Bitcoin (BTC) is providing overwhelming evidence that it is capitulating, and it is time to turn bullish as a result, according to a new analysis.
In a twitter thread On Aug. 3, Charles Edwards, CEO of crypto asset manager Capriole, revealed what he called “The 12 Capitulations of Bitcoin.”
“Return on risk tilts positively” for Bitcoin
With BTC price action recovering from multi-year lows but still hovering near key bear market support, opinions vary widely as to what happens next.
Some call for a return to levels even below the $17,600 June low, while others argue that a “bear market relief rally” could take BTC/USD to $40,000 first.
For Edwards, the raw evidence suggests that the past few months have been bearish enough and that behind the scenes, Bitcoin has been quietly capitulating.
“The raw count of evidence for Bitcoin’s major capitulation today is insane,” he wrote of his 12 key examples.
“Each occurrence alone is a rare event and adds to the likelihood that future risk returns are positively biased.”
In addition to the popular on-chain signals previously covered by Cointelegraph, including MVRV and NUPL, Edwards’ tests include macro triggers, such as poor US equity performance and stagnant M2 money supply growth.
“We just saw the worst inflation-adjusted declines in traditional markets in the last 8 generations. Enough is enough,” he continued, noting that the The S&P 500 had posted its worst performance in real terms since 1872.
However, the icing on the cake in the 2022 Bitcoin bear market is the rate at which players in the sector have capitulated.
For Edwards, the bankruptcy events of Celsius, Voyager and others, combined with Tesla selling most of its BTC holdings at a loss, is the “ultimate sign of capitulation.”
“Take a look at the level of institutional capitulation here,” he commented.
“Leverage is one of the best indicators of relative overvaluation and undervaluation in Bitcoin, and many major crypto leveraged institutions have been wiped out.”
According to separate data from the monitoring resource Bitcoin Treasuries, Tesla remains the public company with the second largest BTC reserves, but is now far behind leader MicroStrategy and its 129,698 BTC reserve.
The “great accumulation zone” returns
As Cointelegraph recently noted, Capitulation has also been evident among Bitcoin miners since the drop to the lowest prices since the end of 2020.
However, after initially selling off their BTC inventory, miners have taken a dramatic turn, new data suggests, in another sign that the worst of the capitulation may be over.
Beyond the miners, the amount of BTC supply being transferred at a price lower than what was paid for it has reached levels that Edwards says are indicative of accumulation.
“The percentage of total supply transferred at a loss reached 1.9% last month,” he wrote alongside a chart from on-chain analytics firm Glassnode.
“Historically, when this metric goes above 1.5% it shows that a large part of the market is suffering. Most were also large accumulation zones.”
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