Play The Long Game

Directionless and low volume conditions continue across the cryptocurrency landscapeIn recent weeks, Bitcoin and the wider crypto complex has shown greater weakness, with price action for BTC failing to make sustained moves into the upper end of its recent 30–40k range as the market continues to absorb two primary bearish drivers: (i) the enormous disruption occurring to the mining industry as China bans practically all mining operations within its borders; and (ii) increased signs of regulatory pressure threatening various pockets of the industry.Selling pressure from Chinese miners liquidating holdings to fund the closure and possible relocation of operations is certainly a valid reason for the current price action, so too is the concern that market participants have with these lower prices and halving of hashrate, leading to the perceived reduction in network security that such hashrate provides. Both of these factors are sure to fade out over time, and we fully expect hashrate to rebound as supply chains re-organize and facilities in more favorable jurisdictions are brought up to capacity.Interestingly, the majority of losses in recent weeks have come from the impatient short-term holders who are selling at losses, as shown by the above Short-Term Holder — Spent Output Profit Ratio (SOPR) chart, which calculates the USD value of when a UTXO is created compared to when it is then subsequently spent. Losses are indicated with the output ratio is below 1. Losses in recent days are on a par with the massive March 2020 Covid liquidation event. Warren Buffet famously once said, the stock market is a device for transferring money from the impatient to the patient…… We would argue that the same applies to practically every asset class, crypto included.Overlaying the above narratives and onchain indicators (which haven’t performed so well in recent months) with some traditional technical…