The Wolf Den #117 - It's Time
It’s Crypto Time From IntoTheBlock
In this report, we bring to you the latest in on-chain cryptocurrency analysis. We look at the blockchain directly and analyze balances, transactions, and the overall activity of market participants. This gives us a unique insight into the future of the market.
This section is written in conjunction with IntoTheBlock (ITB). ITB is an intelligence company that leverages machine learning and advanced statistics to extract intelligent signals tailored to crypto-assets. IntoTheBlock tackles one of the hardest problems in crypto: to provide investors with a view of a crypto asset that goes beyond price and volume data.
The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
It’s Crypto Time
November has been a fantastic month for Bitcoin, as BTC is just a few thousand dollars away from its all-time high near $20,000. Since October 31, the crypto-asset is up a staggering 31.8%, reaching a level not seen since January of 2018.
Along with the recent price, on-chain fundamentals are starting to look as strong as they did in late 2017. Now that investors have endured some of their toughest months Bitcoin’s price is back to levels where lots of investors are doing well, as depicted in the Global In/Out of the Money indicator below.
At the current price of $18,134, 99.6% of the Bitcoin holders are experiencing profits, which means that if they were to sell their position today, those addresses would make a profit.
See the In/Out of the Money Stats
As we approach the ATH, only 100,000 addresses, who previously bought 25.19 thousand Bitcoin’s are either breaking even or out of the money in their positions. We could be soon experiencing a 100% profitability for Bitcoin holders if the rally continues.
But you may be wondering, who’s buying Bitcoin?. Earlier this year, firms such as Square and MicroStrategy purchased Bitcoin, while renowned hedge fund managers like Paul Tudor Jones did so too. The latest to join this club is Stanley Druckenmiller, the billionaire investor known for managing George Soros’s fund for over 10 years.
See the Large Transactions Stats
Large transactions, which IntoTheBlock classifies as those of $100,000, can act as a proxy to large players’ trading activity. As seen on the image above, trading activity among high net worth individuals and institutions has been on an upward trend all year, reaching a new yearly high on November 16 with over $57 billion in daily traded volume.
Not only has the price of Bitcoin reached new yearly highs, but derivatives trading are also showing record levels. Perpetual Swaps are a special type of futures contract, but unlike the traditional form of futures, they don't have an expiry date.
See the Perpetual Swaps Volume
As can be seen in the graph above, Bitcoin Perpetual Swaps Open Interest reached a new level today with $60 billion.
As Bitcoin continues to rally, its on-chain metrics show strength and demand from investors. Ultimately, all eyes are on $20,000.
Bitcoin Thoughts And Analysis
Are you not entertained?
Bitcoin is on an epic run. The last time price hit 18K, it reached an all time high on the very same day. I am not saying that is going to happen again, but it's worth noting just how crazy price action can be when Bitcoin goes parabolic.
Bull, bull, bull.
This thing will retrace eventually, as I have said. No asset has ever gone parabolic without having some healthy correction. Anything is technically possible, but I am quite confident we will see some major corrections. Good luck guessing when - we will know it when it happens. For now, enjoy the ride and don't try to get cute. We waited years for this. I'm not trading, I'm just watching the number go up.
Remember the daily level that I shared yesterday, going all of the way back to 2018? It is the purple line. Price made a clean break through the line yesterday and tested it perfectly as support today. Impeccable price action, really a marvel to watch. You could have set bids there and woken up with an open position and price more than $1000 above your entry.
This is an interesting chart that I posted recently. The ascending triangle broke out, retested as support, but then consolidated rather than bouncing off of the ascending line. Now you can see that the target was ultimately reached and that the ascending line has been a key level of support and resistance. That could be a fun line to continue watching.
Bitcoin Marketcap Hits All-Time High
Bitcoin just hit a new all-time high market capitalization.
When Bitcoin’s price hit all-time highs in late 2017 at $19,800, its total market capitalization was around 331 billion USD. Bitcoin broke a new market cap ATH yesterday with its price $2,000 USD below its previous ATH. This may be confusing at first, but it's a good reminder that Bitcoin’s supply currently decreases by roughly 900 coins a day. It can be taken as a bullish indicator that the Bitcoin market cap is above its previous highs when the price still has to catch up. It would be amazing to see the previous ceiling become the floor.
Skype and Intercom Founders Are Invested in Crypto
The founder of Skype, Jaan Tallinn publicly announced that he keeps most of his personal wealth in cryptocurrency. Eoghan McCabe, the founder of Intercom, has also come forward in support of Bitcoin. He even went as far as saying the following when asked about his company buying into Bitcoin,
“Unfortunately, the laws of physics of big companies state that there are years between the point a founder thinks something is a good idea and his company acts on said idea. But I also think Bitcoin is not a fit for us just yet.”
It is probably safe to say that CEOs across the globe are working their way through the same mental gymnastics. It is only a matter of time.
Ray Dalio Changes His Tune
Just a few days ago, the crypto community was up in arms about Ray Dalio's comment that governments would destroy Bitcoin and it would effectively go to 0. It seems that he heard the roar of the crowd and walked back his statements, opening the door to be convinced that he is wrong.
Strong opinions weakly held - you can see why he runs the biggest hedge fund in the world. The lesson here is that he is willing to learn and is not emotionally bearish on the asset - that's what it takes to be a successful investor and trader.
CME Bitcoin Futures Cross 1B
CME Group's cash-settled bitcoin futures have hit an all-time high open interest of $1 billion.
Wow. I think it is fair to say that institutional money is interest in Bitcoin and actively trading it on the CME. Remember, CME futures are cash settled, so they allow bigger investors and traders to gain exposure to Bitcoin trading without actually having to custody the underlying asset. They can bet on Bitcoin price without buying or selling Bitcoin.
CME Futures launched in 2017 right when Bitcoin hit its all time high - many people blamed top and bear market on the CME, because it gave institutional investors the opportunity to short.
Air B&B Talks Crypto
Just another giant company making a clear statement that crypto assets and blockchain technology will likely be crucial for future success. This news would have moved the entire crypto market in 2017, now it's just a blip and par for the course. So bullish.
Where is the Media?
During the 2017 crypto bull run, every major news source was covering Bitcoin as it stormed to all-time highs. CNBC was talking about it daily, presenting tutorials on how to buy Ripple from your phone.
This time has been different - major media hasn’t caught on yet. The hype just hasn’t found its way to the major outlets and retail fomo is just beginning to start. The longer price can climb without catching the eye of the media, the more room for upward price movement there is.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor.