In 2019, BTC rose 45%, and digital gold defeated physical gold! The whale is also constantly moving

In 2019, BTC rose 45%, and digital gold defeated physical gold! The whale is also constantly moving

The gray line represents the trend of bitcoin this year has surpassed the performance of other assets, the watershed appeared in early April. Image source: BloombergMarkets
Following this optimism, Adamant Capital released the latest research report "Bitcoin in Heavy Accumulation" on the bitcoin market. Based on an understanding of bitcoin history and the study of data trends and the capture of changes in market sentiment, Adamant Capital gives the following core ideas:

1. Bitcoin whales are gathering

2. The market has a situation that is very similar to the bear market in 2014~2015.

3.HODLer are close to the balance of payments

4. Near-volatility enters the low point, indicating that the market bottoms out

5. Bitcoin long-term bull market has received strong fundamental support

6. Exchange security issues, miners' confidence collapse may still trigger demand shocks

In addition, Adamant Capital also gave a target price range of $3,000 to $6,500, and said the value of bitcoin is still undervalued, which is a rare opportunity for value investors. Now is the "Windows moment" of Bitcoin (in 1995, the introduction of Windows 95, redefining the home computer, Microsoft ushered in its golden age), it will eventually become a widely recognized portfolio hedging tool and reserve. Assets and a major breakthrough as a payment network.

In the past few rounds of changes in the bulls and bears, Adamant Capital has more accurately judged the trend of bitcoin and changes in market sentiment. This time, will it go ahead of the market again? And what does it mean in the report that the bitcoin whales are gathering and the value is underestimated? The Mars Financial APP (ID: hxcj24h) interprets this report and adds some understanding of the keywords in the report, hoping it will inspire you.

It's particularly worth noting that we got a hint from Adamant Capital's report and some key market analysts and institutions: Bitcoin's cyclical trend is always strikingly similar.


After the big rout, market confidence resumed

1.1 Reference indicators

Bitcoin is relatively unrealized gains and losses

The unrealized gains and losses of Bitcoin at a certain point in time are derived from its market value at this point in time minus its “realized capitalization”. The concept of “capitalized” was first proposed by Antoine LeCalvez and Nic Carter in 2018 and can be approximated as the weighted average price of transactions on the bitcoin chain. When the value obtained by subtracting the two is greater than 0, it can be regarded as “unrealized gain”, and less than 0 is regarded as “unrealized loss”.

“Bitcoin is relatively unrealized gains and losses” is a ratio that is calculated by dividing unrealized profit and loss by market value. When a large part of the market value of Bitcoin is made up of unrealized profits, it can be interpreted as investors are greedy. This ratio declines as prices fall, and investors may become fearful. When unrealized gains are converted into unrealized losses, the market enters a stage of confidence collapse.

1.2 Discovery of Adamant Capital

Based on changes in Bitcoin's unrealized gains and losses, Adamant Capital divides market sentiment changes into five phases (see below): Capitalization, Hope/Fear, Optimism/Denial, greed (Greed), and pointed out that the current market has already stepped out of the previous rout and turned optimistic.

The key driver behind current market sentiment changes is that the price of bitcoin has risen from $4,000 to $5,000, resulting in significant improvements in the unrealized gains of many HODLers. HODLer is considered a long-term investor in the market. According to Adamant Capital, if you don't consider Bitcoin lost for various reasons, the current unrealized gain of HODLer is about $13 billion.

In 2019, BTC rose 45%, and digital gold defeated physical gold! The whale is also constantly moving

Five stages of market sentiment based on bitcoin's unrealized gains and losses, image source: Adamant Capital
Adamant Capital said that in November last year, after nearly three months of sideways shocks, Bitcoin experienced "bloody Wednesday": on November 14, bitcoin prices suddenly fell below many analysts believe that the $6,000 support level And further fell to around $3,200, which caused Bitcoin's unrealized loss ratio to expand substantially in just a few weeks. People were upset and disgusted with the deal, and there were also malicious emails on Twitter. As a result, they judged that market sentiment was in the worst stage – the collapse.

