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Bitcoin on 7-week streak, breaking $19,000

to touch $19,500 briefly

Thursday 26 November 2020

Key highlights 7 Day Performance

» Healthy correction needed as Bitcoin hits multiple key
resistances Name Price Change
» Psychology cycle show Bitcoin still far from ‘euphoria’ levels
Bitcoin $18021 1.1%
» Expectations of an extended ‘belief’ state could put Bitcoin
above $80,000 next year
Ethereum $533 11.2%

7 weeks of straight gains for Bitcoin XRP $0.57 93%

A rally in global equities this week saw Dow Jones breaking the
30,000 level as investors brought optimism back into the markets Chainlink $12.6 -7.1%
buoyed by positive vaccine news and Biden’s choice of Janet
Yellen as US treasury secretary. Gold retreated further as it Bitcoin Cash $291 18.2%
consolidates above $1,800, losing steam against growth assets,
which prospered for the bulk of this month.
Binance Coin $29.9 6.5%

Bitcoin, sharing a similar growth story with equities, continues its Polkadot $5.02 7.1%
ascent having displayed green candles for 7 consecutive weeks.
BTC broke through $19,000 this week, but only to pare gains as
Litecoin $77.4 3.8%
it whipsawed within an 8.5% range earlier today. The digital
asset has reached multiple key resistances and is at overbought
Bitcoin SV $180 20.5%
levels since October, making this healthy pullback a needed
continuity for its upward trajectory.

Psychology cycle suggests Bitcoin is

still far from ‘euphoria’ levels

Market’s ‘belief’ state could remain extended as Bitcoin price continues to inch upwards

Many have talked about the psychology of market cycles in stocks since the great depression, which depicts investor
sentiments as the market fluctuates. This form of emotions is also applicable to the Bitcoin market as it undergoes
cycles from euphoria, optimism and capitulation. Recently, the crypto fear & greed index is pointing towards extreme
and remained at elevated levels since the start of November. But the real questions is where exactly are we at in the
current Bitcoin cycle?

Dissecting Glassnode’s Bitcoin net unrealised on-chain profit/loss (NUPL) could provide us with a fundamental insight
into the market. The indicator utilises the UTXO (unspent transaction output) of Bitcoin that takes into account the
current price versus the price at which the Bitcoin was last moved; meaning the unspent tokens after a completed
transaction in a prior epoch. The percentage of UTXOs in profit/loss can then be calculated at any given point in time.

Historically, the metric has been a good indicator of market tops when it surged above 95%. Colour mapping the
parameters in percentiles with various market states (Euphoria - >75%, Belief – 50% to 75%, optimism – 25% to 50%,
Hope – 0% to 25%, Capitulation - <0%) would give us a good picture of the macrocycles of Bitcoin.

We have observed that the market can be under a ‘belief’ state for an extended period of time. During the 2017 bull-
run, Bitcoin remained in the ‘belief’ state for an entire year from Dec 2016 to Dec 2017 before hitting extreme ‘euphoria’
levels that saw the price reversing downwards. During this period Bitcoin exhibited a parabolic move from $850 to
$20,000, posting a 2,250% increase.

Currently, the indicator suggests that the market have just kick-off a new wave, re-entering the ‘belief’ state at the end
of October. Extrapolating from the previous bull cycle (not saying history would repeat itself), but even a quarter of the
2,250% returns would price Bitcoin at $86,000 next year.

About the Analyst

Lennard Neo, CFA - Head of Research, Stack Funds
Lennard specializes in fundamental and technical analysis in digital asset investments. He became acquainted with blockchain,
cryptocurrency and ICOs in 2016, and recently decided to take a meaningful step away from traditional banking to join this industry.

Previously, Lennard spent 3 years with an investment bank in Forex and Debt Capital Markets. Companies he worked for include
Commerzbank AG, DBS Bank, Bloomberg, and Fidelity. Prior to this, he also had entrepreneurship experience with an e-commerce
startup and a local social enterprise.

Lennard completed the CFA program and graduated with a master’s degree in Applied Finance. He is fluent in English, Chinese with
a basic in Korean.

About Stack Funds

Stack Funds is an issuer of Cryptocurrency Access Products (CAPs) including trackers, indexes and structured vehicles for

Our investment funds have been structured according to institutional standards, taking into account the highest degree of security,
flexibility and compliance in our delivery of digital asset based products.

Contact Stack Funds

Singapore Office: 30 Cecil St, #19-08 Prudential Tower, Singapore 049712

Website: www.stackfunds.com

Email: admin@stackfunds.com


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