The Wolf Den #142 - Santa Claus Rally And SUSHI
The Analytics Behind The Sushiswap Saga - 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 Analytics Behind The Sushiswap Saga
Sushiswap’s native token SUSHI has outperformed Bitcoin and the DeFi space over the past few months, as the crypto-asset is up 400% since the lows seen in October.
The protocol has been buoyed by good news over the past month, strengthening the fundamentals behind the run, such as the Yearn.Finance partnership, the intention of opening the platform on Polkadot, and the highly expected launch of BentoBox, which will allow the user to obtain margin leverage while using the SUSHI token as collateral.
Leveraging blockchain’s public nature, IntoTheBlock’s machine learning algorithms extract key data that provide a deeper dive into the recent SUSHI run.
Uniswap’s Liquidity Mining end brought a new wave of liquidity for Sushiswap
The largest decentralized exchange (DEX) Uniswap finalized its liquidity mining rewards on November 18. For two months, liquidity providers were receiving rewards with the UNI native token for supplying liquidity to the protocol. Since the UNI incentive came to an end, Sushiswap’s liquidity increased by approximately 170%. The sudden shift in liquidity highlights the yield-seeking fickle nature of the DeFi space.
See the Sushiswap protocol insights
This growth has led Sushiswap to become the sixth DeFi largest protocol for liquidity supplied.
Network Activity has been increasing along with the price action
Having bottomed on Nov. 4 at under $0.48, SUSHI’s price has managed to increase by over 400% since then. Moreover, by analyzing the network activity, the number of active addresses has increased by 114% over the same period, backing the recent momentum behind the protocol.
See the Sushiwap Addresses Stats
The Sushiswap network has seen explosive growth throughout 2020. As can be seen in the graph below, the total number of addresses with a positive balance of SUSHI grew from 0 to over 22,000 since October. The number of holders even managed to increase despite the downward price action from August to late October.
See the Sushiwap Addresses Stats
New Money has been flowing into SUSHI
IntoTheBlock’s Traders indicator quantifies the number of buyers that have been holding for under a month. While some of these addresses will continue to hold for longer periods of time, changes in the number of traders point to the level of speculative activity taking place.
See the Sushiwap Ownership by time held Stats
In the graph above we can see that the number of traders for SUSHI has increased by over 35% between November and December. This coincides with a parabolic run-up in SUSHI’s price, pointing to a large number of traders rushing to buy and high fear of missing out.
Overall, both fundamental and on-chain data support the premise that the price of SUSHI may continue to rise over the upcoming months, backed by several improvements in the protocol, explosive growth in the number of holders and network, and new money flowing into the token.
Bitcoin Thoughts And Analysis
Yesterday I wrote about how lucky I was to avoid my stop loss on LINK by less than a penny. Market karma is amazing and always reverts to the mean.
I shared a Bitcoin setup here yesterday, using the Bitstamp chart. Price easily filled on Bitstamp, right at support. It was perfect. The problem? Phemex did not get there, and I was charting a Phemex trade on Bitstamp. I missed by a dollar, even accounting for being front run and placing my order $20 higher than the support. I hope some of you caught it!
Reminder to always chart where you trade.
That said, I filled on the same trade this morning when price dropped. What a bear trap that seemed to be. So even though it fell quickly through my order and I was temporarily at a loss, I am now in profit once again.
What a day it has been for volatility.
As you can see, price formed a head and shoulders over night, broke down and almost hit its target in a single hour. Then bears were trapped in their shorts when price quickly reversed.
Whale games! They often push price down to an area of liquidity to fill their buys, which is clearly what happened here. They found lots of orders to fill when everyone started shorting and selling, looking for a bigger drop.
While I happen to currently be in a trade, I think that this volatility is most likely to cause liquidations over and over again in both direction. I really cannot advise trading this at all - mine was a standing order that filled, almost stopped out and then pumped. More lucky than good.
At this point, I would say it's not worth longing until we have a clear break of $24,000 with candles closing above that level. There's clearly a ton of selling pressure in that area. Every attempt is quickly rejected. I also don't think there's a reason to short above $22,300 locally, if at all. I mean, why really short Bitcoin!?
