Surviving Bull Drawdowns

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As Bitcoin breaks through 60k support for the first time in two months, we look at which group of investors is contributing the most to sell-side activity.


  • Bitcoin’s Market Analysis: Bitcoin recently broke through the $60k support level for the first time in two months, descending from a March and April high of $73,000.
  • Investor Behavior: In this report, I delve into whether current investor actions lean more towards distribution or accumulation, particularly in light of recent market movements.
  • Recent Selling Activity: Notably, large wallet holders began offloading in April, aligning with a dip in Bitcoin’s price post-conflict news from the Middle East.
  • Navigating Local Bottoms: With Bitcoin only 23% below its all-time high, the current situation may seem dire, but it’s aligned with Bitcoin’s historical resilience to such downturns.
  • Potential End of Bull Run?: While the NUPL metric and other signs point to a euphoria phase, suggesting potential cooling, many other indicators I’ve analyzed imply that the bull run isn’t over just yet. However, it’s important to acknowledge that this bull run may be shorter than many anticipate.
  • Investment Strategy: In light of these findings, I continue to argue in favour of adding capital and maintaining investments in the S-DCA ($BTC) zone of USD 52,000. The current level of USD 52,000 is a significant liquidity zone that represents a good buying opportunity.

Distribution in April

The Bitcoin market has been in a consolidation phase in the mid-$60s since peaking at $73,000 in March and April, but has now fallen below the zone we identified weeks ago. In this report, we will examine whether investor behaviour during this period is leaning more towards distribution or accumulation.

First, we will use the Accumulation Trend Score to demonstrate how investor accumulation trends have defined the local highs and lows since the FTX crash.

In the early phases of both the 2020-21 and 2023-24 bull runs, we observed a correlation between periods of distribution (light colors) and phases of price contraction. As the market reaches new peaks, selling pressure returns as investors mobilize dormant supplies to meet rising demand.

When the spot price hit new all-time highs in mid-March, a similar pattern of local distribution emerged, which intensified following news of the conflict in the Middle East, leading to a drop to $60.3k.

When we have a look at the recent trend accumulation score by cohort, we see that large wallets started selling during April. This is a metric we should pay closer attention to in the future.

Unrealized Pain & Gain Cycles

A key feature of the ongoing bull market has been the positive influence of US Spot ETFs on price movements. The impact of these ETFs on investor actions is evident through the Net Unrealized Profit & Loss (NUPL) metric, which assesses the overall unrealized profits or losses across the market (normalized by market cap).

Using NUPL, we can distinguish the classic Euphoria phase of a bull market where unrealized profits exceed half of the market cap (NUPL > 0.5).

In the 2020-21 cycle, this phase started about 8.5 months post-Bitcoin halving and continued for nearly 10.5 months. However, in the current cycle, NUPL crossed 0.5 roughly 6.5 months before the halving, highlighting the significant role of US ETFs in accelerating price movements by introducing substantial demand. Unfortunately, this is not good at all because it could mean a potential end to the bull run.

Navigating Local Bottoms

But does this actually mean the bull run is over?

Nobody of us has a crystal ball, but I don’t think so. After all, we are “only” 23% away from the all-time high. But why does it feel so much worse? There are two main reasons:

1. This is the second longest streak of negative weekly candles in Bitcoin’s history.

2. This is the largest negative monthly performance since November 2022, when the FTX crash occurred.

But a drawdown of -23% during a bear market is nothing unusual!

Credits to @MilkRoadDaily:

So far, this run we saw 4 times a 20% and not a single -30% drawdown!

Conclusions and Summary

This report confirms that the Bitcoin market has entered a widespread net payout phase since peaking at $73k in March. The NUPL metric indicates that we are in a euphoria phase, but it has also cooled significantly since the correction began.

All other factors do not point to an end of the current bull run. As I said a few days ago, I would add further capital in the 52k S-DCA zone, otherwise I am already well invested.

Quick note because I was asked: The arrows indicate where I think the course is going, and do not indicate the time frame unless I specifically mention it.

This also plays into a liquidity zone that we see at $52k.

I know most of you are already invested, so you can probably do as I did. In case someone is starting their investment journey or has a lot of new capital to invest, I would rather buy something now. We are currently at a support level (see the thin dotted line in the black chart above, touching two candles in the left centre of the chart.

With that beeing said my advice is: Patience my friend, patience 🧘🏽‍♂️⏳

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