Original source: Markus Thielen, 10x Research

Compiled by: Wenser, Odaily Planet Daily

Editor's note: 10X Research, a well-known investment research institution, once again expressed its latest views on the Bitcoin market. Combined with the recent selling of Bitcoin ETFs, miners, listed miners and early Bitcoin holders, 10X Research gave a price estimate for the next stage of the market. Whether it can reach the expected point may determine the subsequent direction of the market. .

The four-year cycle and supply-circulation model are key tools for price forecasting

The quadrennial predictive parabolic cycle pattern is crucial as the basis for Bitcoin price estimates, which is also the basis for 95% of cryptocurrency estimates. Although, this model is often over exaggerated, suggesting that Bitcoin’s value will rise indefinitely. Another key tool is the "supply-flow model", which predicts Bitcoin's infinite value by emphasizing the reduction in supply.

As usual this year, most experts are still predicting that Bitcoin prices will reach new highs, with predictions ranging from $100,000 to $150,000 and beyond.

These two factors, technological innovation and human psychology (especially the interplay of greed and fear), are key catalysts for the cyclical market in cryptocurrencies. Nonetheless, the market is essentially a momentum game - most participants are actively pushing prices higher and maintaining a consistently bullish stance. This self-fulfilling prophecy underscores the need to decisively capture upward momentum when opportunities arise. At the same time, this phenomenon also indicates that there may be more cycles in the future.

Valuation of Bitcoin on a utility value and cash flow basis should be addressed in the discussion. Unlike other assets, Bitcoin is similar to gold if valued based on a production cost curve. As time goes on, the psychology of buying Bitcoin becomes more complicated, because one Bitcoin purchased at a high price (such as $70,000) may not seem as attractive as a cryptocurrency that can buy a billion coins for $100. force. Meme coins take advantage of this psychology, and listed companies achieve the same goal through stock splits.

Comparison chart between Bitcoin (purple) and fund flow indicator (white). Three major groups sell Bitcoin, and hedge fund arbitrage opportunities may disappear.

Although the current market structure is not entirely bullish, we speculated three weeks ago that Bitcoin would attempt a breakout near $70,000 based on the belief that all-time highs are typically followed by a parabolic rise; When a breakthrough fails, risk management becomes critical. At the time, we expected lower inflation data to be a catalyst for a rise in Bitcoin prices, which was indeed the case, but Bitcoin suffered a massive sell-off.

First, contrary to previous aggressive buying of Bitcoin ETFs due to changes in inflation, Bitcoin ETFs have sold off $1 billion in assets over the past eight trading days.

Secondly, over-the-counter sales by Bitcoin miners grew to the largest single-day volume since March, with sales exceeding 3,200 Bitcoins in one day. Listed miners hold 3% of the market but sold a net 8,000 BTC in May (June figures are not yet available, but miners sold significantly more). Miners’ Bitcoin reserves fell from $129 billion on June 5 to $118 billion now.

Finally, another group of sellers were early Bitcoin holders, who sold $1.2 billion.

All three appear to be content selling Bitcoin at prices above $70,000.

We estimate an average Bitcoin ETF entry price of $60,000 to $61,000, with prices returning to this level likely to cause a wave of liquidations. When Bitcoin fell to $56,500 on May 2, BlackRock issued a statement saying that "sovereign wealth funds and pension funds are about to enter the market." This somewhat prevented Bitcoin from falling further, but now, BlackRock says that 80% of the buying volume for their Bitcoin ETF IBIT comes from retail investors rather than institutions (see source here ).

Currently, the $61,000 price level is in line with the 21-week moving average, while in previous cycles this indicator has been good for both buys (Bitcoin price is above the 21-week moving average) or sells risk management indicators. We estimate that 30% of the $14.5 billion Bitcoin ETF is funded by arbitrage-seeking hedge funds, and eight trading days of ETF liquidations suggest that these funds may not be close to the futures expiration date (June 28) The arbitrage trade (long ETF vs. short CME futures) continues because the arbitrage opportunity has disappeared.

