Healthy Pullback & Taproot Upgrade
Key Takeaways
- After Bitcoin reached a new all-time high of $69,000, we have seen a reset in futures funding markets, and spot demand start to waiver.
- These pullbacks are not uncommon in bull markets. Since June 2020, there have been 34 daily drawdowns (open to close) of over 5%, largest of which were 14% in May and 13% in January.
- On chain data further supports our view. As we noted last week, long-term holders have started to scale out of their positions into a strengthening market, with short-term holders re-entering the market at higher price ranges.
- On November 14, the Bitcoin network implemented the Taproot Upgrade, its first software upgrade in four years. The update is part of a larger effort by Bitcoin developers to improve the scalability, privacy, and composability of the network.
- Bottom Line: We view Bitcoin's 17% pullback this week as a healthy market pullback from overbought conditions - nothing structural has changed. Having said that, we believe the volatility from the past week has presented good buying opportunities across the majors. The Taproot upgrade also presents a long-term bullish case for Bitcoin, as it minimizes unnecessary data collection in the network and enables more complex transactions.
Bitcoin Taproot Upgrade Note
On ...Reports you may have missed
BUYERS ON STRIKE Last week, we discussed our immediate-term cautious approach to the crypto market, highlighting recent geopolitical tensions, tax-related selling, negative fiscal flows, and the persistent rise in real yields as reasons for a more risk-averse positioning (albeit relative, as holding 7.5% in cash and the rest in crypto is hardly considered risk-averse in most circles). This uncertainty has persisted into this week, evidenced by what we consider an...
Fiscal Dominance, Flows from China, Plus Some Thoughts on Global Conflict (Core Strategy Rebalance)
WHAT BTC SHRUGGING OFF CPI SAYS ABOUT CURRENT FISCAL SITUATION The most significant piece of macro data this week was the CPI. Headline CPI registered at 3.5%, surpassing the anticipated 3.4%, while core CPI remained steady from last month at 3.8%, also above the expected 3.7%. This increase was largely attributed to rising costs in auto insurance and shelter. Consequently, interest rates saw a sharp rise, with the 10-year Treasury...
Articles Read 1/1
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In 6ed3bb-ae3840-2924aa-fef9d7-f40f04
Already have an account? Sign In 6ed3bb-ae3840-2924aa-fef9d7-f40f04