Bitcoin's recovery into the day.

Meanwhile, the coins coming to market are getting increasingly younger.

This is a custom indicator of ours that compares the spent outputs of greater than 6-months to those less than 6-months of age. When this line is rising, an increasing proportion of the coins being sold are older in nature.

Over the last few weeks, the coins coming to market are young, not from older long-term investors.

And speaking of long-term HODLers, they continue to stack sats.

Inventories on exchanges have fallen by 100k in the last month:

Derivative speculators are bearish, while long-term spot investors are continuing their accumulation. These are fertile grounds for a powerful disbelief rally that can trap bears.

But, these suspicions of ours will only be confirmed if Bitcoin can get back above that 46,000-47,000 ceiling we've been banging the table about for the last month.

So until then, things are likely to be choppy in the coming days/weeks while the market works off this overhead supply. That's why we're focusing heavily on the relative strength.

The coins above their Spring highs are the leaders - it's that simple.

There's a handful that look the exact same right now:

The resolutions from these bases will give us a lot of information on the underlying strength of the asset class. And it already looks like they're on their way higher...

We particularly like Avalanche $AVAX - you can check out our deep-dive into AVAX from yesterday's note here.

We'll catch you in tomorrow's call!

Allstarcharts Team

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