Bitcoin (white) versus its 21-week moving average (purple)

The arbitrage opportunity exists because high interest rates allow exchanges to sell futures at a premium, and most crypto traders tend to be bullish (on the buyer side), which drives up the cost of funds. The average annualized funding rate for Bitcoin in 2024 is 16%, up from just 8-9% over the past few days. Therefore, this single-digit funding rate may not be able to sustain the arbitrage game, leading to continued outflows from Bitcoin ETFs. This is the flip side of the arbitrage signaling effect we explained in articles like March 8 (the first cautious statement since Bitcoin reached $40,000) and April 5.

Our market structure analysis unpacks liquidity components and so sometimes provides a cautious view counter to the underlying bullish (parabolic) narrative. In fact, despite a significant slowdown in Bitcoin ETF inflows since March 12 (when CPI data was rising rapidly), a significant decline in altcoin trading volume, and a subsequent decline in funding rates, Bitcoin prices have declined over the past three months. Internally, it remains within a wide range of 15%.

Stablecoin minting has slowed down significantly since April 21, when the Bitcoin halving was completed. These factors (Bitcoin ETF inflows and stablecoin minting pauses, falling altcoin and funding rates) lead us to fear of a Bitcoin price drop to $52,000-55,000, a figure just shy of the actual performance of the market Around 3% (Bitcoin price dropped as low as $56,500).

On May 15, following the release of lower CPI data, Bitcoin ETF inflows reached $3.8 billion over the next 20 days. If growth continues, we expect lower CPI numbers to drive a market rebound and expect CPI numbers to be below 3.0% later this year. In July 2019, the Federal Reserve cut interest rates due to declining inflation and weak economic growth. At that time, Bitcoin fell as much as 30%, so the reason for the rate cut is important.

However, Bitcoin ETF buying failed to grow this time as arbitrage (funding rates) became less attractive. When the U.S. Securities and Exchange Commission (SEC) hinted at possible approval of an Ethereum ETF on May 20, the market structure improved significantly as futures positioning increased. In about three weeks, the market bought $4.4 billion in Ethereum futures positions (a 50% increase) and $3 billion in Bitcoin futures. Combined with May 15 CPI data, this effectively improved the market structure and helped Bitcoin prices rise back to $70,000, with early holders, miners, and ETFs actively choosing to sell their Bitcoin holdings.

Key points: Can it hold 61000 and 65000?

Trading is always a "risk-reward game", and we pointed out on June 3 that if the price of Bitcoin fails to reach an all-time high in June, excessive ETH futures positions will face associated risks. Leveraged futures traders have been the primary, if not the only, buyers since the Securities and Exchange Commission (SEC) approved the 19 b-4 filing on May 23 (the S-1 filing is still under review). Their flows have pushed Bitcoin back towards the top of the range, and combined with lower CPI numbers, the risk/reward ratio is tilted towards a Bitcoin breakout.

Lower inflation data, the U.S. election and a rebound in U.S. stocks are non-crypto market catalysts supporting a rise in Bitcoin prices later this year. But without more stablecoin minting, Bitcoin ETF inflows, and an increase in futures leverage or other liquidity (market structure) indicators, Bitcoin bulls may miss out on the upside.

Every time the price fails to attempt a breakout or Bitcoin trades back below the previous cycle’s all-time high ($68,300 as the dividing line), we need to redefine a level for risk management of open positions.

The $61,000 21-week moving average has somewhat protected against larger retracements in previous cycles.

Another key level is $65,000, which is the mid-point of the consolidation period over the past three months and could signal the formation of a larger cycle top.

We do not blindly believe in baseless claims, but we trust the information reflected in the data. Judging from the fact that the number of market participants (including early holders, Bitcoin ETF buyers, miners, stablecoin issuers, etc.) has not increased significantly, the current market situation is worrying.

Therefore, each individual needs to decide for themselves their own risk tolerance. By combining risk management and data analysis, traders can "stay at the poker table." As an old trader said to us 15 years ago - "The market opens every day", which means that we will always have the next opportunity and the next cycle.

Bitcoin (white) compared to its monthly stochastic (purple)

(The above content is excerpted and reprinted with the authorization of partner MarsBit, original text link | Source: Odaily Planet Daily)

Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.

〈More than US$2 billion in Bitcoin has been sold off, should retail investors “follow” or “stick”? 〉This article was first published in "Block Guest".