Dear subscribers,
In this version of Uncharted: Distilled we break down Uncharted #14 and the major drivers behind the drop below $40k. A strong dollar and the upcoming Fed meeting threaten risk-on assets, but the most hawkish outcome may have been priced in, leaving room for potential upside in the near term.
Let’s dig in!
Summary
Uncharted #14 kicks off by analyzing bitcoin’s trading channel and the downward pressure caused by panicking short-term holders’ reaction to the systematic selloff. After we compare the buying power denoted by robust on-chain fundamentals and active hedging in the derivatives market. All in the context of a strong dollar and rising inflation.
Bitcoin’s trading channel is being squeezed between $38.5-$42k.
The Fed’s course of action could drive the dollar higher, pressuring bitcoin further.
Systematic risk encouraged investors to pull capital out of US equities and flock to fixed-income securities.
April VC crypto investments are above the median despite the sluggish crypto fund flows.
The drop below $40k was led by panicking short-term holders.
Robust on-chain fundamentals indicated an upbeat in the long-term holder accumulation.
The demand for bitcoin in the spot market resurfaced and more supply was transferred out of exchanges.
Heavy hedging in the derivatives market drove put premiums higher.
Swissblock’s Altcoin Cycle Signal showed a change in regime to bitcoin season.
Swissblock’s Bitcoin Risk Signal remained within the high-risk zone coming into the Fed May meeting.