🪙 What Needs to Happen for Bitcoin to Moon Again?

Today, I'm diving into the current crypto market scene and what it takes to get Bitcoin back on track.

💬 We're still in a bull phase, but this is the weakest pump since March 2023
💬 Demand for Bitcoin and stablecoin liquidity are dropping, with investor interest turning bearish
💬 The critical support level for Bitcoin is $56,000. Falling below this could trigger a major correction

Let's break it down:

📈 Market Action

The market’s growth needs a serious boost. Right now, it’s the weakest surge since March 2023.

HODLers have upped their buys to 72K BTC per month from 68K in May, but this is still way below the 160K we saw during Q1 2024's rally.

We need more buying pressure to lift prices.

📉 Bitcoin Demand

While demand for Bitcoin has ticked up a bit since May, it’s still far from the peak we hit in Q1 2024 during the US spot ETF launch.

For Bitcoin prices to skyrocket, traders need to get back in the green. Currently, their unrealized gains are still in the red.

📈 Stablecoin Liquidity

The 60-day growth rate for Tether (USDT) market cap has slowed down big time.

We need more liquidity to drive a price recovery.

📊 What’s Next

Bitcoin’s critical support level is $56,000. Dropping below this could lead to a significant dip.

The market is tough right now, but it’s not game over. Keep an eye on demand and liquidity, and be ready for potential dips that could send Bitcoin even lower.

Stay vigilant and ready to pounce on opportunities!

Satoshi Tweeted🔑

📊 What’s Happening in the Crypto, and the New Reality of Tokenomics?

In recent years, the cryptocurrency market has undergone significant changes. One of the key indicators that helps to understand these changes is Fully Diluted Valuation (FDV), which reflects the total market capitalization of an asset when all tokens are issued.

However, FDV does not always provide a complete picture as it does not account for short-term market fluctuations.

It is also important to consider the float — the volume of tokens available for trading, which affects the valuation and liquidity of tokens.

❗️ Why Float is Important?

FDV is useful for long-term valuation but does not consider short-term market dynamics arising from changes in liquidity and supply.

😀Tokens with a high float, like Bitcoin, are highly liquid because over 90% of all Bitcoins have already been mined.

Tokens with a low float can have an inflated and misleading valuation.

For example, World Coin has a market capitalization of $800 million, but an FDV of $34 billion, creating a significant discrepancy.

In the industry, it has become a standard to unlock 5-15% of tokens for the community, with the rest locked for the team, investors, and other purposes.

❓ The Tokenomics Science

Tokenomics is the system of token distribution, balancing the interests of different stakeholders and ensuring the current and future value of the project.

Projects use different tokenomics to incentivize certain actions within their ecosystems:

1️⃣ Part of the tokens is unlocked for the public for price discovery
2️⃣ Another part is locked for investors and the team on favorable terms before public trading
3️⃣ Some projects use airdrops, rewarding users for specific actions such as providing liquidity or voting

❓ Why Fully Diluted Value (FDV) Remains Important

FDV is the market capitalization of an asset when all tokens are issued.

It shows how the market values the future worth of the token.

High FDV and low float can be misleading.

For instance, FTX used its FTT to inflate its balance sheet (and scam millions of users👤) by accounting for illiquid shares as assets.

❓ Why Airdrops are Used

Some protocols use airdrops to distribute tokens and mitigate risks associated with low float.

Airdrops reward users for specific actions that promote the growth of the protocol.

However, most tokens lose their long-term value. Only about a third of tokens retain their value after an airdrop, like BONK (~8x return).

Airdrops can stimulate short-term activity but do not always lead to sustainable growth.

For example, the Layer2 project — Optimism saw a spike in activity after an airdrop, but then activity declined.

✅In Conclusion…

Different tokenomics schemes and airdrops affect market valuation and network activity.

It remains an important factor to monitor trends and adapt strategies accordingly, while for investors it is even more important to master the tokenomics research, and not to buy-in the over-hyped projects with misleading vesting and unlock schedules.

Satoshi Tweeted🔑