Adamant Capital published a report of their analysis of Bitcoin prices and sentiments since its inception in 2019. The report is titled “Bitcoin in Heavy Accumulation” and was released on 18th April 2019. It is a comprehensive approach that covers Technical Analysis on account of the bitcoins moved in addresses or bitcoin days. Furthermore, fundamentals have also been taken into consideration to judge market sentiments.
Moreover, the general tone of the report can be judged from the following quote in the report:
“Preparation for the principal movements in the market will often occupy several months.” Richard D. Wyckoff, 1910.
Technical Analysis of ‘No. Of Bitcoin Days’
Bitcoin Relative Unrealised Profit/Loss is a metric defined by Adamant Capital to estimate the gross loss/profit by the ‘average’ Bitcoin investor. This is calculated by taking out the average of total value moved in Bitcoin in USD (No. of Bitcoin Days); i.e., only Bitcoins which are moved are finally incurring profit/loss, the rest is ‘hodled.’ According to their report, the market sentiments have entered a hopeful phase which is most closely resembles the 2013-2014 cycles. Hence, the recent 20% gain can be expected to be doubled soon.
The analysis also included the ‘hodler’ characteristics over the timeline in Bitcoin (BTC). While the market sentiments fell incredibly during November 2018, the overall market seems to be in favor of buying Bitcoin.
The report outlined that while many institutional investors “got cold feet” during November 2018, the over market sentiments have increased with increased avenues for investment for institutional investors.
The reported included the fundamental progress made by institutional firms:
“Goldman Sach invested in crypto-custodian Bitgo… Planned for later in 2019 are Fidelity Digital Custody (soft launch), Nasdaq Bitcoin Futures, and cryptocurrency custody provided by Northern Trust”
Currently, the growth in Satoshi’s Vision of payment channels on top of Bitcoin implemented as the Bitcoin Lightning network is also under progress and has gained momentum.
However, the downside in the short-term is Bitcoin’s inflation rate at 3.7% annualized. The inflation in the US Dollar is currently 2%. Hence, as during a bear market, the miners sell more to pay electricity bills, it leads to price pressures. Nevertheless, the most recent miners make a profit above $3000. Hence, the accumulations could continue as well.
Hence, while the report confirmed that the market has entered an accumulation phase it could still take multiple routes in the short term which includes a double-up and a re-test of November lows. However, the reported said, “we strongly feel that Bitcoin is undervalued at these prices.”