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SwissBorg MacroScope - March 11th

SwissBorg MacroScope - March 11th

Welcome to crypto mania

Welcome to crypto mania

The last couple of weeks have been wild for crypto and we are now entering uncharted territory. As of writing, Bitcoin is trading above $70k, which is higher than its previous all-time-highs. This means that everyone that has ever bought and still holds Bitcoin in the last 14 years is in profit.


As discussed in previous updates, ATH (All-Time-High) are difficult psychological barriers to break. But once it breaks, things usually start accelerating. To give a bit of context, here’s Bitcoin performance in previous cycles when it crushed its previous cycle highs:

  • 2013: ~600%
  • 2017: ~1400%
  • 2021: ~240%

With that in mind, there's a lot of reason to believe that there is still a lot of upside potential ahead for crypto assets. Let’s look at some important fundamental metrics to assess where we are in the cycle.

Cycle update - Important Crypto Indicator

MVRV Z-score shows the market value's relative position to realised value. This is a core risk indicator where a z-score going higher implies that Bitcoin is being overvalued. For now, Z-score is far from its peak values, which often correlates with cycle highs, and is still in healthy territory.

Left translated cycle

Moreover, long term holder supply is also still near its all-time-high value. We note that “Percentage of supply last active 1 year ago” is just below 70%. This means that long term holders are not selling their Bitcoins yet. Usually, as the bull market develops itself this metric starts to go down and finds its bottom around the cycle peak. For now, we are from this scenario.

Bitcoin, percent supply last active 1y+
Source: therationalroot

Another interesting fundamental metric is “Bitcoins Energy Value” which measures the intrinsic value of Bitcoin using electricity into the mining network. Currently, this metric sits at $81k, which is higher than current Bitcoin price. In past cycles, Bitcoin always traded higher than this metric for a sustained period of time.

Bitcoin energy value
Source: Charles Edwards

Lastly, an old model that worked really well in the past: Bitcoin Power Law Corridor, also suggests that we are still in a broad buy zone with a lot of upside potential to come.

Bitcoin Power Law Corridor, also suggests that we are still in a broad buy zone with a lot of upside potential to come.
Source: Capriole

TL;DR: All of those elements suggest that we still have a lot of asymmetric upside for crypto.

Ethereum - Some major catalysts ahead?

In 2 days, Ethereum is set to ship its biggest upgrade and one of the most anticipated hard forks since the Merge, Dencun . This upgrade is expected to significantly reduce transaction fees of layer-2 network and enhance Ethereum’s overall scalability.

According to James Wo, CEO and founder of Digital Finance Group, this upgrade could significantly enhance the overall scalability, efficiency and security of the Ethereum network. This is another major milestone for Ethereum and solidifies its vision of becoming the settlement layer of the new era of the internet.

Ethereum - Some major catalysts ahead?
Source: cointelegraph

While it is nearly impossible to predict the short term implication of this upgrade on Ethereum price, one thing is for sure: Dencun will improve the network fundamentals, and in the long run, this is bullish.

Another catalyst ahead for Ethereum is a potential ETF approval. Given the hype generated by the recent Bitcoin ETF approval, it is fair to argue that an ETF could be one of the biggest catalysts ahead for Ethereum. 

However, there are no guarantees that this will happen. For the moment, prediction market, Polymarket, puts the odds of an approval at 36% while JP Morgan analysts gives it a 50% chance.

Ethereum ETF approved by May 31?

But in any case, this is definitely something to watch out for in the coming month.

On the supply side , we note that since the Merge, Ethereum has been in a deflationary trend. This means that more Ethereum are being burnt than produced everyday. To give some context, there is around 430,000 ETH that has been burned since the Merge and the current supply of ETH is approximately 120 million.

ETH supply
Source: Ultrasound.money

When we combine this supply shock with improvement in the network (Dencun upgrade), and a potential ETF down the road, it seems that Ethereum is in a strong position as the bull market continues in Crypto land.

Our Long-Term in-House View

  • We are in a bull market and we expect to see BTC > $100k, ETH > $10k and SOL > $500 as new ATH in the next leg of the cycle.
  • A dovish stance is starting to appear on central banks sides and global liquidity is in positive territory. Long term, this is bullish for crypto assets.
  • We believe in ETH as the superior asset to Bitcoin for the next decade. Further, our view is that SOL has the biggest potential for consumer app adoption.
  • Our favourite altcoins thematics for the next upleg are Socialfi, Gamefi, DePIN, AIfi & Infrastructure for scalability.

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