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Hello readers,
With BTC up 45% over the last month, I’ve seen a lot of chatter calling for either a “local top” or a “full send” into year-end.
These are largely gut instinct calls from “Key Opinion Leaders” + other market prognosticators and analysts on social media.
Of course, nobody has a crystal ball. But to build strong conviction, we like to combine our instincts, experience, and analysis with hard data. This helps us assign probabilities to potential outcomes.
It’s the hallmark of The DeFi Report, as our research typically combines:
Macroeconomic analysis
Onchain data analysis
Sentiment analysis
Fundamental analysis of blockchains and protocols
Crypto native/idiosyncratic analysis (things like politics, geopolitics, regulation, communities, and other unique aspects of crypto as a global asset class)
In this week’s report, we’re laser-focused on Bitcoin onchain data, wrapping up with a bonus section on SPX6900 — a memecoin we covered recently.
The goal is to determine where we’re at in the cycle. To do so, we analyze key BTC metrics today while comparing them to past cycles.
Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment, legal, tax, business, or any other advice.
Let’s go.
Kicking off with Bitcoin’s “Smart Money.”
What’s it doing right now? It’s selling.
Long-term holders took profit in Q1 of this year, reaccumulated during the summer months, and started taking profits again on the post-election move.
No surprise here. After all, bitcoin is up 45% in the last month. It’s up 600% off the cycle lows.
69% of Bitcoin’s circulating supply is currently held by long-term holders. As the bull market continues, we expect to see long-term holders pass their coins onto short-term holders. So the 69% figure should continue to drop.
To put it into perspective:
In the ‘21 cycle, BTC price peaked when 58% of the circulating supply was held by long-term holders
In the ‘17 cycle, BTC peaked when 51% of the supply was held by long-term holders
Takeaway: Smart money is starting to take profits. We think this will continue as new money enters the market. For price to rise, demand (new money) needs to overcome supply/those willing to sell. We think it will.
Shifting to Bitcoin’s “New Money.”
Short-term holders are new market entrants. In bull markets, we typically see this cohort rise as long-term holders drop.
That’s exactly what we’re seeing today.
Short-term holders chased the market back in Q1. Many exited during the consolidation chop over the summer. And now we’re seeing a new impulse.
For perspective:
16.6% of Bitcoin’s supply is in the hands of short-term holders (paper hands) right now
In the ‘21 cycle, BTC peaked with 25% of the circulating supply held by short-term holders
In ‘17 the price peaked when short-term holders controlled 70% of the supply
Takeaway: New money is coming into BTC. Based on past cycles, probabilities point to more coming.
Balances on exchanges are dropping right now. This is somewhat of an anomaly — as we tend to see coins moving into exchanges as the price rises (presumably to sell).
Instead, we see bitcoins leaving exchanges, presumably to be held in self-custody.
While interesting to note, it’s not the first time we’ve seen this dynamic. At the beginning of the run-up in early ‘21, the yellow and black lines diverge in a similar pattern.
Flows ultimately came back to exchanges later in the cycle.
In addition to BTC balances on exchanges at their lowest level since 2019, I’m hearing that OTC desks are short on bitcoin. Here’s Marcus Theilen, founder of 10x Research commenting on one of my recent LinkedIn posts:
Takeaway: Bullish.
Funding rates in the futures market help us understand the momentum and sentiment of traders. When in green, longs are paying shorts to keep their positions open. When red, shorts are paying longs.
For perspective:
Funding rates are currently .012%, after getting as high as .025% as BTC hit 100k
In March they got as high as .07%
In the ‘21 cycle, funding rates peaked at .17%
Takeaway: Historically speaking, funding rates are quite low today — considering that BTC is trading near $100k. A high funding rate indicates over-leverage and a “house of cards” type market structure. That’s not what we see today. Bullish.
The MVRV Z-Score helps us understand the relationship between the current market value of BTC and the “realized value” — which is a proxy for the cost-basis of the network. It’s essentially giving us an idea of the unrealized gains the average BTC holder is sitting on.
Historically, it’s done a fantastic job of identifying cycle peaks.
For perspective:
Current reading = 3.17. This means the average holder has an unrealized gain of 217%
At the cycle peak in ‘21, the MVRV was reading 7.5 (650% gains)
In ‘17 BTC peaked when the MVRV was reading 11 (1,000% gains)
To go even deeper, a focus on the long-term holder cohort:
The current LT MVRV is 3.89
In March it was 3.76
LT MVRV got as high as 12 when the BTC price peaked in the last cycle
It registered a reading of 35 at the ‘17 cycle peak
The MVRV for short-term holders is currently 1.26 — indicating short-term holders are sitting on 26% gains on average.
For perspective:
It was 1.45 in March
peaked at 1.8 in the ‘21 cycle
and 2.4 in the ‘17 cycle
Takeaway: Probabilities point to both long and short-term MVRV going higher before the cycle tops out.
Similar to the MVRV Score, the Pi-Cycle Top Indicator has historically been a useful tool for identifying cycle peaks. It measures momentum via the 111-day moving average (green) and a 2x multiple on the 350-day moving average.
When the market gets overheated, the shorter 111-day moving average tends to cross the longer 350-day moving average.
