Netizen Weekly | Bitcoin Market Update #7
Uncertainty, Delusion, and Bitcoin: Why Market Risk Is Skewed To The Downside
Wall Street's Rose-Colored Delusion
As discussed in this week's premium note, market uncertainty is extremely elevated. Wall Street's consensus earnings estimates appear increasingly disconnected from economic reality. As a former equity research analyst, I've seen firsthand how sell-side estimates are routinely inflated due to the cozy relationships between corporations and investment banks. It's no coincidence that current analyst ratings show an absurd 275 buys, 227 holds, and literally ZERO sells on S&P 500 stocks. Not a single sell rating! These overly optimistic projections make absolutely no sense when contrasted with the Fed's recent revisions – they've lowered 2025 growth to 1.7%, raised unemployment to 4.4%, and increased inflation to 2.8%.
The Fed's alarming admission that economic slowdown is their base case comes while FOMC members report the highest forecast uncertainty since COVID. Yet Wall Street's bottom-up consensus forecasts inexplicably call for approximately 19% returns on the S&P 500 over the next year. Add to this the Trump administration's unpredictable trade policies (auto tariffs one day, exemptions the next), potential SLR amendments, and shifting economic priorities, and we're facing a perfect storm of misplaced optimism and policy uncertainty. Asset markets despise uncertainty more than almost anything else, creating downside risk for all risk assets, Bitcoin included.
TLDR: Market expectations remain disconnected from deteriorating fundamentals, creating elevated volatility risk for Bitcoin in the near term.
Red Ink Rising: Short-Term Holder Pain
Our analysis reveals that approximately 89% of short-term holder coins are currently underwater, representing the largest volume of STH supply in loss since July 2018 at 3.5 million BTC. This "top-heavy" market structure is a concerning signal that typically precedes increased volatility. From the perspective of unrealized losses, Short-Term Holders are experiencing some of the largest paper losses of this cycle. However, these losses remain within the upper bounds of previous bull markets, suggesting that while investor stress is meaningful, it's not yet at levels considered atypical for a healthy bull market uptrend.
TLDR: A massive 3.5 million BTC (89% of short-term holder supply) sits underwater, yet remains within typical bull market parameters.
Diamond Hands Reloading: The Accumulation Wave
A unique market dynamic is developing in this cycle, with oscillating waves of LTH distribution followed by periods of accumulation, creating a more controlled and stable market environment. We’ve identified two main waves so far: after distributing -1.11M BTC in the most recent wave, long-term holders have already accumulated +278k BTC, signaling renewed conviction. In addition, the 3-6 month cohort is experiencing a notable uptick in wealth held, suggesting coins acquired around $100k are aging into this bracket despite paper losses. These accumulation periods create a gradual constriction of available supply, potentially establishing the conditions for the next uptrend as selling pressure diminishes.
TLDR: This cycle has shown distinct waves of long-term holder accumulation and distribution, with on-chain data confirming we're currently in the early phase of a new LTH accumulation wave.
Supply Cliff-Edges: Where Bitcoin's Fate Hangs in the Balance
Our analysis shows several critical price levels that could determine Bitcoin's next big move. The most important support sits at $67K, but there's a dangerous "empty zone" between $67K and $80K with little Bitcoin supply to cushion a fall. We're seeing positive signs of Bitcoin accumulating in the $80K range ($84K-$88K), creating a potential floor at these levels. Looking upward, huge amounts of Bitcoin at $94K and especially at $98K (a massive 618K BTC) could act as strong resistance to price advances. Bitcoin's position is crucial right now – holding above $80K suggests strength, while dropping below could lead to a quick slide down to $67K with few buyers in between.
TLDR: Supply concentration is building in the $80K range, but we remain cautious of the concerning supply air gap that exists below this level.
Final Thoughts
The current market environment presents multiple layers of uncertainty—from inflated earnings estimates to unpredictable fiscal and monetary policy. These conditions have created a "wait-and-see" period for risk assets, including Bitcoin. As markets historically dislike uncertainty, near-term upside may remain limited until clarity emerges on these fronts. However, the continued accumulation by long-term holders during this period of consolidation suggests underlying strength that could support Bitcoin once uncertainty diminishes.
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Thanks for reading this week's note! See you next week – and as always, hit reply if you have any questions, comments, or suggestions!
Take care -Brian
Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.
Good analysis as always, thank you!