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Bitcoin's 'Institutional Demand' Is a Lie | What No One Is Telling You...
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Bitcoin's 'Institutional Demand' Is a Lie | What No One Is Telling You...

Introduction

In this video, Nicholas Merton from Data Dash talks about Bitcoin's price and whether institutions are on-ramping into the crypto space. He also discusses some interesting charts to gauge institutional interest.

Bitcoin Price Analysis

Nicholas talks about Bitcoin's price and how it has been ranging between 28-33k, which is the range of prior support during the last bull market. He mentions that they have been in cash since around 25k back in August due to the macro environment and their belief that we are in a longer-term downturn.

  • They believe there will be strong relief rallies during this period, so they only want to take shorting opportunities or bets on Bitcoin's price going down when prices get too exuberant.
  • Nicholas discusses two key indicators for determining shorting opportunities - momentum indicator and Lux algo. He explains how he uses these indicators to confirm a move further to the downside.

Conclusion

Nicholas concludes by saying that they are waiting for confirmation from their key indicators before taking any action. He emphasizes the importance of patience when trading and avoiding chasing relief rallies.

  • The first confirmation is a red flip on their key momentum indicator, which hasn't happened yet.
  • The second confirmation is if Bitcoin comes back down into an ascending trailing bar for Lux algo and holds onto it. If it snaps through it, they switch towards a new resistance band.

Institutional Interest in Cryptocurrencies

In this section, the speaker discusses institutional interest in cryptocurrencies and how publicly traded companies can be a good indicator of such interest.

Publicly Traded Companies as an Indicator

  • Liquidity for institutional capital is living within the equity space where dollars are trading between publicly traded companies.
  • Looking at ratios of publicly traded companies can demonstrate whether or not Wall Street is optimistic about crypto.
  • Ratios can help determine if momentum in correlated assets like Bitcoin is justified.

Institutional On-Ramps

  • Institutions use different types of exchange on-ramps tailored towards high net worth individuals and large clients.
  • Crypto hedge funds and VC funds are not considered part of the "big boys" with billions or trillions of dollars in liquidity.

Access to Indicators

  • The speaker offers access to their key momentum indicator through subscription to the Dash Report.
  • A discount code for Lux algo, a tool used alongside partner Bookmap, is also provided.

Coinbase and Microstrategy Performance Analysis

In this section, the speaker analyzes the performance of Coinbase and Microstrategy in relation to Bitcoin's price. The speaker discusses how these companies are affected by market forces and whether they are outpacing Bitcoin.

Coinbase Performance Analysis

  • Coinbase launched at an exuberant valuation matching towards the exuberant times in Bitcoin's price.
  • As much as Coinbase is trying to become more of a nimble business that does well during bull and bear markets, it is still succumbing to market forces.
  • Wall Street and large-scale investors will price in whether or not they really believe that we're in a new bull market.
  • Generally speaking, since January 2021, Coinbase has been making choppy slight moves to the upside but not showing heightened momentum.

Microstrategy Performance Analysis

  • Microstrategy has converted its entire business model by borrowing short-term capital to purchase Bitcoin at relatively low interest rates.
  • During periods of optimism, generally microstrategy can outpace Bitcoin but even since August 2021, it has been setting lower highs for its performance against Bitcoin.
  • Financial markets specifically Wall Street do not believe the rally; this should be trading at a higher premium over time.

Overall, both companies' performances have been affected by market forces. While there have been some slight moves to the upside for both companies since January 2021, neither company has shown heightened momentum. Additionally, financial markets do not seem to believe in the rally and expect these companies to trade at a higher premium over time.

GBTC Discount and Bitcoin Demand

In this section, the speaker discusses the continued discount of less than a third of the value in the GBTC exchange-traded note. The speaker explains that there is not enough demand from people in brokerage accounts or traditional investment funds to purchase Bitcoin.

GBTC Discount

  • The GBTC exchange-traded note has a continued discount of less than a third of its value.
  • GBTC bought too much Bitcoin off the spot market in the last bull market, and now there is not enough demand from people in brokerage accounts or traditional investment funds to purchase said Bitcoin.
  • The one-third discount against the actual valuation of underlying Bitcoin tells us that there is still too much supply on the open market versus demand.
  • Until this discount starts to correct back up to spot value and continue that trend up, this is likely a relief rally. If it continues to get worse, that is an even more telltale sign and it's time to expect lower prices.

Two Percent Maintenance Fee

  • There's a two percent maintenance fee every year for GBTC. While it's obviously negative over say 30-50 years, at the end of the day, it's nothing compared to what kind of returns we should be expecting from Bitcoin.
  • Microstrategy is fine paying one-two-three percent interest in order to borrow any capital they can get in order to go out and buy Bitcoin.

Relief Rallies Can Be Deceiving

In this section, the speaker warns about relief rallies being deceiving and cautions against investing based on emotions pushed by referral links towards leveraged trading exchanges where you lose everything.

Relief Rallies

  • Relief rallies can be incredibly deceiving, and there are too many people telling you about what you're going to miss out on if you don't invest now.
  • People have a business model of getting you to trade, think with emotions, and push referral links towards leveraged trading exchanges where you lose everything.
  • The speaker does not promote taking over risk in the market and believes it's not something that should be expected from a trustworthy content creator.

Long-Term Downtrend

In this section, the speaker discusses how their momentum indicator has signaled in the monthly timeframe that we are likely in for a long-term downtrend.

Momentum Indicator

  • The momentum indicator has signaled in the monthly timeframe that we are likely in for a long-term downtrend.

Signs of a Downtrend

In this section, the speaker discusses the signs of a potential downtrend in the market and how to identify them.

