Hi Ben, I'm wondering why the Greyscale Effect is still considered bullish. Doesn't the argument assume that the Greyscale premium is positive? For a while now the premium has been consistently and significantly negative. I don't understand what incentive there is for the GBTC whales to sell on the secondary market at a loss in order to buy more BTC.
It's considered bullish until it's not. Thus far there's a 100% hit rate which means there's a high likelihood it happens again.
The discount we see applies more for the private investors to begin a new unlock.
Additionally, if we get bullish price momentum on BTC in May and June I fully expect the premium to return... which the recently GBTC shares will be sold into.
The chart is at a log scale so obviously the slopes are not going to be the same.. and even if that wasn’t the case, why would that be an argument for invalidating the Pi cycle? Doesn’t really make much sense
@Nick, while we are on Pi-Cycle chart discussion, here is what Philip Swift emailed his subscribers in the newsletter about the potential Pi-cycle top this time
"So is the price of Bitcoin about to crash?
My opinion
My current market outlook for Bitcoin is bullish overall, so my personal view is that there is a good probability Bitcoin will NOT top out and crash when the Pi Cycle Indicator moving averages cross in a few days time.
Other indicators are suggesting that this is NOT the end of the market cycle (e.g. RHODL Ratio, 1yr HODL) and that the market is NOT overheated right now (MVRV Z-score).
So I am of the opinion that if Bitcoin does not continue up, it is more likely to range for a while, rather than crash.
That is just my personal viewpoint looking across a broad range of indicators and metrics, and considering the fundamentals for Bitcoin currently.
While I have a very good hit rate of forecasting the market (as you will know if you have been a subscriber for a while), nobody can see into the future...so at some point, either myself or some of the indicators on the site will be wrong."
In my opinion, Pi-cycle top indicator was created in 2019. So technically it did not predict the previous tops, but is overfitted to see if it 'could' have predicted if it were available in previous cycles. So I expect it to have some effect if we were to expect it to work this time. Its similar to those golden and death cross situations which rarely pan out in crypto.
Very valid point. And forces me to reconsider this chart due to this gross oversight.
As for why it would be an argument - We're measuring how overextended we are on a cycle basis. So what the Pi Indicator is looking to do is capture blow off tops of multi-year long cycles. And the 2019 price action is rather unique compared to price action seen in prior halving in the year before the event. Because of this I've been a bit hesitant to rely on this indicator.
However, after taking another look at the chart in light of your comment... It is not fair to discredit the chart based upon slope. In fact, removing log scaling makes the steepness higher than prior years. Suggesting any large move higher in the next month might be a peak similar to the first one seen in 2013.
I believe I let my personal bias creep in here. Seems I tried to create a shortcut analysis, which caused me jump to the slope argument.
I'll need to re-evaluate this and update readers on Friday. Thank you for taking the time to share your thoughts.
The reason I do believe the PI cycle indicator has some validity this time around is because it aligns with other technical analysis metrics that suggest we could be due for a rather heavy correction followed by some reaccumulation phase.
Particularly, we broke to the downside out of a rising wedge pattern we had been forming since december, and we have been unable to even retest the breakout line.
We also have a very ugly divergence on the weekly RSI and some other momentum indicators, and in terms of explosive momentum if you look at the boilinger bands on the monthly and compare it to 2013 they look very similar.
Onchain data (which I rely on you for xD) doesn’t suggest we’re seeing a top yet, so the 2013-2014 narrative seems to make a lot of sense
Agree with you that the technicals look ugly. Bollinger looks rough on the monthly, ok on weekly and daily. RSI on monthly is screaming caution, weekly is calming down a bit while daily looks ok.
If we keep grinding out here for another week or so I don't think it'd be enough to bring those monthly readings back into "ok" ranges.
The bearish view on the wedge can also be seen as bullish. To see the bullish view consider the area where we broke $42.2k - near the 2.618 fib extension. This break was followed by a very clean reset before progressing higher. If looked in this manner our focus on consolidation patterns change to where we look at the triangle that began forming on February 14ish.
This triangle is composed of higher lows with similar highs. If that's the case we had the clean break higher, consolidating, and poking holes in the $60k wall.
Now, I am a fan of technicals. BUT I'll admit, I throw them in the trash in parabolic moves. They tend to cloud my judgement and force me to close too early or get rekt on a short. It's why our team leans upon on-chain analysis so heavily at these stages.
Lastly, some analysts seem to believe two things... First, a mini spike is coming in the next few months. And second, due to how quickly we've progressed, Q3-Q4 might be a massive consolidation from the spike before we make another run at another peak like we saw in 2013. This is what on-chain is telling us. We haven't peaked and it might be the first of two. Armed with that knowledge, that's my bias as well as Jarvis Labs. Fortunately Jarvis AI doesn't have this same bias.
Hopefully that helps break down some of my reasoning on why I so easily dismissed the PI Indicator, which I admit could have used more analysis.
Writing this reply definitely helped me think more clearly on a few things.
Just read Nick's Ecoinometrics newsletter. Great analysis. The speed at which the market moves - doubles - is good to look at. It can serve as a reference point for how quickly we can move in the weeks to come.
Should also mention the amount of dry powder in the market, recent on-chain movements, and Grayscale form my bias on the Pi Indicator. And like Benjamin pointed out, the death/golden crosses rarely pan out.
Hi Ben, I'm wondering why the Greyscale Effect is still considered bullish. Doesn't the argument assume that the Greyscale premium is positive? For a while now the premium has been consistently and significantly negative. I don't understand what incentive there is for the GBTC whales to sell on the secondary market at a loss in order to buy more BTC.
