November 27, 2024 • 1hr 10min
BTC210: 2024/25 Bitcoin Bull Market Overview w/ James Check (Bitcoin Podcast)
We Study Billionaires - The Investor’s Podcast Network
Key Takeaways
- Bitcoin consolidation and ETF impact: Despite continuous ETF inflows in early 2024, Bitcoin went through a 6-7 month consolidation period due to selling pressure from long-term holders taking profits
- On-chain analysis insights: The "sell-side risk ratio" metric shows when profit-taking has tapered off, indicating potential market moves ahead
- Market structure evolution: The introduction of ETF derivatives and institutional players will change Bitcoin's volatility profile but won't necessarily reduce overall volatility
- Lost Bitcoin supply: An estimated 18-21% of total Bitcoin supply (3.7-4.4 million BTC) is likely permanently lost based on dormancy analysis
- Price cycle outlook: The market has entered the "euphoria zone" which historically lasts 6-18 months before exhaustion sets in
Introduction
In this episode, host Preston Pysh interviews James Check, an on-chain analyst and researcher who conducts detailed Bitcoin market analysis. The conversation covers current market dynamics, institutional adoption trends, technical analysis perspectives, and future price cycle predictions.
Topics Discussed
Bitcoin ETF Impact and Market Consolidation (3:00)
The discussion begins by examining why Bitcoin went through a lengthy consolidation period in early 2024 despite continuous ETF inflows. James explains that while ETFs were buying, long-term holders were simultaneously selling into that demand.
- Price consolidation above $1.2 trillion market cap showed meaningful demand absorption
- Old coins in profit were being sold at around $100 million per day until September
- Sophisticated buyers were allowing the market to sell to them rather than aggressively bidding up prices
- The consolidation period was necessary for coins to change hands from early holders to new institutional buyers
On-Chain Analysis and Market Metrics (7:10)
James details key on-chain metrics that help analyze market conditions and potential moves ahead.
- Sell-side risk ratio measures realized profit/loss relative to market size
- Supply dynamics show reduced selling pressure from long-term holders by September 2024
- On-chain metrics often correlate with traditional market indicators like options implied volatility
- Analysis focuses on mechanics of buyer/seller behavior rather than price predictions
Technical Analysis Perspectives (22:27)
The conversation shifts to discussing the validity and usefulness of technical analysis in crypto markets.
- Technical analysis can be valuable for large market cap assets like Bitcoin
- Charts reflect human psychology and collective market behavior
- More useful when combined with fundamental analysis
- Less reliable for small-cap assets due to manipulation risk
Market Structure Evolution (31:28)
James discusses how derivatives and institutional adoption will impact Bitcoin's market structure.
- Derivatives are essential for institutional risk management
- Options markets enable risk transfer between different market participants
- Large allocations require hedging capabilities
- Market maturation doesn't necessarily mean reduced volatility
MicroStrategy Analysis (35:56)
The discussion examines MicroStrategy's Bitcoin accumulation strategy and valuation considerations.
- Premium over Bitcoin holdings reflects option value on future accumulation
- Company holds approximately 1.5% of total Bitcoin supply
- Potential for extreme volatility in premium during market cycles
- Risk of government intervention if Bitcoin becomes too strategically important
Super Cycle Theory and Market Cycles (51:57)
James shares his perspective on Bitcoin market cycles and the super cycle theory.
- Macro trend shows progression from zero to millions in value
- Short-term volatility and consolidation periods remain likely
- Nation-state adoption could drive repricing events
- Market needs time to value 21 million fixed supply units
Lost Bitcoin Analysis (56:33)
The conversation covers analysis of potentially lost Bitcoin supply.
- 18-21% of total supply estimated to be lost
- Analysis based on coin dormancy patterns
- Impossible to definitively prove coins are lost
- Early coins have lower cryptographic security levels
Current Market Cycle Outlook (1:00:43)
James provides his perspective on the current market cycle and potential timeframes.
- Market has entered "euphoria zone" based on various indicators
- Euphoria phases typically last 6-18 months
- Long-term target of parity with gold market cap
- Consolidation periods likely as market tests new valuation levels
Conclusion
The conversation provides deep insights into Bitcoin market dynamics, institutional adoption trends, and future outlook. Key themes include:
- Market structure evolution as institutional players enter
- Importance of understanding both on-chain and traditional market metrics
- Likelihood of continued cycles despite long-term upward trajectory
- Need for market maturation through derivatives and risk management tools
James emphasizes focusing on market mechanics and participant behavior rather than price predictions, while maintaining a long-term bullish outlook as Bitcoin progresses toward potential parity with gold's market capitalization.
