CRYPTO SPRING HAS ARRIVED

February 22, 2023 Written by AXiS ALiVE

Cover Image Credit: LordThrash

Crypto Spring is the part of the market cycle where prices start to recover from devastatingly low prices. Typically, this is a volatile period of time where old investors act as resistance on every major move while new investors look to absorb them at the "best price."

The change of supply and demand during this period is a function of overall shifts in market sentiment and price discovery of "fair value." After many months of holding higher lows and higher highs the table becomes set for a short speculative run.

BITCOIN AND THE 350 DAY MOVING AVERAGE

Bitcoin is the "Mac Daddy" asset of cryptocurrency. Bitcoin set the precedent as the highest appreciating asset of all time with an all-time-high 69,000,000% increase in price from the all-time low. When measuring the market sentiment during major trend changes in the market, analysts look to bitcoin as a signal that defines the overall direction.

One of the ways we measure the overall trend in cryptocurrency is by measuring the relationship between Bitcoin's price and its 350 Day Moving Average. In the chart below you will see five blue boxes which indicate key moments in the history of bitcoin's price.

1. The First Rejection off of the 350 Day MA lasted five months.

2. The Second Rejection off of the 350 Day MA lasted four months.

3. The Third test of the 350 Day MA experienced a one month consolidation period before doubling in price within two months.

4. On the Fourth test, price ripped straight through the 350 Day MA and formed support above it for two months before starting the 2020 Bull Run.

Price is now testing the 350 Day Moving Average for the fifth time. If history is any indicator, price has one of two outcomes. Either the asset will be rejected off of the 350 Day MA for a final test of the lows before continuing higher or the asset will rapidly move higher to test the 1.6 Accumulation High (green line) which is positioned at approximately $39,000.00 per Bitcoin.

Source: LookintoBitcoin.com

BITCOIN HALVING CYCLE

Another way of measuring Bitcoin's Price performance is by measuring its price distance from the next Block Reward Halving. Bitcoin exists because people set up large industrial warehouses filled with ASIC Mining Computers. These computers perform the hashing of the bitcoin network which propagates the blocks and rewards miners with bitcoin in return for their investment.

Source: Bitcoin Halving Clock

Every four years, the amount of Bitcoin rewarded to miners is reduced by 50%. This halving creates a supply-shock effect of newly minted Bitcoins on the market which reduces the overall supply of coins available to purchase. In other words, as a business, revenue is cut in half and miners are forced to sell their coins at a high price before the halving in anticipation of lost revenue. One way miners prevent themselves from going bankrupt is by hedging their bitcoin positions with short positions at the top of the bull market and by finding new and efficient ways to mine bitcoin for less costs and less energy demand during the bear market.

In every single cycle, Bitcoin has historically bottomed on or around 400 Days before the next halving. This is an indicator that prices are going to rise because large investors are looking to accumulate their positions for the next bull run at a discount. This behavior comes in anticipation of the increased scarcity of coins after the next halving occurs.

As of the time of writing, there are exactly 400 days until the next halving event and Bitcoin is in a bullish posture from a technical perspective. The chart below explains this relationship by the purple arrows which signal a momentum flip in sentiment.

Source: LookintoBitcoin.com

Bitcoin Puell Multiple

The Puell Multiple was created by David Puell in March of 2019. This metric looks at the supply side of Bitcoin's mining economy, specifically bitcoin miners and their revenue. The Puell Multiple is calculated by dividing the daily issuance value of bitcoins (in USD) by the 365-day moving average of daily issuance value.

This indicator explores market cycles from a mining revenue perspective. Bitcoin miners are sometimes referred to as compulsory sellers due to their need to cover fixed costs of energy expenditure and mining hardware in a market where price is extremely volatile. The revenue they generate influences price over time.

There are periods of time where the value of bitcoins being mined and entering the ecosystem is too great or too little relative to historical norms. Understanding these periods of time can be beneficial to understanding the overall market direction.

The chart below highlights periods where the value of Bitcoins issued on a daily basis has historically been extremely low (Orange Line Enters Green Box), which produced outsized returns for Bitcoin investors who bought Bitcoin here. It also shows periods where the daily issuance value was extremely high (Orange Line Touches Red Box), providing advantageous profit-taking for Bitcoin investors who sold here.

Notice how every time price leaves the Purple Boxes and tests the Blue Line, that marks the end of the bear market and the official start of Crypto Spring.

Source: LookintoBitcoin.com

Ethereum Rainbow Chart + HEX

The Ethereum price has found some long term support on the purple band of the rainbow going back to the $850 low. HEX has made an amazing 300% run off or the lows with a clean "W-Bottom" and a higher low.

Source: ETH Rainbow Chart

Correlations

• HEX is negatively correlated to Bitcoin and Ethereum over the past 7 days, meaning it is doing the opposite of Bitcoin 12% of the time and the opposite of Ethereum 17% of the time.

• Ethereum, by comparison, is doing the same thing as Bitcoin 90% of the time over the past 7 days.

• Hedron is positively correlated to the overall market direction and negatively correlated to HEX during the same time frame. This reinforces my prediction from last weeks blog that the price of Hedron would fall relative to HEX because of the removal of the Origin Address' Liquidity from the HEX/HEDRON pair.

Source: Correlations Matrix

HEX Liquidity

Part of the reason HEX is performing in this way is because the asset is holding its price levels with a strong liquidity setup backing up the price on the 1% Fee pair. Over the past few days a large Liquidity Provider put up 2.5 Million of USDC behind price in the 4.2¢ to 7¢ range. This liquidity is acting as bid support for investors looking to accumulate HEX before price moves its next leg up.

You can see in the chart below that I have identified a 22 million HEX Liquidity Wall between the 12¢ and 20¢ range. There is virtually no HEX to purchase between 7¢ and 12¢. This means that if the price stays at these levels for too long, a large player is likely to step in and sweep up all of the remaining HEX in the 5¢ to 6¢ Liquidity Wall and push prices rapidly higher into the "New Accumulation Range."

Source: Liquidity Viewer

Secure your bags now. Dollar Cost Average in on every retracement. Time is running out and maximum pain is starting to rear its ugly head north. Once this market really takes off, these prices will be gone forever. The proof is in the pudding and right now the pudding is Liquidity Pie.

Recent Broadcasts and Feedback

I had some very well-received broadcasts over the past week. Click the images below to see them for yourself and keep an eye on the EVENTS page for the next ones. I will be live with Cabana Crypto and Big Kurkowski this Friday at 5 PM EST.

Fireside Chat With Randy Hilarski | HEX, Pulsechain and The Macroeconomic Environment

AI and its Implications for Humanity With Brother KG and Corey Costa | Philosophical Sunday

Pure Alpha EPISODE III With Crypto Sloth and Chrispyman

If you have suggestions of what kind of content would make you more successful in crypto, leave your feedback on this twitter post here.

Cheers!

-AXiS ALiVE

Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.