<\/p>\n
Bull market truthers would say bitcoin bottomed out at the end of 2022 and we\u2019re destined for a parabolic run sometime after the next halving in April.<\/p>\n
That would mean bitcoin has been in a bull market for more than a year. Not true.\u00a0<\/p>\n
Bitcoin has been in a kangaroo market for nearly as long.\u00a0<\/p>\n
The unpredictable kangaroo market hops sideways \u2014 sometimes aggressively \u2014 while bull and bear market trend consistently in one direction.\u00a0<\/p>\n
No doubt, a kangaroo market sounds familiar to anyone closely tracking the price of bitcoin over the past year.\u00a0<\/p>\n
Kangaroo markets were made famous<\/a> by Berenberg strategist Jonathan Stubbs in the aftermath of the Covid market crashes in early 2020.<\/p>\n The S&P had folded<\/a> almost 40% across February and March before an impressive bounce to new record highs in August.\u00a0<\/p>\n Stocks would whipsaw over the next quarter \u2014 a potential outcome flagged by Stubbs in a research note months earlier.<\/p>\n The insight had been distilled into a viral meme after Stubbs appeared on a CNBC television segment.\u00a0<\/p>\n Granted, bitcoin has more than doubled since the end of 2022, which certainly sounds like a bull market.\u00a0<\/p>\n But most of that action was a simple bounce from Terra\u2019s collapse<\/a> and the subsequent rolling liquidations that triggered a string of bankruptcies, ultimately leading to the FTX scandal.<\/p>\n One month after Terra\u2019s implosion, Celsius, Three Arrows Capital and Voyager all went bust. Outside of the stress those collapses put on crypto markets, the Federal Reserve had just announced the biggest rate hikes in almost three decades, leading to widespread negative sentiment across both crypto and equities markets \u2014 heavily dragging prices.<\/p>\n Bitcoin changed hands for close to $30,000 in June 2022, a month which marked BTC\u2019s worst monthly candle<\/a> in 11 years. FTX CEO Sam Bankman-Fried\u2019s outing as a multibillion-dollar fraudster triggered a further 20% fall in November, wiping the bulk of the previous bull run off the chart.\u00a0<\/p>\n Bitcoin had totally shaken off the FTX crash by the end of January, and had properly reclaimed the $30,000 mark by March, even nearing its pre-Terra price point.\u00a0<\/p>\n Recovering from those debacles would signal the beginning of bitcoin\u2019s current kangaroo market: Bitcoin jumped around for the next eight months but went practically nowhere.<\/p>\n Read more:<\/strong> Bitcoin price often drops 20% in bull markets \u2014 but it\u2019s becoming less frequent<\/a><\/p>\n In fact, most of bitcoin\u2019s gains over the past year came directly after some very fake news<\/a>. Bitcoin suddenly rallied 10% in October 2023 after Cointelegraph\u2019s X account claimed the SEC had approved BlackRock\u2019s ETF, when in fact no such decision would be made for months.\u00a0<\/p>\n One might expect bitcoin would\u2019ve given up those gains once markets found out the post was wrong, as has happened in similar scenarios over the past few years.\u00a0<\/p>\n Bitcoin did no such thing. It even rallied another 25% over the next few weeks \u2014 and then again by nearly one-third leading up to the real bitcoin ETF launch earlier this month. But bitcoin then proceeded to dump by up to 21% in a classic \u201cbuy the rumor, sell the news\u201d event from which it\u2019s yet to fully recover. It has been hopping up and down ever since \u2014 like a kangaroo.\u00a0<\/p>\n Major \u201csell the news\u201d events are earmarked<\/a> by steady accumulation before a sudden crash after a highly anticipated date \u2014 and rarely say much about which type of market we\u2019re in.<\/p>\n To be clear, there are no formal definitions for \u201ckangaroo market\u201d (although \u201cbull\u201d and \u201cbear\u201d definitions are similarly vague).\u00a0<\/p>\n VIX, the benchmark volatility index for stocks, had just skyrocketed<\/a> due to the Covid crashes when Berenberg\u2019s Stubbs popularized the term three years ago. Volatility kept relatively high for much of the following year, during which time the S&P 500 went mostly sideways \u2014 hence the whole kangaroo thing back in 2020.<\/p>\n Bitcoin\u2019s historic volatility, meanwhile, has generally trended down over the past few years and hasn\u2019t seen any spikes on par with the VIX around Covid. Still, historical bitcoin volatility has now been rising since September.\u00a0<\/p>\n Stubbs later explained that the kangaroo market had much to do with valuations being pulled from all sides: Downside risks outside of COVID such as tensions over Brexit, the Trump-Biden presidential race and strained US-China relations kept prices down, while bloated supply chains threatened revenues and flared credit risks across the global economy.<\/p>\n \u201cBut then you have this historic support of central bank liquidity from what I call QE plus, which is a [combined support mechanism of] fiscal and monetary support. You have vaccine hopes coming through and let\u2019s not forget, we do have a pathway to recovery, albeit one with risk [\u2026]<\/p>\n So markets are kind of trapped in the middle and kangaroo along until we have this decisive break in either direction.\u201d<\/p>\n Bitcoin is likewise trapped right now: Spot bitcoin ETFs<\/a> may have opened it up to previously untapped liquidity, but that has yet to convert to higher prices \u2014 even though BlackRock, Fidelity, Bitwise and others have collectively bought billions of dollars in bitcoin over the past three weeks.<\/p>\n Whether they intended to or not, those funds (like the central banks in Stubbs\u2019 scenario) have played critical support at a time of major liquidation threats: The FTX estate was busy pulling $1 billion in bitcoin<\/a> from Grayscale\u2019s flagship trust during the spot ETF\u2019s first week.\u00a0<\/p>\n Theoretically, those FTX flows could have contributed to even lower prices had the other spot funds not experienced billions in inflows on their own.<\/p>\n