Identifying Market Leaders

  • When market leaders start to underperform against the broader sector of stocks, it is a telltale sign that a momentum shift is coming soon.
  • If market leaders like NVIDIA or Microsoft start to fade, it could lead to prices correcting lower.

Momentum Indicators

  • After seeing a couple weeks of consolidation or sideways chop, it is usually a telltale sign that a momentum shift is coming soon.
  • The optimism and euphoria in the market are starting to slow down, which may lead to prices correcting lower.

Meta Stock

  • Laying off people and cutting back on employees and costs may not be enough for Meta Stock's valuation to double and kick off a new bull market.

NVIDIA as an Example

In this section, the speaker uses NVIDIA as an example of how identifying market leaders can help predict potential downtrends in the market.

NVIDIA's Performance

  • NVIDIA has been accelerating higher due to excitement about AI technology.
  • Since March 2021, NVIDIA has been stalling and shopping sideways.

Using Ratios

  • Ratios can be used to compare leading plays against the broader sector of stocks.
  • If NVIDIA starts performing less than the broader NASDAQ, it could be a telltale sign that prices will correct lower.

Monthly Time Frame Analysis

In this section, the speaker analyzes the monthly time frame of Meta against NASDAQ and warns traders about getting caught in a potential trap.

Key Points:

  • Since February, Meta has accelerated up on the ratio chart against NASDAQ.
  • The speaker is afraid that many traders will get trapped into buying at previous support, which usually becomes new resistance.
  • The speaker warns against building leverage trades and going all-in on call options as they may not pay off.
  • While the speaker does not think that Meta will dive off a cliff tomorrow, he believes that betting on it may not sustain a new bull market.

Conclusion and Call to Action

In this section, the speaker concludes his video by thanking his audience for their continued support and encouraging them to check out his tools and newsletter.

Key Points:

  • The speaker thanks his audience for their continued support during bull or bear markets.
  • He encourages viewers to check out his different tools or newsletter to support the channel and boost their trading strategy.
  • The video ends with the speaker saying goodbye until next time.
Video description

#bitcoin #crypto #cryptocurrencies Consider dropping a like if you enjoyed the video! 👍 Sign up for the DashReport 💹➡️ http://nicholasmerten.com/dashreport/ Use Code: DD30 to get a 30% off from our partner LuxAlgo ⚡🔽 https://bit.ly/41FQZQS 00:00 - Intro 00:43 - Bitcoin Price Analysis 05:15 - Crypto Stocks / Bitcoin's Price 12:48 - Bitcoin's Dark Shadow (GBTC Discount) 16:42 - NASDAQ Isn't Signaling Long-Term Confidence 18:38 - NVDA/IXIC, MSFT/IXIC, & META/IXIC 22:48 - Closing Remarks Want to support the channel: Sign up for the DashReport 💹➡️ http://nicholasmerten.com/dashreport/ Use Code: DATADASH20% to get 20% off from our partner BookMap 📊🔽 https://bookmap.com/members/aff/go/DataDash?i=55 Use Code: DD30 to get a 30% off from our partner LuxAlgo ⚡🔽 https://bit.ly/41FQZQS Support us on Patreon 🎁➡️ http://patreon.com/data_dash Want a DataDash hoodie? 👘➡️ https://merch.nicholasmerten.com/ 📝 Looking to file crypto taxes? Check out TaxBit: https://app.taxbit.com/invite/DataDash/ 💹 Interested in price data? Check out CoinMarketCap: https://coinmarketcap.com/?utm_source=youtube&utm_medium=video&utm_campaign=datadash ---------------------------------------------------------------------------------------------------------- If you want me to be able to contact you in case of further issues, here's our email list: https://forms.gle/ADorNSFkkGbggJHY6 What are your thoughts on what we discussed? Feel free to leave a comment below! Thank you all so much for watching the video. If you enjoyed the video, please consider dropping a like, subscribing, and ringing the bell icon. Join our community channels! ---------------------------------------------------------------------------------------------------------- Telegram Alerts | https://t.me/Data_Dash Telegram Discussion | https://t.me/datadash Discord: https://discord.gg/S7MtTcB ---------------------------------------------------------------------------------------------------------- 👥 For advertising, consulting, speaking, or other business inquiries reach out to us at: http://nicholasmerten.com/advertising/ Alternatively, feel free to reach us at: contactdatadash@gmail.com ---------------------------------------------------------------------------------------------------------- WARNING: *I WILL NEVER PURSUE PROJECTS THROUGH TELEGRAM OR OTHER SOCIAL MEDIA OUTLETS. CONTACT MY EMAIL LISTED BELOW FIRST AND THEN VERIFY MY IDENTITY THROUGH A VIDEO CALL BEFORE MOVING FORWARD WITH SPONSORSHIPS. THERE ARE MANY SCAMMERS IN CRYPTO. EMAIL SPOOFING IS RAMPANT, SO VERIFY MY IDENTITY THROUGH VIDEO* *BEWARE OF SCAM COMMENTS REQUESTING YOU TO SEND FUNDS. THESE ARE IMPERSONATORS, AS WE WILL NEVER REQUEST YOU TO SEND PAYMENTS* Disclaimer: DataDash ("Company") and The Dash Report are not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers or viewers should buy or sell for themselves. All information is for discussion and educational purposes only. The independent contractors, employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and cryptocurrencies. The Company assumes no responsibility or liability for your trading results. Factual statements on the Companies outlets are made as of the date stated and are subject to change without notice. It should not be assumed that the methods, techniques or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by the Company are not indicative of future returns by that trader or system and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of the Company's products (collectively, the "information") are provided for informational and educational purposes only and should not be construed as investment advice.