Bitcoin’s doing high quality, thanks for asking.
Amid a shaky few months for markets, the world’s favorite cryptocurrency has been remarkably secure, buying and selling within the narrowest vary since late 2020:

You may take a distinct view on this relying on priors akin to whether or not you purchased, when, and in what quantity. Views might embody:
It’s additionally doable you haven’t been following bitcoin’s each day fluctuations intently since you’re a grown-up who invests in strong belongings like UK authorities bonds.
Whichever approach you method it, for a forex that did this in the course of the pandemic —

— the flatness of latest months is a little bit … eerie.
Volatility’s additionally muted:

What’s occurring? Morgan Stanley strategists Sheena Shah and Kinji Steinmetz have taken a glance in a observe printed Thursday.
Their prime takeaway is that almost all of those that acquired into bitcoin because the begin of 2021 are at present holding (or HODLering) the bag — and that the tokens themselves aren’t transferring round a lot:
Virtually 1 yr into the bitcoin bear market, most who purchased bitcoin in 2021 are dealing with heavy losses and seem like ready for any rallies to shut their place. A document variety of bitcoin items haven’t been used for any transaction up to now 6 months, at present at 78% of whole and this quantity continues to rise (Exhibit 1).
What this implies, if we oversimplify a bit, is that those that purchased/acquired bitcoin greater than 6 months in the past are holding onto their positions, with some probably ready for a worth restoration. For the remaining 22% of bitcoin items held by the shorter time period traders who did transact bitcoin up to now 6 months, estimates counsel their common breakeven worth is simply over $22.3k (+7% from present however was as excessive as 20% a couple of days in the past, see Exhibit 2)
(Shah and Steinmetz observe that there are couple of key caveats right here: the primary is that it assumes every pockets is owned by a distinct entity, the second is that it could actually’t account for off-blockchain transactions.)
As is likely to be anticipated, that lack of motion has coincided with a downturn in exercise on most exchanges aside from market chief Binance, which has reduce charges to drum up extra enterprise and now hosts a few fifth of all quantity:
The elephant within the room is in fact ethereum, which had a publicity boost final month when its blockchain survived an update. Good! ETH now tracks fairness markets extra intently than bitcoin, a dynamic that means it could be the extra normalised danger asset of the 2. Some available in the market “might now begin to query … the buying and selling dynamics” for bitcoin because of ETH transfer to a proof-of-stake mannequin, Morgan Stanley says.
The analysts observe that bitcoin tends to search out sturdy help at simply above $18,100, suggesting merchants are shopping for dips beneath this stage.:
Protection over the summer season identified $20k as a key support level, beneath which compelled liquidations of leveraged positions have been wanted. We’d speculate latest dynamics counsel $18k may very well be an identical ache level. (If you happen to’re a massively leveraged bitcoin whale, please get in contact.)
Public bitcoin miners in the meantime aren’t mining as a lot, which must also be offering some help. Certainly, they’re having a further torrid yr (even by crypto requirements) amid surging vitality costs. The share costs of among the largest listed ones — Marathon Digital, Riot Blockchain and Core Scientific — have been dreadful:

(Core Scientific announced it may seek bankruptcy whereas this text was being written!)
It’s circumstances wherein highly-leveraged holders may need this sort of stability to be underpinned by severe, long-term traders holding BTC. Shah and Steinmetz:
As buying and selling volumes fall and there are fewer market contributors, intraday merchants and market markets have an rising affect on costs. Their exercise is extra prone to be impacted by technical worth and momentum than say long run asset managers.
Firm-driven bitcoin adoption efforts proceed apace, inspired maybe by the UK putting in its first laser-eyed prime minister. MS’s workforce is a little bit sceptical about how a lot any of that issues:
In latest months, conventional monetary corporations have more and more been saying new crypto merchandise to supply their shoppers publicity to the markets and amenities to have the ability to purchase, promote and maintain the underlying crypto…
The businesses are saying they’ve launched the merchandise on account of consumer demand however wanting on the latest flows out and in of trade traded merchandise and the developments for buying and selling volumes described above, we proceed to assume that until there may be materials upward worth volatility it could be tough to see that actual demand choose up materially.
Stability appears to be like good, not less than relative to what’s taking place elsewhere. However thinning volumes in a market that has no utility past retailer of worth, the place the actions of its few lively each day contributors are being decided by technical resistance and help ranges, just isn’t a symptom of sturdy well being. Although we’re far too jaded to say the very best has handed for the mom of all cryptos, its flatlining after the plunge may signify nothing aside from that it’s now an asset class on life help.