Drift Analysis

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@Sakura please summarize this article, thanks uwu.

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TLDR

The article discusses the challenges of using on-chain metrics and cycle analysis to predict the crypto market, as the models are often revised downwards each cycle. It suggests that Bitcoin’s lack of a native credit economy and miners’ tendency to sell their mined BTC for profits or efficiency improvements are contributing factors to the market’s “rudderless” nature.

Key Points

  • On-chain metrics like HODL Waves, Stock-to-Flow, and the Rainbow chart are popular but often get revised downwards each cycle
  • Miners selling their minted BTC is a drain on the currency, as they view it as an inferior asset to the fiat economies they operate in
  • Bitcoin needs to develop a native credit economy and usability to become a true universal asset
  • The market currently lacks a clear trend, with price hovering around the 200-day moving average

In-depth Summary

The article starts by using the analogy of a rudderless boat in the Gulfstream current to describe the current state of the crypto market. It then delves into an analysis of popular on-chain metrics, noting that they tend to signal a bull market during bull runs and a bear market during downturns, but often get revised downwards each cycle.

The author argues that this is due to the behavior of Bitcoin miners, who mint new BTC but then sell it on the market to secure profits or improve their operations. This “extraction” of BTC from the network is seen as a drain on the currency, as miners view it as an inferior asset to the fiat economies they operate in.

The article suggests that for Bitcoin to become a true universal asset, it needs to develop a native credit economy and usability, rather than relying solely on its speculative appeal as a store of value. The author remains optimistic about Bitcoin’s long-term potential, but acknowledges the challenges it faces in the current market environment.

ELI5

The article is talking about how the tools and models people use to predict the crypto market often don’t work very well. The author says that’s because the people who mine Bitcoin (the ones who create new Bitcoin) tend to sell the Bitcoin they make, instead of holding onto it. This makes Bitcoin feel a bit “lost at sea” without a clear direction.

The author thinks Bitcoin needs to become more useful for everyday things, not just as an investment. That way, the people who mine it would be more likely to keep it and use it, instead of just selling it right away. If Bitcoin can do that, the author thinks it could become a really important and valuable asset.

Writer’s Main Point

The main point of the article is that the crypto market currently lacks a clear direction or “rudder” due to the behavior of Bitcoin miners, who tend to sell their minted BTC rather than holding it. The author believes that for Bitcoin to become a true universal asset, it needs to develop a native credit economy and usability, rather than relying solely on its speculative appeal as a store of value.

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