Market developments since Trump's presidency

Past couple months since January 20th have been packed with events. ATH of 110k with expectations of 4 years of up only. Consecutive launches of $TRUMP, $MELANIA and $LIBRA that first launched Solana to 300 and then rugged thousands of people in a matter of days. First tariff dip. Saylor announcing a $2 billion buy at 97.5k and instantly going 20% underwater. "Relative strength" of BTC vs stocks right before the floor fell under crypto. 10 opposite tariff headlines every day that eventually lead to the market not really caring about them anymore.

Despite that seeming whipsaw back-and-forth, our long-term tested and tried metrics are showing that the market has been moving quite orderly, even preceding Trump's presidency, and the structure is very similar to a typical long-term turnaround formation.

Mean dollar invested age (MDIA) and Network realised profit-loss (NRPL) are very helpful in understanding the market cycle dynamics. You can clearly see how MDIA steadily declines during the bull market (new money coming in, coins are distributed from long-term holders to newcomers) and how its flattening and subsequent reversal precedes weakening of the trend (new money inflow stops).

Similarly, NRPL shows the highest values in the middle of the rally, indicating market participants actively taking profits, and then later as the top approaches they stop moving their coins, preferring to hold onto them (too much confidence and greed).

And also you can clearly notice recently, despite all the spicy news headlines, those metrics aren't really reacting to them - which indicates that the processes that drive the long-term price cycle are much deeper. News can cause temporary swings, but eventually things will gravitate towards the direction of the cycle.

But what about Ethereum?

Pain and suffering. Fees have dropped to levels not seen since 2019. If you go on crypto twitter it's hard to find anyone who hasn't been dunking on ETH's price performance, and yet every time it dumps people are coping and suffering, which shows that they're still holding their bags.

Long-window MVRVs are currently on par with deep bear markets of the past, and this is happening while BTC is well above previous all time highs.

Recently there's been a large unwind of Ethena's staked USDE, which mainly holds ETH as collateral - that's also an indication of capitulation (shorting perps isn't profitable anymore).

Ethereum is truly a misterious asset right now - metrics are showing what in any other situation would be a guaranteed bottom signal, and yet it just keeps going lower by the day. Maybe something truly significant has to happen for a bottom to form, like a 10% stETH depeg and a month long unstaking queue? Probably only time can tell that.

How are the institutions doing?

Microstrategy, led by Michael Saylor-moon, sticks to their guns and keeps preaching bold price targets going well into millions of dollars per BTC before end of this decade. Since adoption their Bitcoin treasury strategy they have amassed more than 530 000 BTC

More than half of those bitcoins were purchased in the last 6 months, following their announcement of the "21/21 Plan", intending to allocate 21 billion USD from the sales of stock and convertible notes, and another 21 billion from the sales of perpetual bonds. These aggressive purchases have sharply increased MSTR's average buy price from just above 30k to more than 67k.

From the above table, which sums up every MSTR's purchase since the announcement of the 21/21 Plan, you can see that they've spent almost 26 billion USD. That means that at least 5 billion was generated by selling perpetual bonds, that have coupon rates of 8% and 10%, and as they trade at about 15-20% discount to face value, their effective yields are roughly 9.5% and 11.5% respectively. That puts MSTR in for a 500-600 million dividend bill yearly, plus interest on their existing loans. Those loans have significantly lower coupon rates (less than 1%), but the total interest payment on them is around 50 million per year. All that totals to at least 550-600 million every year, and if they decide to sell more for additional BTC purchases, the interest will increase significantly, as it appears they they've hit the cap on their ability to raise cheap money.

The core software business of MSTR is not doing well at all, in some of the recent quarters they even had negative cash flow, so the interest payments can only come from selling more shares or bonds. And the worst part is that with the recent stock sales Saylor was forced to give up company votes to the new investors, and now his voting power is around 48%, compared to 75% a year earlier. Plus, if the interest payments on perpetual bonds are missed for 4 consecutive quarters, the bondholders get additional votes. All that means that if Saylor's investors are less diamond-handed than he is, a significant dip in BTC price can in theory lead to a forced sale of their holdings if investors decide to bail and salvage whatever is left.

MSTR's next quarterly report is scheduled to be released around May 6, 2025 and it should bring more clarity into their financials. But even now it seems like they're on a very shaky ground, and their risky bet on BTC run continuing forever might not play out and lead to their complete demise (largely because they significantly contributed to said run themselves).

Another big player in the space is obviously the ETFs, which since their inception had a total net inflow of just over 520 000 BTC.

The big difference between the ETFs' holdings and MSTR's holdings is that according to reports around 60% of the ETF money is retail investors, which means that they are very much subject to emotional investing and they are much quicker to change their minds if the price trend was to change. One can even speculate that seeing Saylor buy so much might have been a big reason why those flows happened in the first place.

What's happening next?

Out of all coins above 500M marketcap, Fartcoin has the best 30d price performance, which indicates that the will to gamble didn't go away at all, even with all the macro FUD and crypto market slump.

Considering all of the above, crypto market is in a tough spot. Some positivity from the tradfi in case tariffs get eased might bring a temporary relief, but overall the risk looks to be to the downside, rather than missing the upside.