Bitcoin - A Bloody June Monthly Coming To A Close

The Bitcoin monthly close is 8 days away - we are looking at, at the very least, one of the worst monthly closes Bitcoin has seen, perhaps even rivaling the worst monthly close of 2011 (-39.75%). 2011 was the early days for Bitcoin - very little adoption and mostly just market speculators who contributed very little, if anything, to the network. When you see this kind of carnage 11 years on with hash rates at an all-time high, institutional investors entering the stage, and adoption on the rise YOY, you know Bitcoin is going through something 'big'.

“...bitcoin's value as a hedge against long-term inflation on the macro level is undeniable. The key ingredient is time.”

When you span out over the decade, you clearly see BTC dropping 30%+ on the monthly is by no means something new. With every major pullback, an opportunity for long-term holders has presented and for those who felt like "they missed the train" to accumulate at much lower levels. Much the reason why hardened holders will be increasingly harder to shake out of the market than in previous cycles - in fact, potentially they become smarter and learn from past cycles to scale-out during stages of euphoria and re-accumulate during times of max fear. Given enough time, this effect will flatten the curve as more and more participants learn the method - this is one idea I've thought about with the last BTC top being a lot rounder than the previous 2 tops with 'smart money' front-running the euphoric 'blow off the top' moment. The macro trend is obvious and bitcoin's value as a hedge against long-term inflation on the macro level is undeniable. The key ingredient is time.

Value investors with a long-term mindset understand that the cost of 1 BTC today is likely to be drastically lower than the cost of 1 BTC in 10 years. Investing, by definition, is a consumer's best bet to hedge against inflation, but not if they have a short-term mindset, and especially not if they have no sense of market cycles. Those that bought the BTC top, for example, will need to wait for potentially another 2-4 years before they even hit break-even, until then they will be cursing the day they ever entered the space and will likely sell... at the bottom of the bear market. Timing of market entries is essential.

Stepping back and analyzing the BTC Monthly chart over the last 10 years it's easy to conceive BTC sub 10k given the right conditions (domino effect from forced-selling), it doesn't have to, but we have seen such brutal pullbacks in the past, and current macro conditions arguably look perfect for a great purge. In such an event, I would look at the pullback as very healthy in the long run for both Bitcoin and crypto in general - much like a fire's roll in nature, crypto will be given a fresh slate to usher in the next generation of blockchain technology. Ideas from the past will remain and be built upon - Developers will learn from past mistakes (as long as projects are allowed to die) and it will be an incredible time for growth in the cryptocurrency space.

“BTC mining will quickly become unprofitable once BTC breaches the $15k zone, begging the question of how long will miners be able to continue running at a loss.”

In any case, bears won't have it easy. To even consider BTC under $10k, one needs to understand the historic support levels that will need to break. To start with, Bitcoin has never closed a candlestick under the 50 Month Moving Average. Even if this support breaks, sellers have a 9-year macro trend to contend with - although, this level has been breached before in 2015. The macro trendline also corresponds to a level that Bitcoin miners will be watching closely - BTC mining will quickly become unprofitable once BTC breaches the $15k zone, begging the question: How long will miners be able to continue running their operations at a loss? But, in contrast, the latest on-chain data from Glassnode shows that miners have stopped selling and begun accumulating.

If the Bitcoin $15k support level is broken then the $11-13k zone will come into play fast. This level is a former resistance zone from 2018 that was finally flipped to support at the end of 2020. $11-13k also represents the macro bottom of the Bitcoin support band.

Anyone looking to enter the crypto space today needs to do so with the mentality of a long-term value investor and leave the 'get rich quick' mentality at the door. Generational wealth in the blockchain space can still be attained, but strategies require patience, conviction, and an eye for the future.

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