TL; DR
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David Pullell from ARK Invest and James Check from Glassnode has just created a bitcoin research framework that suggests, “The bear market is much worse than expected.”
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According to Dave and Jim, the common method of calculating the market’s average buying price is flawed.
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When Dave and Jim removed these bitcoins from their calculations, they found that the average buy price in the market was currently $32,000 per BTC – a solid $8k below bitcoin’s current trading price.
Full story
David Pullell from ARK Invest and James Check from Glassnode has just created a bitcoin research framework that suggests:
“The bear market is much worse than expected.”
We’d happily ignore their findings…but 90% of the good investments we’ve made in our lifetime have come from ARK Invest’s research, so we’re struggling to keep our heads in the sand.
The fundamental essence of Dave and Jimmy’s research is this:
Investors often calculate all BTC purchases ever made to find out what the market’s average “buy price” is.
If the average is lower than the current BTC price, the market is making a profit (a healthy sign).
If the price is above average, the market is in the red (this is not the best sign).
The only problem is that according to Dave and Jim, the usual method of calculating the average buy price in the market is flawed.
The purchase price of many lost bitcoin is taken into account.
That is, from wallets that bought BTC for $1, $10, $100, etc… and then immediately lost their wallet keys (passwords).
This bitcoin is effectively out of commission (the owners will never be able to sell and never will), meaning it can never affect the market.
And for that reason, this dead bitcoin should not be included in market calculations.
When Dave and Jim removed these bitcoins from their calculations, they found that the average buy price in the market was currently $32,000 per BTC – a solid $8k below bitcoin’s current trading price.
Which indicates to them that we are in a more difficult situation than previously suspected.
Silver lining?
Any bitcoin that is lost will only make the remaining available coins more valuable.