BTC: mean transaction fee (USD) vs. price
Diupdate
Let's look at an on chain metric: the mean transaction fee in USD for Bitcoin since inception.
We can see there's a clear correlation between the mean fees and price. When transaction fees go up, so does the price and vice versa. What we can conclude from Bitcoin's all time history is that fees peak out at all time high, this could be because of big players cashing out, thus having high volume transactions creating relative high fees. Just based off this metric we could argue Bitcoin topped out in April, which it didn't.
Another interesting point is the May - July accumulation where fees were still relative high, this could represent the high institutional buying interest at that time. Fun fact is that - from that point - we have seen price going towards a new ATH but fees have still kept dropping. Overall you could argue this is bullish, because institutions seem to have held onto their Bitcoin bags. However, I regard it as bearish. Institutions (or whales) - whatever you want to call them - moving into Bitcoin in 2021 means to me(!) they have no clue about this space. Simply said, they are late adopters and they definitely have missed the parabolic price action action on Bitcoin especially in terms of percentage returns.
This also explain the large amount of Bitcoin that has left exchanges over the last (half a) year or so. It means a pivotal shift of the Bitcoin supply from smart money (early adopters) to dumb institutional money (laggards). I know they teach you institutions are always "smart money", but believe me they aren't: the financial crisis of 2008 should teach you a lot about this - and wasn't that event referred to by Bitcoin's creator?
The question remains what these institutions will do with their bags, especially if price goes against them. Price levels of sub 30K will drop them into substantial loss territory and could be used by market makers to induce capitulation.
Looking at the chart we see a clear downtrend on mean transaction fees deviating a lot from it's all time trendline (white dashed), also printing a bearish divergence on the RSI and a negative momentum on the MACD. When we see transaction fees spike again, it could mean one or two things: they are selling or they are buying.
All will come in confluence with the price action on the stock market and the new policies of the federal reserve announced this Wednesday. The Fed is split between record inflation and a looming depression if rate hikes are too fierce. However, I do think they will want to cool off the market and especially the crypto market would become a high liability if institutions behave as laggards in the space. Both the stock and crypto markets are at all time high valuations if you zoom out a year or two, cooling these markets off is nothing more than healthy. A shift back to active income; do something useful for society instead of passive income; watch numbers - would be preferred. This also applies to myself and I have no problem admitting that trading is both a dumb and brilliant way to make money.
Have a life next to these markets and if you don't have one, get one.
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
We can see there's a clear correlation between the mean fees and price. When transaction fees go up, so does the price and vice versa. What we can conclude from Bitcoin's all time history is that fees peak out at all time high, this could be because of big players cashing out, thus having high volume transactions creating relative high fees. Just based off this metric we could argue Bitcoin topped out in April, which it didn't.
Another interesting point is the May - July accumulation where fees were still relative high, this could represent the high institutional buying interest at that time. Fun fact is that - from that point - we have seen price going towards a new ATH but fees have still kept dropping. Overall you could argue this is bullish, because institutions seem to have held onto their Bitcoin bags. However, I regard it as bearish. Institutions (or whales) - whatever you want to call them - moving into Bitcoin in 2021 means to me(!) they have no clue about this space. Simply said, they are late adopters and they definitely have missed the parabolic price action action on Bitcoin especially in terms of percentage returns.
This also explain the large amount of Bitcoin that has left exchanges over the last (half a) year or so. It means a pivotal shift of the Bitcoin supply from smart money (early adopters) to dumb institutional money (laggards). I know they teach you institutions are always "smart money", but believe me they aren't: the financial crisis of 2008 should teach you a lot about this - and wasn't that event referred to by Bitcoin's creator?
The question remains what these institutions will do with their bags, especially if price goes against them. Price levels of sub 30K will drop them into substantial loss territory and could be used by market makers to induce capitulation.
Looking at the chart we see a clear downtrend on mean transaction fees deviating a lot from it's all time trendline (white dashed), also printing a bearish divergence on the RSI and a negative momentum on the MACD. When we see transaction fees spike again, it could mean one or two things: they are selling or they are buying.
All will come in confluence with the price action on the stock market and the new policies of the federal reserve announced this Wednesday. The Fed is split between record inflation and a looming depression if rate hikes are too fierce. However, I do think they will want to cool off the market and especially the crypto market would become a high liability if institutions behave as laggards in the space. Both the stock and crypto markets are at all time high valuations if you zoom out a year or two, cooling these markets off is nothing more than healthy. A shift back to active income; do something useful for society instead of passive income; watch numbers - would be preferred. This also applies to myself and I have no problem admitting that trading is both a dumb and brilliant way to make money.
Have a life next to these markets and if you don't have one, get one.
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
Catatan
I missed the biggest point haha! >>> 2017 top: 25 usd, 2021 top: 25 usd <<<
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