Momentum Trade
Traditional markets are flat to down year-to-date. The air is being let out of the balloon after a gangbusters end to 2024 that capped off two impressive years for equity markets.
Bitcoin is in a similar boat.
The Trump trade carried both traditional and crypto markets higher to end the year, but reality is setting in. It’s not just uncertainty around US policy and rash decision-making coming out of DC, although that’s part of it.
It’s also a natural correction.
Bitcoin is often compared to either the top tech stocks like Apple or Nvidia or the more speculative momentum stocks.
Look at Palantir.
The stock went from $15 to $125 in one year, largely on hype and momentum. To be clear, there is something to the company but a lot of it is held close to the vest due to the sensitive nature of what the company does.
It’s a great example of something that’s likely going to redefine an industry but that also needed to come back down to earth.
As of Friday, Palantir is 33% off its 52-week highs. The company is trading at an insane 450 price to earnings ratio. Even in the most bullish momentum trade environment, that’s unsustainable. It might very well be a multi-decade compounder but volatility is part of the path toward that end state.
Traders
Who’s trading bitcoin?
I’m not.
I never have and never plan to.
I buy, hold, maybe spend some.
Over the years, I’ve done more spending than I’d like to think about now and I went through the same onboarding journey that anyone new to crypto does, seeing potential trades in the altcoin space, hitting some, flipping profits back to bitcoin, but also losing plenty of bitcoin on other trades.
It’s a common progression:
come to crypto via bitcoin
notice altcoins
try to trade them
win some
lose most
Then, 1 of 2 things happens:
you learn and go btc-only
you leave the space for good
HODL Waves
Look at HODL Waves.
Bitcoin Magazine gives more details on their page about this chart but, in short, it shows the amount of bitcoin held for different periods of time and what those bitcoin holders are doing with it.
In general:
older coins move less
There is a cohort of new bitcoiners trading bitcoin in the short term but it is dwarfed by those who have held bitcoin the longest.
Consider bitcoin’s supply too.
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