#1091 David Puell On If The ETH Merge Will Affect Bitcoin
9/15/2022 · 29 min · transcript via mlx
Tags
Key topics
— Bitcoin's 200-week moving average continues to serve as reliable support across multiple market cycles, including major crashes like COVID-19 in 2020.
— Investor cost basis, calculated from realized gains minus miner revenue, has historically marked cyclical bottoms and currently sits at approximately $19,000.
— Short-term holder cost basis crossing below long-term holder cost basis is a reliable indicator of cyclical bottoms and marks equilibrium between speculators and long-term participants.
— Long-term holder supply has reached all-time highs at approximately 14 million Bitcoin, increasing market illiquidity and inelasticity.
— ETH-BTC trading pair is within striking distance of 2018 all-time highs; Ethereum shows record options market open interest and futures backwardation ahead of the merge.
— Macro environment correlation with crypto has intensified since COVID-19, with Fed policy and inflation trends now the dominant price discovery drivers for Bitcoin.
Market & price signals
— Bitcoin's 200-week moving average at approximately $19,000 serves as key support. Investor cost basis currently sits around $19,000 and has proven reliable for marking cyclical bottoms. Short-term and long-term holder cost basis differential is narrowing rapidly—from $2,500 at report publication to approximately $900—signaling potential bottom formation. Long-term holder supply has reached all-time highs near 14 million BTC, with supply becoming increasingly illiquid. Bitcoin's four-year CAGR has dropped from a 100%+ range over six years to 30–100% for the first time, indicating diminishing growth returns. ETH-BTC pair is trading near 2018 highs; Ethereum shows record options open interest and backwardation, indicating major hedging activity ahead of the merge. Equities historically bottom approximately one month before peak inflation; current timing remains uncertain.
Actionable insights
— Monitor the short-term and long-term holder cost basis crossover closely; it is a battle-tested signal for cyclical bottoms and marks a high-conviction upgrade point for Bitcoin exposure.
— Consider macro and Fed policy as the dominant price discovery mechanisms for Bitcoin since COVID-19; peak inflation timing and Powell's risk-on/risk-off signals will likely drive next major price moves over the next 12 months.
— Evaluate Ethereum's merge narrative carefully; record options hedging and backwardation in futures suggest significant tail risk is being priced in; monitor post-merge price action for a potential "sell the news" event and regulatory risks around proof-of-stake centralization.
Episode sponsorships
Paid placements mentioned in this episode. BTC Pods is not sponsored by or affiliated with these advertisers. Links are included so you can find offers mentioned on the show.
— Amberdata provides critical data infrastructure for financial institutions entering the digital asset class, delivering comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance. Download their Digital Asset Data Guide at www.amberdata.io/pomp.
— Alto IRA helps you invest in crypto tax-free by offering Alto CryptoIRA with access to over 200 coins and tokens, all with standard IRA tax advantages. Fund via 401(k) or IRA rollover or directly from your bank account with no setup or account fees. Visit https://altoira.com/pomp to open an Alto CryptoIRA and invest in crypto tax-free today.
— Unstoppable Domains has teamed up with OKEx to make crypto simpler by supporting .crypto domains on their exchange, allowing you to receive over 70 cryptocurrencies including Bitcoin, Ethereum, and Chainlink with a single blockchain domain name instead of long wallet addresses. Go to unstoppabledomains.com and get your name .crypto to make your crypto life easier, or use unstoppabledomains.com/r/pomp.