In general, due to the existence of “disposal effects” (often referred to as the “win-loss and loss-making” effect), people tend to continue to hold bitcoin when the market goes down and suffer losses, and hopes that when the market rebounds. Make up for the loss. This was evident in the first three quarters of 2018, when the market had entered a downtrend channel, but investors increased their position in Bitcoin and even increased their exposure. However, as the market turned into a “rough” sentiment, coupled with the behavior of Coinbase finishing its cold wallet in early December (the number of bitcoins involved was about 850,000, accounting for 5% of total bitcoin supply), it caused market misunderstanding. There was a “selling” in the secondary market – Adamant Capital said that institutional investors also suspended investment at that time, but this situation began to reverse after 2019, and people gradually recovered from the plunge, “coin” behavior Reappeared.


The bottom of the market, bitcoin whales in the assembly

2.1 Reference indicators

Bitcoin net position change

HODLer tends to accumulate new positions in the bear market and cash in the bull market. Holding a position is equivalent to a "savings" behavior. Once the market reaches the top, the net purchase of Bitcoin is likely to turn into a net sell.

Historical price trend

Even if the price peaks and troughs of bitcoin are different in each round of the bull and bear cycle, there are still certain rules to follow. In 2018, bitcoin prices fell by 84%, from 92% in 2011 to 86% in 2014-2015.


Higher volatility may be caused by a large number of retail investors participating in the transaction, while volatility declines and entering a lower range is often associated with speculators being eliminated, market sentiment is sluggish, and large players are beginning to accumulate “chips”. The bottom of the market after the depression.

2.2 The discovery of Adamant Capital

In the report, Adamant Capital made the market bottoming, the value of Bitcoin was underestimated, and the judgment of the giant whales to enter the market. HODLer's behavioral change is the most important reference and is further evidenced by Bitcoin historical price trends and current price volatility.

According to Adamant Capital, in the history of Bitcoin, HODLer has accumulated “chips” in the bear market and the bull market sold (as shown below). The current situation is basically in line with this historical feature. Although there were exceptions at the end of 2018, this was not a failure of historical experience, but it was probably because the exchange was not excluded – the exchange wallet also contained a large amount of bitcoin. Coinbase's massive consolidation of its Bitcoin cold wallet in December 2018 led to the shift of the bitcoin net position held by HODLer from "+" to "-".

In 2019, BTC rose 45%, and digital gold defeated physical gold! The whale is also constantly moving

Bitcoin HODLer's net position change, image source: Adamant Capital
The current market conditions have strong similarities with the bear market of 2014~2015, and the value of Bitcoin is underestimated. In general, when the value of an asset moves from overvalued to undervalued, assets are also transferred from “weak hands” to “strong hands” in the market. The weak hand refers to the lack of understanding of the real fundamentals. People who are in the cloud and follow the trend are mostly retail investors. The strong players are mostly value investors. They are more patient and understand the market. They are often big players in the market. Mainly composed of institutional investors (also basically HODLer).

The reason for this is that the strong players in the market are often value investors who are willing to accumulate wealth by buying "chips" of falling prices for quite some time. Investors trapped by the previous round of bull market speculation, if they can not expect the long and cruel bear market, they will not be able to sell in the market, which gives the strong players the opportunity to buy on the dips and gradually build up the position. .

Now, the volatility of Bitcoin has entered a very low range: according to the data provided by, the volatility of Bitcoin 30 days, 60 days, 120 days, 252 days is only 3.54%, 3.02%, 2.98%, 3.33%. , both located at historical lows. This feature means that most retail investors and speculators are squeezed out of the market, and the market is dominated by investors and value investors with “agnosticism”.

If the whales start the process of building a position, what are the characteristics of the overall market trend? This may find an approximate uptrend from the price trend from February 2016 to May 2016, when Bitcoin traded between $200 and $400. More generally, the market's upward trend will present "increasingly high price lows" (see chart below). This price trend will provide retail buyers with buying confidence. The next bull market will have the same price movement pattern.

In 2019, BTC rose 45%, and digital gold defeated physical gold! The whale is also constantly moving

Image source: AdamantCapital

Historical reproduction?

It must be acknowledged that there is a certain similarity in each cycle of the rise and fall of Bitcoin history. Not only does Adamant Capital suggest in the report that most analysts and research institutions on the market hold similar views more or less. However, history is not a simple repetition.

According to Adamant Capital, as Bitcoin matures as the target of global commodity trading, its cycle of growth and decline will continue to grow in the future, and it will be reasonable to form a cycle of up to 10 years, just like gold and copper. As the cycle lengthens, it is possible to reduce its volatility, the degree of rebound within the cycle, and the degree of downturn (as shown below).