It's considered bullish until it's not. Thus far there's a 100% hit rate which means there's a high likelihood it happens again.
The discount we see applies more for the private investors to begin a new unlock.
Additionally, if we get bullish price momentum on BTC in May and June I fully expect the premium to return... which the recently GBTC shares will be sold into.
Hi Ben!
First of all, kudos for the great content you deliver every day :)
In regards to “The Grayscale Effect”, can you please give us some light on why you see their unlockings as a bullish signal??
My ‘supply-demand’ logic tells me that unlockings will increase the supply side, so for me that’s a bearish signal.
Thanks in advance for your enlightenment!
Absolutely. Here's the article that introduces it: https://jarvislabs.substack.com/p/the-grayscale-effect
Let me know if you have additional questions after you give it a read. Thanks!
I got one problem with your Pi cycle claim:
The chart is at a log scale so obviously the slopes are not going to be the same.. and even if that wasn’t the case, why would that be an argument for invalidating the Pi cycle? Doesn’t really make much sense
@Nick, while we are on Pi-Cycle chart discussion, here is what Philip Swift emailed his subscribers in the newsletter about the potential Pi-cycle top this time
"So is the price of Bitcoin about to crash?
My opinion
My current market outlook for Bitcoin is bullish overall, so my personal view is that there is a good probability Bitcoin will NOT top out and crash when the Pi Cycle Indicator moving averages cross in a few days time.
Other indicators are suggesting that this is NOT the end of the market cycle (e.g. RHODL Ratio, 1yr HODL) and that the market is NOT overheated right now (MVRV Z-score).
So I am of the opinion that if Bitcoin does not continue up, it is more likely to range for a while, rather than crash.
That is just my personal viewpoint looking across a broad range of indicators and metrics, and considering the fundamentals for Bitcoin currently.
While I have a very good hit rate of forecasting the market (as you will know if you have been a subscriber for a while), nobody can see into the future...so at some point, either myself or some of the indicators on the site will be wrong."
"
In my opinion, Pi-cycle top indicator was created in 2019. So technically it did not predict the previous tops, but is overfitted to see if it 'could' have predicted if it were available in previous cycles. So I expect it to have some effect if we were to expect it to work this time. Its similar to those golden and death cross situations which rarely pan out in crypto.
Very valid point. And forces me to reconsider this chart due to this gross oversight.
As for why it would be an argument - We're measuring how overextended we are on a cycle basis. So what the Pi Indicator is looking to do is capture blow off tops of multi-year long cycles. And the 2019 price action is rather unique compared to price action seen in prior halving in the year before the event. Because of this I've been a bit hesitant to rely on this indicator.
However, after taking another look at the chart in light of your comment... It is not fair to discredit the chart based upon slope. In fact, removing log scaling makes the steepness higher than prior years. Suggesting any large move higher in the next month might be a peak similar to the first one seen in 2013.
I believe I let my personal bias creep in here. Seems I tried to create a shortcut analysis, which caused me jump to the slope argument.
I'll need to re-evaluate this and update readers on Friday. Thank you for taking the time to share your thoughts.
The reason I do believe the PI cycle indicator has some validity this time around is because it aligns with other technical analysis metrics that suggest we could be due for a rather heavy correction followed by some reaccumulation phase.
Particularly, we broke to the downside out of a rising wedge pattern we had been forming since december, and we have been unable to even retest the breakout line.
We also have a very ugly divergence on the weekly RSI and some other momentum indicators, and in terms of explosive momentum if you look at the boilinger bands on the monthly and compare it to 2013 they look very similar.
Onchain data (which I rely on you for xD) doesn’t suggest we’re seeing a top yet, so the 2013-2014 narrative seems to make a lot of sense
Agree with you that the technicals look ugly. Bollinger looks rough on the monthly, ok on weekly and daily. RSI on monthly is screaming caution, weekly is calming down a bit while daily looks ok.
If we keep grinding out here for another week or so I don't think it'd be enough to bring those monthly readings back into "ok" ranges.
The bearish view on the wedge can also be seen as bullish. To see the bullish view consider the area where we broke $42.2k - near the 2.618 fib extension. This break was followed by a very clean reset before progressing higher. If looked in this manner our focus on consolidation patterns change to where we look at the triangle that began forming on February 14ish.
This triangle is composed of higher lows with similar highs. If that's the case we had the clean break higher, consolidating, and poking holes in the $60k wall.
Now, I am a fan of technicals. BUT I'll admit, I throw them in the trash in parabolic moves. They tend to cloud my judgement and force me to close too early or get rekt on a short. It's why our team leans upon on-chain analysis so heavily at these stages.
Lastly, some analysts seem to believe two things... First, a mini spike is coming in the next few months. And second, due to how quickly we've progressed, Q3-Q4 might be a massive consolidation from the spike before we make another run at another peak like we saw in 2013. This is what on-chain is telling us. We haven't peaked and it might be the first of two. Armed with that knowledge, that's my bias as well as Jarvis Labs. Fortunately Jarvis AI doesn't have this same bias.
Hopefully that helps break down some of my reasoning on why I so easily dismissed the PI Indicator, which I admit could have used more analysis.
Writing this reply definitely helped me think more clearly on a few things.
As soon as I read this article, BTC fell down a bit before I could prepare. Hope it doesn't reach to 54k anymore
Just read Nick's Ecoinometrics newsletter. Great analysis. The speed at which the market moves - doubles - is good to look at. It can serve as a reference point for how quickly we can move in the weeks to come.
Should also mention the amount of dry powder in the market, recent on-chain movements, and Grayscale form my bias on the Pi Indicator. And like Benjamin pointed out, the death/golden crosses rarely pan out.