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Bitcoin and Ethereum Cross Resistance


Bitcoin has risen above $17,000 and ethereum has taken $1,300, both significant resistance lines that have taken about a month to overcome.

The ethereum ratio has also risen to 0.765 BTC for the first time since October, suggesting that eth might be leading.

Litecoin however has outperformed both, up 8%, on speculation regarding its halving which is now just six months away.

And yet Cardano has outperformed all the ones mentioned, up 11%, probably mainly because it just fell more than the others. Indicating the overall crypto sentiment has turned somewhat bullish.

One reason may well be that bitcoin miners have slowed down their selling with the relentless red for months turned into some green.

Bitcoin miners net position, Jan 2023
Bitcoin miners net position, Jan 2023

But, on the other hand, some companies that bought bitcoin during the bull are now selling in that old fashioned tradition of buy high and sell low.

Phunware, a publicly traded company with a market cap of $100 million that offers an enterprise cloud platform for mobile, said:

“On January 5, 2023, the Company’s Board of Directors (the “Board”) authorized and approved a stock repurchase program for up to $5,000,000 of the outstanding shares of the Company’s common stock… and will be funded through the liquidation of the Company’s bitcoin holdings.”

A number of stock traded bitcoin miners had to sell some of their crypto as well. Not all, but a few had no choice in a clearing out echo of previous bear markets.

Companies like Phunware however, that are not directly related to bitcoin, are rare and hold little outside of Tesla and MicroStrategy. So any other such buy highs and sell lows probably won’t have much of an effect on the market.

Nonetheless, we are probably not quite out of the woods yet, fully. January tends to have a good sentiment, maybe February too with a new year optimism, but we are probably in the stage of fighting the bear, and the bear will fight.

That’s for short term and 3-4 month-ish considerations. Longer term it might be different, but during this period the bear might make himself felt again, though hopefully he ends up higher than where it started.

That is to say the buy high and sell low strategy is a real risk during this time as this might go to $20,000 or even higher, maybe even $30,000, then drop to $18,000 in an atmosphere that suggests we might $9k, but it doesn’t go any lower.

However, there is a big unknown in regards to how the change in eth’s supply, which has basically become fixed, might affect the wider crypto dynamics.

We’ve just about entered the fourth month of that change, and price wise eth clearly seems to have changed.

In fact ethereum is up over the past six months, though just 1%, while bitcoin is still down a bit during that period.

The previous cycles therefore might not necessarily apply to the same extent, but it may well be the case that nonetheless the fighting the bear stage operates roughly the same whereby in some occasions the price action suggests there was a fake bull and we’re now back in bear forever.

As an example, in late December 2018 bitcoin’s price moved from $3,000 to $4,000, although January 2019 didn’t start well, down to $3,500 and eventually $3,300 in February when it then moved up.

That’s a 10% gain from the bottom, but a circa 20% loss if you bought that peak and sold the low.

In April 2019 it was a lot more dramatic, from $5,000 to $14,000 and then down over months to eventually close that year at $7,000 when it started moving up.

Why? Well, information asymmetry presumably or information waves. Phunware for example probably doesn’t know they’re selling the bottom, if we are there. They’re doing cloud stuff, not crypto. Are they keeping up?

An even better question might be do they have a choice. Apply this to maybe 200 million individuals and entities, and you get the fight between the bulls and the bears which makes those waves.

All this to say that outside of daytraders, which is their business, this is a period where if you buy you have to hodl, for dear life. If you think you can’t or might need the funds in months or even a year, then you’re gambling with it anyone’s guess at which point of the fight you have to get out.

If you can hodl however in a way you consider the funds ‘lost,’ then this is probably the best period to buy going by previous cycles with no one able to predict the future of course.

This is in fact one of those periods where you don’t have to feel guilty or feel uncomfortable about mentioning crypto as on the balance of probabilities you might be helping.

Macro wise as well interest rates can’t really go up much more in US, and may go down, if this sort of macro really had any effect anyway.

And ethereum may be changing the game so the fight might be even more intense and perhaps tilting towards the bull this time, though who knows.

There are remaining risks, but where GBTC is concerned, it is a trust operating on the paper system with that whole bureaucracy so any unwinding of the coins to the point they’re in the hands of the actual owners would probably take a long time, if it moves in that direction at all.

The bigger risk for ordinary bitcoiners instead being the temptation to margin which may work out of course, but the bear is brutal and that brutality itself may well continue, even if hopefully not lower lows.

All in all therefore there might be some glimmer of hope returning for the 10%-20% of the crowd that still remains, with the good news hopefully being that there may now be a bull to fight, when there was none in sight last year, and that this is an unknown sort of bull in ethereum.


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