Hello subscribers,

Short term we are coasting bullish with no updates to the on-chain structure reported 2.5 weeks ago. It’s a sit and wait game while price climbs.

Over successive past months we’ve been seeing strong accumulation that is only just beginning to be reflected in price. New HODLers continue to arrive pushing the camouflaged organic price floor upwards.

Top level summary for 11th October 2020:

• Short Term (next 3 weeks): No changes to on-chain structure, bulls continue to dominate, likely 3 weeks or more, stay tuned.

• Mid Term (next 3 months): On-chain is bullish the next 3 months

• Long Term (full macro cycle): Now is the time to accumulate for a 2021 bull run

Analysis Breakdown

The next 2-3 weeks ahead

Peering into the blockchain, we saw an impulse of coins changing hands in August which predicted a price decline in September, followed by another impulse of coins which halted the price decline (“take profit”).

In my last update (made publicly on Twitter), the latest impulse was still forming with an expectation that it would be a bullish buying impulse based on early signs of hidden accumulation being seen on exchanges. This has correctly played out.

We are now coasting upwards with no new changes in the short term on-chain structure. I remain bullish and am awaiting any new changes.

Keen observers will notice there is a bullish supporting trend-line in coin movements forming, which I’ll highlight below.

A baseline of increasing activity in coin movements between participants is a sign of new investors. It’s bullish for the monthly time-frames ahead.

The next 3 months: Coin supply has dried up while demand dominates.

When the speculative coin stock sitting on spot exchanges drop it's a sign that new buyers are coming in to scoop coins off the market moving them into cold storage for longer term HODL. Approximately 250,000 BTC have been scooped up off the exchanges in the last 8 months. It’s very macro bullish; supply is drying up while demand dominates.

The next year: Bitcoin is undervalued (NVT Ratio)

Let’s take a look at NVT Ratio which measures Bitcoin's ratio of investor activity to capitalization. I first described it as Bitcoin's equivalent of a “PE Ratio”. Presently NVT is at undervaluation levels equivalent to the COVID19 white swan price bottom.

While NVT Ratio is in it’s lower ranges it is safe to buy. Typically in the early stages of a bull market there’s a lot of investor activity without it being yet reflected in price, we are in one of those zones right now.

What NVT is saying about BTC? It’s setting up for its next stage of the macro cycle, somewhat akin to mid-2016 of the last cycle, in a zone where we have broken out of the accumulation bottom, coins are now quietly being re-accumulated with a very healthy amount of investor activity which will drive price upwards for the remainder of the year and into 2021.

On-chain and market data provided in partnership with Glassnode.

In the meantime, tell your friends!