On-Chain Week 43 / 2021
Long-term (LT) > 60 days, Sentiment: Bullish - By the end of the year, we could see pricing well above the 70k mark up to and, possibly, beyond 90k. The real surge will happen after the end of the new year.
Mid-term (MT) > 14 days < 60, Sentiment: Bullish - After rising to new ATH, we can expect to see small dips along the way until the end of the year in the range of 5 to 20%, however, prices will continue to climb into the high 60s, low 70s.
Short-term (ST) < 14 days, Sentiment: Bullish with Caution - Prices will continue to climb and will explore new ATH but profits will be taken at the end of the month dropping it back down to the low 60s or high 50s.
LT - $75,000 - 90,000
MT - $63,000 - 74,000
ST - $58,000 - 70,000
Long-term (LT) > 60 days, Sentiment: Bullish $75,000 - 90,000
With the Bitcoin Network currently in price discovery mode, it’s an exciting time with a potential for a strong bull run coming into the end of the year.
How long will it last before the expansion stops and we go into a recession of prices? Looking at past bull cycles in 2013, 2014, 2017, 2019, and 2021, we can note that we spent about 5 months in each cycle (the single-digit number at the bottom right corner of the boxes below signify the number of months for that run).
Assuming that we are currently going into another bullish cycle it would not be too far-fetched to think that we are just now beginning the cycle and we can expect this behavior to continue into the next year.
Using Entity-Adjusted Spent Output Profit Ratio (Entity-Adjusted SOPR) in the chart above gives a simple metric that we can use to infer the market’s sentiment and the behavior of the people in it. When SOPR is > 1, then investors are in profit when they spend or sell their BTC, otherwise, below 1, they are executing transactions at a loss. Something to note when looking at the past bullish cycles is the SOPR has been greater than 1 and in an uptrend during most of the past bull runs. With the current value at 1.2, we can also see a pattern forming where higher values of SOPR > 1.2 correspond with upward price movement.
Mid-term (MT)>14 days< 60, Sentiment: Bullish $63,000 - 74,000
Looking ahead into the coming months, we expect that the demand for bitcoin will expand as the price surges.
Net Unrealized Profit/Loss (NUPL) is an easily understandable metric that answers the question, “If we sold all of the bitcoin available today, would we be in profits or would we be in losses?” We are currently in the 0.60 range which is relatively high and we can observe pricing moving on a similar upward slope as last year at this time, however, this year the price is five times higher. We can also observe that when we were in this range during other cycles, such as in 2013, 2017, and last year; it was just the beginning of the growth cycle which saw the price of bitcoin appreciate significantly in the months that followed.
Taking it a step further, and looking beyond the next two weeks, Net Realized P/L is also trending upward and relatively high, reaching up to just beyond $3bn USD on 19 October 2021. During the significant growth in price at the end of last year, we saw similar numbers that coincided with a healthy market ready for a bull run.
Short-term (ST) > 14 days < 60, Sentiment: Bullish with Caution $54,000 - 70,000
Considering we are at new ATHs, and assuming that HODLing behavior tends to prevail during times of high pricing, we could see prices climbing up to between $67-70,000 USD. As we close out October and go into November, selling pressure will be great and we may see a decrease in price in the $54,000-65,000 range. In the past miners have sold to exchanges for fiat expenses at the beginning of each month. The expectation is that it will happen again shortly.
Long-term HODLers and whales tend to move with miners. Miners, together with long-term HODLers and whales, can be defined as smart money in the bitcoin market and are compulsory sellers. However, looking at HODLers Net Position Change below, HODLers are still in an accumulation cycle which again signals strength in the market overall, with the expectation for pricing to remain solid for the short term.
This week Bitcoin has made history with new ATHs and continues to thrive as it builds momentum. From a short-term perspective, we can expect pricing to stay in discovery mode in the immediate future staying within the mid to high-60s, with a potential for an end-of-the-month dip to the low-60s or mid-50s. In the Mid and Long term, the future looks bullish for the next few months as we see how large and quickly the market expands.