In 2019, BTC rose 45%, and digital gold defeated physical gold! The whale is also constantly moving

From a historical perspective, Bitcoin's cycle of ups and downs is growing, and the price gap between price peaks and price troughs is also shrinking. Source: Adamant Capital
If the above reasoning is correct, then the market decline in 2018 should not be 84%, but should be smaller. Adamant Capital explained that this may be due to the global enthusiasm caused by the 2017 rally, and more people involved than any previous cycle. This explanation also means that Bitcoin is likely to retest last November's low (or lower) to further digest the 100-fold growth between 2015 and 2017.

Despite this, Bitcoin is still undervalued—especially considering technologies such as sidechains and lightning networks that continue to improve the scalability of the Bitcoin network to promote its wider use, and its financial level continues to increase, young. The first generation became the mainstream of the society and showed increasingly strong acceptance and use of Bitcoin. Adamant Capital estimates that Bitcoin will be seen on a large scale in the next five years. Now is the "Windows moment" of Bitcoin, Bitcoin is bound to become a recognized portfolio hedging tool and reserve assets, and will make significant progress as a payment network.


risk warning

Although the market is improving, Bitcoin has regained its upward momentum, but this does not mean that the risk alert is completely lifted. In the report, Adamant Capital also hinted at the risk variables. In their view, policy supervision, hard forks, and even MtGox startup claims may have a negative impact on the market, but the biggest risk points in the future mainly exist in the following three aspect:

Exchange intrusion

Exchanges and custodians play an important role in the crypto-asset ecosystem. In the MtGox incident that occurred in 2014, Bitcoin, which accounted for 6% of the circulation supply, was stolen, resulting in a drop in bitcoin prices of more than 50%. Although no dominant position in the market is comparable to MtGox in 2014, the market impact of exchange intrusion is still a risk factor that cannot be ignored. And the exchange invasion will continue to appear for a long time.

? Macroeconomic downturn

Although there is no evidence that Bitcoin has a strong correlation with the overall market, its higher liquidity has made Bitcoin an asset. When the financial crisis comes, there may be a paradox, that is, market demand continues to rise, and prices continue to fall.

This is not impossible. Similar evidence can be found from the performance of gold during the 2008 financial crisis. At that time, the stock and bond markets were extremely depressed. People’s demand for gold coins and gold bars was very strong, but the price of gold fell by more than 30%.

In 2019, BTC rose 45%, and digital gold defeated physical gold! The whale is also constantly moving

On October 23, 2008, the British Telegraph reported that “the financial crisis: the price of gold fell, the demand for gold soared”, photo source:
Miner confidence collapse

Mining has a major impact on the rise and fall cycle of Bitcoin. Miners tend to hoard bitcoin in the bull market, limit market supply and push up prices to get excess profits, but sell bitcoin in the bear market to pay for electricity, which puts further downward pressure on prices.

In 2019, BTC rose 45%, and digital gold defeated physical gold! The whale is also constantly moving

The countries and regions with the cheapest global electricity prices, source:
Roughly estimated, when the bitcoin power is 44EH/S, there are about 3.1 million mining machines in the world. If the electricity bill is 5 cents per degree, the breakeven point of an S9 miner is about $3,250 and $4 is $2,600. This means that once the bitcoin price falls below $3,000, it is likely to cause the miners' confidence to collapse, which in turn leads to a series of subsequent market downturns. This risk has already appeared when the crypto asset market fell sharply in November and December last year.



According to Adamant Capital's report, multiple indicators, including market sentiment, clearly point to the fact that the current bear market, which began in early 2018, is getting closer to its end. People have hopes for renewed trading, but there is still a certain distance from becoming optimistic.

In such a market situation, it is clear that the “strong hands” in the market are already taking the lead, and their sucking behavior is likely to have begun by the end of 2018 – this is reflected in the report of Adamant Capital. It is also reflected in the market information obtained by Mars Finance APP (ID: hxcj24h).

But this is not to say that there is no risk of market downturn when Bitcoin regains momentum, but that the possibility of going up is higher and confidence is more sufficient.

From a longer-term perspective, the biggest inspiration for Adamant Capital's report is that Bitcoin is still in a low-value area and will be adopted on a large scale in the future. This makes their judgments at the bottom of the market in 2013 continue to be effective today: Bitcoin's “prosperity-depression” cycle is part of its natural adoption process. When a very scarce alternative asset faces increasing demand for many years, its price will rise again in the repetitive phase of accumulation and redistribution. (Mars Finance)