The podcast provides a comprehensive review of Bitcoin’s performance in 2023, highlighting key market trends, on-chain activities, and the impact of inscriptions. It also discusses the behavior of long-term Bitcoin holders, the dynamics of the derivatives market, and the supply and demand of Bitcoin and stable coins.
Bitcoin’s Dominance and Market Resilience
- Bitcoin’s Performance: Bitcoin outperformed traditional assets like gold, bonds, and equities in 2023, with a 170% increase in market cap. The deepest correction in 2023 was only 20%, marking the strongest bear market recovery in Bitcoin’s history.
- Market Shift: October was a pivotal month for Bitcoin, with a significant shift in market dynamics. Breaking above the true market mean price in October was a psychological turning point, shifting investor sentiment from uncertainty to confidence.
On-chain Activities and Inscriptions
- On-chain Analysis: The realized cap, which reflects capital flows in and out of Bitcoin and Ethereum, was a key focus. Since October, there has been an influx of capital into Bitcoin, with entity-adjusted transaction volumes reaching bull market levels.
- Inscriptions: Inscriptions, a new development in the Bitcoin space, have dominated on-chain activity. They account for 50% of all confirmed Bitcoin transactions and pay between 20 to 40% of all transaction fees, yet they only take up 10% of the block space due to the SegWit data discount.
Long-term Holder Behavior and Supply Dynamics
- Long-term Holder Behavior: Long-term holder supply is at 14.9 million Bitcoin, over 72% of the total supply. Despite a 170% increase from the lows, there has been no major distribution pressure, indicating that long-term holders are demanding a higher price for Bitcoin.
- Supply Dynamics: Short-term holder supply is at an all-time low, with about 2.3 million BTC. The supply and demand dynamics of Bitcoin are described as tight, with low coin supply on exchanges and short-term holder supply, setting up an interesting dynamic for 2024.
Derivatives Market and Stable Coin Supply
- Derivatives Market: Options trading has slowly overtaken futures in market size throughout 2023, signaling a maturation of the trading industry. The majority of options trading dominance is on the Deribit platform.
- Stable Coin Supply: The supply of stable coins peaked at over $160 billion in March 2022 but has been declining due to various market events, bottoming out at around $120 billion. In October, there was a noticeable increase in capital flowing into stable coins, BTC, and altcoins.
- Bullish: The podcast expresses a bullish sentiment towards Bitcoin, highlighting its strong performance in 2023, the resilience of the market, and the influx of capital since October. The behavior of long-term holders, the growth of options trading, and the increase in capital flowing into stable coins also contribute to this bullish sentiment.
- Bearish: There is no bearish sentiment expressed in the podcast.
- Neutral: The podcast maintains a neutral stance when discussing the decline in stable coin supply and the dynamics of the derivatives market, presenting the facts without expressing a positive or negative outlook.