Takeaway: The shorter moving average has yet to make a parabolic move — indicating a blow-off top could still be on the horizon.
We entered the “extreme greed” zone on 11/1 and have been there since. Of course, when others are greedy, you want to be fearful.
But there’s some nuance to explore here. For example, we entered “extreme greed” for the first time in the ‘21 cycle in early November of 2020. We stayed there until the cycle peaked in April (5 months — with a few brief pullbacks that sent us into “greed”).
Additional offchain indicators also point to the beginning of the “extreme greed” period of the cycle. For example, views on popular crypto YouTube channels are still about half of where they were at the peak of the last cycle. The Coinbase App is ranked #15 (went to #1 last cycle).
Finally, I’m seeing more people calling “tops” than calling for the “super-cycle.” This is not what we typically see at the top. At the actual top, it’s more likely that few will be calling for it as extreme exuberance will have set in — with many market participants assuming a “new normal” is here to stay.
Takeaway: while there are several signs of exuberance out there (pump dot fun, Microstrategy, memecoins, AI agents, NFTs coming back, etc), the probability points to more extreme greed to come. Expect volatility. It’s human nature.
Shifting to SPX6900 — a memecoin that we covered in a prior report (and hold a small amount of).
I know some readers will have a knee-jerk reaction to my memecoin coverage. But I feel strongly that the move we’ve already seen in memecoins this cycle is a preface of what could come later.
Why?
It’s become quite clear that retail loves memecoins. People love to gamble. And there seems to be something about the “gaming” aspect of trading memes. At the end of the day, that’s what I think memecoins are. A game. That’s the utility. And it comes with a sense of community and endless dopamine hits.
Make no mistake about it, memecoins are onboarding new users. I view them as a net positive to crypto, while also acknowledging that they are not for everyone. Many are scams. And lots of people will get burned playing the game.
Now. In full disclosure, my instinct on the sector is basically a “gut call” as someone who has spent thousands of hours studying the crypto markets.
But I want to share a sample of what I’m tracking for SPX — so that you can get a view into some of the analysis.
When it comes to memecoins, I’m primarily looking for the following:
Lots of evangelists and social media presence (mindshare/attention)
A consistently growing tokenholder base
Projects that have already made big moves, sold off, and consolidated
$100m + market cap
Ample trading liquidity
Exchange listings (or potential for future listings)
Lots of whales (shows high conviction)
A clear rallying cry
A community that is making extremely high price predictions
Trading on Solana (easy onboarding via Coinbase, Phantom)
Global market/addressable interest
SPX6900 seems to check the boxes. A few highlights:
Attention: Its social media account has grown from 9k followers to over 50k over the last few months. Its largest evangelist account (Murad) has grown from 110k followers to 550k over the same period — spawning several smaller evangelist accounts in the process.
Tokenholder growth: Its tokenholder base has grown from roughly 3k a few months ago. It has 79k today and is growing fastest on Solana (also available on Base and Ethereum).
Resilience: It had multiple 70+ % corrections before the parabolic move a few months back. It sold off roughly 50% from its peak price of $.94/token, and has been consolidating in the $.49 - $.72 range for the last 7 weeks.
Whales: SPX has over 4.4k tokenholders with over $10k on Solana alone. That’s nearly half of what WIF has and more than half of Bonk (both have market caps 5x larger). It has nearly 1/3 of the number of tokenholders with over $100k and $1m that Pepe has. Pepe’s market cap is 13.4x that of SPX.
Global Market: Simple idea anyone can get behind. Now trading on KuCoin (Asia) and Bybit (UAE) + Solana, Ethereum, and Base DEXs
Rallying Cry: “Flip the stock market,” and “Stop trading and believe in something” — GameStop vibes
Absurd Price Predictions: Murad target is $100b. Remember, Doge got to $90b last cycle, making it possible to dream.
So that’s the thesis. Please note that I have no affiliation with SPX6900 or anyone associated with the project. Investing in crypto is quite risky. Memecoins are on the far end of the risk curve. There can be flaws in the ways in which we query and analyze data. My analysis may be off. And that SPX6900 could go to zero quite quickly.
Note that my data source is a private dune dashboard + Holderscan. I’m working on additional data that I hope to be able to share soon.
Local top or full send into year-end?
That’s the question we started with. Everyone wants to know where we’ll be at year-end. I’m not a trader or someone who pays too much attention to short-term price movements, but I believe the probability points to BTC going higher from here — possibly into the $120k range by Christmas.
I don’t have a strong conviction on this. I’m looking for volatility either way. But I do think we are going higher in ‘25.
Of course, we’re monitoring the broader economy as well. Global liquidity is currently sending some bearish signals. The dollar has come off its local peak of 108, but remains elevated. Nonfarm payroll data comes out later today and we’ll get CPI data on 12/12, with the next Fed FOMC meeting on 12/18.
As always, please do your own research. Expect lots of volatility. And don’t invest anything you can’t afford to lose.
Finally, a shout-out to Glassnode for making the analysis possible. If you’d like to access their data directly, please see the referral link here for a 20% discount on the Advanced Plan and a 10% discount on the Pro Plan.
Take a Report.
And Stay Curious.
Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.