Netizen Weekly | Bitcoin Market Update #1
Bitcoin Tests $98K: Liquidity Wave Meets Trade Policy Headwinds
Bitcoin has shown impressive strength this week, holding steady around $98K even as broader crypto markets tumbled. While recent trade policy announcements from President Trump sparked some weekend volatility, Bitcoin's quick recovery from the $93K dip demonstrates growing confidence from large investors.
The Macro View: Mixed Signals Create Uncertainty
The financial landscape presents both opportunities and significant risks for Bitcoin. The U.S. Treasury is set to release nearly $830 billion into the financial system over the coming months, which typically supports risk assets (including Bitcoin). However, President Trump's new trade policies could strengthen the dollar and reduce global market liquidity, potentially pressuring Bitcoin's price.
Institutional interest remains steady through ETF flows, but positioning data suggests many large investors are already heavily exposed, limiting potential new buyers. The persistent high wage growth at 6.6% annually could force the Federal Reserve to maintain tight monetary policy longer than expected, which historically challenges asset prices. These conflicting forces mean investors should prepare for increased volatility ahead.
On-Chain Pulse: Strong Hands vs Weak Hands
Bitcoin's on-chain data reveals an interesting battle between different types of investors. Recent price dips triggered $520M in losses, primarily from traders who bought near the highs and quickly sold. Over 90% of selling came from positions less than a month old, suggesting newer investors are being shaken out while long-term holders remain confident.
Large transactions continue at high levels despite price swings, indicating that bigger players view dips as buying opportunities. This pattern of weak hands selling to strong hands has historically preceded significant upward moves, though past performance doesn't guarantee future results.
Particularly Noteworthy
While Bitcoin has maintained relative stability, other cryptocurrencies have experienced a massive $234B sell-off. This striking difference suggests that Bitcoin is increasingly viewed as a safer, more mature investment – more like digital gold than a speculative tech bet. However, investors should watch this trend carefully, as severe weakness in the broader crypto market could eventually impact Bitcoin's price.
Cost Basis Analysis: Key Support Levels
Current market structure shows several critical cost basis levels forming potential support zones:
Bitcoin Price: $96,074 (current)
Short-Term Holder Cost Basis: $92,246 (-4.0% below price)
True Market Mean: $63,945 (-33.4% below price)
Realized Price: $43,198 (-55.0% below price)
Long-Term Holder Cost Basis: $24,773 (-74.2% below price)
These price levels act as natural support zones where different types of investors have built large positions. The closest support at $92,246 has proven strong during recent tests. While the substantial gap to lower levels might suggest room for upside, it could also mean limited buying support if prices fall significantly.
Market Positioning & Outlook
Short-term (1-3 months): Market conditions suggest increased volatility ahead. The government's upcoming $830B spending could support prices, but several warning signs have emerged. Bitcoin's price needs to hold above key support at $92K to maintain bullish momentum. The rapid collapse in altcoin prices could spill over into Bitcoin if market stress increases. Current positioning shows many investors are already heavily invested, which could amplify downside moves if sentiment shifts.
Long-term (3-12 months): The outlook presents both opportunities and significant risks. Changes in government spending patterns could support asset prices, but multiple challenges loom on the horizon. A potential reacceleration of inflation in Q2 could force a more hawkish Fed stance. Trade policy uncertainty might strengthen the dollar and pressure Bitcoin. Positioning metrics are reaching levels historically associated with major market peaks. Given these factors, investors should consider scaling position sizes accordingly and maintaining strict risk management practices.
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Disclaimer: This newsletter is for informational purposes only and should not be considered investment advice. Bitcoin is a volatile and speculative investment that carry significant risks. Do your own research.