Market Analysis

Market Intelligence 23

May 4, 2022 • 3 min read

BTC's weekly range tightens further with price remaining largely unchanged week over week
Volatility & yields in derivatives markets have continued to decline
Institutions found value at current price levels and have accumulated heavily in recent weeks
Long-term BTC price model suggests that a bottom zone has been established

Price: $38.8k
Week Open: $38.1k
Week High: $40.2k
Week Low: $37.5k
7-day return: + 1.9%

This week saw weakness across equity, bond & crypto markets with BTC trading to a new monthly low of $37.5k
Bitcoin has remained relatively robust this week as prices continue to trade within its YTD range, whilst the Nasdaq & the S&P500 indexes traded to new local lows
Correlations between Bitcoin & traditional markets remain near all-time highs however, as the broader perception of Bitcoin as a risk asset remains and is a significant risk to its short-term price action

Bitcoin's price has primarily ranged between $37.5k - $44k in 2022
Price has traded within a tight range of $38.5k - $42k in the last month
The BTC trading channel has compressed further in the last week which has caused its realized volatility and 30d beta to decline to 62.82% and 1.0 respectively

There are two significant market events taking place this week:

Given the high BTC-NASDAQ correlation (30d correlation, 0.73), these events can impact the digital assets market.

Markets have already priced in these events according to the following estimations:

Positive news will likely translate into a buy signal with the opposite leading to a sell signal.

The Mayer Multiple (MM) is an oscillator calculated by taking the ratio between price & the 200d moving average, & has historically provided reliable long-term bottom & top signals for Bitcoin cycles
The model is signalling that BTC is undervalued by - 20%, which is a level previously seen during late stage bear market floors
This level is outlined below in green

Bear markets of past cycles have tested the 0.8 bottom zone on two occasions before significant recoveries in price
The MM is currently consolidating within the green zone and is testing it for the second time during this bear market cycle (2021-22)

The number of addresses with a balance of over 10k BTC has steadily increased in the last three months, and rapidly in the last three weeks
To be exact, six wallets have accumulated more than 10k BTC in the last three months which amounts to approximately $390 million USD worth of BTC per wallet
In total, these wallets have accumulated a total of $2.34 billion USD worth of BTC since February
Interestingly, prices have remained relatively unchanged during this period
This suggests that institutions, whom are likely behind these wallets, view the current price range as a value zone and a good entry point into the market

Conclusion

Bitcoin remains in its YTD range and has in the last few weeks compressed into a tight trading channel
This coupled with declining volatility and yields in derivatives markets has created an attractive entry zone for institutional investors
These sophisticated investors have in fact accumulated significantly in the last three months, especially in the last three weeks
Institutions view current price levels as a value zone which aligns with the signal provided by long-term BTC price models, which indicate that BTC is currently undervalued and has established a bottom price