The Wolf Den #122 - Bots, Bull Runs And More
The Ethereum 2.0 Bull Run - 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.
The Ethereum 2.0 Bull Run
Bulls seem to have taken full control of the crypto market, as Bitcoin finally reached $19,000, Ethereum passing the $600 mark for the first in over two years, and several altcoins pushing through double-digit profits.
But the most important event of the week so far was that the minimum threshold required for the launch of ETH.20 was reached. Over 500,000 ETH needed to be deposited before November 24 into an Ethereum 1.0 to confirm community support
In this week’s edition, we cover the path to Ethereum 2.0 by using some of IntoTheBlock’s on-chain indicators.
The price action since the Ethereum 2.0 announcement was made.
On November 4, Vitalik and the Developer team announced in the Ethereum Blog that the launchpad for Ethereum 2.0 was up, and in order to be triggered, there had to be at least 16384 32-ETH validator deposits 7 days prior to December 1.
Ever since the announcement was made, the price of ETH started an amazing bull run, reaching levels not seen since early 2018.
Before the ETH.20 announcement was made, the price of Ethereum was hovering around the $300 mark for more than 60 days. Since then, it has appreciated by 52.86% in only 3 weeks.
As can be seen in the graph above, ETH reached the $600 mark for the first time since January of 2018, and throughout 2020, it has appreciated by a whopping 310%. Although we have reached a new multi-year milestone, we are still down 59% from the ATH of $1422. Let’s see what happens once the Beacon Chain goes officially live on December 1.
On-chain data support the recent bull run
While reaching a new multi-year high on the price, several key on-chain indicators have been hitting all-time highs long before this. Firstly, the total number of addresses holding Ethereum has been reaching new highs since 2019.
See the Ethereum Addresses Stats
The number of addresses holding Ethereum is a decent approximation of the total number of people holding it. The increasing number of addresses holding point to network adoption trending bullish for the last year.
Yesterday, the number of addresses holding ETH reached a new all-time with 49.16m addresses.
But not only does the number of addresses holding ETH has been increasing consistently. The long term holding proposition for Ethereum holders continues to strengthen. As we track the number of addresses holding the asset for more than 1 year, we can conclude that it has increased by a whopping 67% in the last 12 months
There are now 28.36 million addresses holding 59.29m ETH for more than a year.
See the Ethereum Ownership by Time Held Stats
And lastly, but not least importantly, a vast majority of Ethereum holders are currently sitting on profits.
See the Ethereum In/Out of The Money Chart
Using ITB’s Historical In/Out of the Money indicator, we can observe a large shift in the number of addresses profiting when compared to the yearly low in March. The Historical In/Out of the Money provides the distribution of in-the-money (profiting) and out-of-the-money (losing money) positions over time, and allows us to determine the number of investors that would have made a profit if they had sold their position at the price at that moment in time.
At the time of writing, Ethereum sits at around $597, and 87.19% of the addresses holding the asset are experiencing profits.
Altcoin Charts
EGLD/BTC
This is simply an update of a setup that I have shared a few times, to tell you that EGLD has broken through the descending resistance and retested both that level and the horizontal resistance as support. Assuming it stays above 474 with candle closes, this has a ton of potential.
Bitcoin could spoil this and any potential alt party very quickly.
ETH/USD
Start placing bids in the untested demand zone (green box)
This idea is from Altcoin Psycho. And I agree!
While I'm not certain the green demand zone will get retested, I highly recommend putting some "stink bids" in the green box down below. Stink bids are what we call low ball bids that have the hope of getting filled in the event of a crazy wick. I think this demand zone is where bids will get filled if we see some big wicks from Ethereum or a flash crash.
Legacy Markets
Trades from Altcoin Psycho:
AAL (AMERICAN AIRLINES)
Long American Airlines. The bottom could be in.
I think airlines have bottomed out and will only go up from here. This is a long term swing trade, but I think we start to work our way up to pre-covid price levels soon. Expect huge jumps in airlines as more vaccine and stimulus news comes out.
I also really like how AAL has broken both long term resistance trend lines here that were formed during Covid.
APA (APACHE)
Beautiful break of a long term resistance trend line with a clear gap to be filled up above. I also noticed some extremely bullish option flow activity coming in, so I really like the gap fill as the target for this trade, which puts us at about a $20 target.
Coinbase Ends Margin Trading
Coinbase introduced margin trading for its users on Coinbase Pro in February... which is coming to an end today. All open orders will be closed this evening and the feature will entirely be removed when positions expire next month. Coinbase didn't say much as to why the feature was suspended, but hinted that compliance with the CFTC was “difficult, if not impossible.” Some people have commented on the situation, saying that this is likely to “cool down the recent price run by taking money off the table.” The bigger issue to us is the United States government holding its foot on the crypto market's throat rather than letting it breathe, not the absence of one exchange offering futures semi-popular features.
Big brother has once again stepped in to protect Americans, when in reality they are eliminating our freedom to make our own financial decisions. Remember, teenagers can still trade options with high leverage on Robinhood.
Bybit Exchange Experiences Massive Ethereum Wick
Popular crypto derivatives exchange Bybit experienced a massive Ethereum price wick to the downside from a multi-million-dollar market sell order. The move was only experienced on Bybit and on no other platforms. Some people celebrated the scam wick as "stink bids" were filled at a 20% discount and others were infuriated when stop losses were triggered etc. Bybit immediately said they would investigate it, encouraging anyone negatively affected to reach out. Bitmex did the same customer service tactic in the past but left many people high and dry. This serves as a warning not just to Bybit users, but to anyone leaving open orders on exchanges - it may work for or against you. Stories like this are likely to ramp up with increased volatility and growing activity in the space.
Historical Price Chart May Reveal What is Ahead
Lark Davis, a popular Bitcoin investor and advocate, shared a historical Bitcoin chart showing what happened when previous monthly candles closed above all-time high levels. Expansion out of the range lasted 334 days and 275 days per cycle with continuous green candles. We aren't sharing this to fill you with excitement, but rather to give a historical perspective on Bitcoin’s past performance beyond all-time high levels. As the famous saying goes, past performance is not indicative of future results.
Colombian Stock Exchange Using Blockchain
The use of blockchain technology in Latin American stock markets is expanding.
"The Colombian Stock Exchange announced it is joining the Consorcio Colibrí, a private initiative that promotes the adoption of blockchain technology within the finance industry.
As Cointelegraph Español reported on Nov. 18, Consorcio Colibrí was formed by major financial institutions such as Bancolombia, BBVA, Santander Caceis Colombia, Deceval, Contrato Marco, Porvenir and Skandia, among others.
Via a partnership with member firm Contrato Marco, the CSE will use the Colibrí platform's blockchain tech to improve operational efficiency in the over-the-counter derivatives market, which is currently time-consuming, expensive and difficult to reconcile with established manual procedures, according to the CSE."
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.\
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions.
This is where I invest, commission-free. They now let you earn interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
Rewards Code: Scott25
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
This is one of the main places where I hold crypto to gain interest. Celsius also offers dollar or stablecoin loans against your crypto, starting at just 1% annual interest. Celsius is giving WOAS followers $20 to open a new Celsius wallet. All you have to do is enter promo code WOLF, then transfer and keep at least $200 worth of crypto in your wallet for 30 days.
Binance is finally available in Florida!
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
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.