I have seen people drawing a larger head and shoulders on the 4-Hour. Meh. There's no volume on the head and it's choppy. Looks more like a sideways ranging chop fest to me.
Altcoin Charts
Today is not an ideal time to be trading altcoins, clearly.
While the charts look bad, almost all altcoins are oversold on RSI, some extremely. Many are showing signs of bullish divergence. So I would not panic sell anything - there should be a bounce coming soon across the board. The night is darkest before the dawn. We can take a look at ETH, although it's not an actionable trade at the moment, unless you are looking to build a position. Looking at ETH often gives us info about the alt market as a whole.
WAVES closed right at support, but appears to be breaking down today, although that is not confirmed as of yet. Also, it's oversold on most time frames and has bullish divergence starting to brew on lower time frames. The same with LINK. I was stopped out in profit on my LINK long. After missing my stop by less than a penny. I moved my stop up with price. I did not maximize the potential of this trade, but I made money and am happy. I am considering another LINK/USD long as well. There's a potential bull div on the 4 hour chart.
ETH/BTC
The daily chart shows a savage sell off, presently pushing through a key area of support. Remember, this is not really a line but a zone, so it still looks ok to me. Note that RSI is oversold, and there's the potential for some weak bullish divergence (over a larger time than I like). Key levels are shown. I would LOVE to see a close above this support to end the day, that would be a great sign.
The 4-Hour shows that price continues to drop, but RSI does not. This means that buying pressure is growing and that sellers are getting weaker with each attempt to push down. RSI WILL eventually go from oversold to overbought, it's just hard to predict whether price will do the same or move somewhat sideways with a little rise. We have potential bullish divergence as well.
If you are looking to build a longer term position in Ethereum, I could see starting to buy here.
LTC/USD
I have Litecoin orders around $94. They may never fill, but that's where I want to buy. One chart, one line. That's literally how easy this is.
Legacy Markets
Both Altcoin Psycho and I have been discussing legacy markets and are finding it difficult to find compelling trades or ideas at the moment. Everything feels frothy, a bit overvalued. It's the holidays, markets are about to close and people are closing out their year. Not a good time to be trading stocks.
XAG (SILVER)
Update on the silver set up. As you can see, it broke out of the bull flag and is currently retesting it as support. My only slight concern here is that the top of the green range that we were trading before has not been retested as support, and that still remains technically possible. That said, we have a clear resistance to support flip of the blue channel and this should continue up to the target shown.
I generally trade silver on forex.com, for those who have asked.
I Made An Investment In Elitium
I posted about this yesterday on Twitter but wanted to share some deeper thoughts with my newsletter subscribers. To my surprise, the investment caught the attention of a lot of different media outlets including Yahoo Finance, GlobalNewswire, and Coinspeaker.
Elitium is an entire crypto ecosystem offering a wide array of products geared towards both high-end investors and anyone looking to steer away from our broken financial system. A quote of mine from an earlier interview picked up steam and I wanted to share it here: “Assets such as luxury collectibles and real estate have performed extremely well in 2020, making asset owners wealthier while many people are struggling to get by. Elitium’s tokenization platform makes these asset investment opportunities available to a much wider audience, and it’s only one of many exciting features.” Elitium caters to any crypto user looking to hold, spend, invest, or trade and with the backing of GDA Capital I believe their services can only improve.
I am hopeful that EUM will do exceptionally well in 2021 because it is a platform that opens the doors to secure, simple, and diversified blockchain investments.
The team is onboarding investors into their new wealth management solution as we speak. They’ve given me exclusive access to test the first functionalities of their platform after I purchased a masternode (100, 000 coins).
The fact that the business is a partner of Crypto Bank Amdax, which is regulated by the dutch central bank — and it has its own token insurance mechanism — gives me confidence that this coin will succeed.
The coin currently trades on BitMart, which is available to American traders. You also earn 6.5% staking rewards a year when holding in your BitMart wallet, which is a nice bonus.
This is not a trade for me - it's a shot at a long term investment on a project that I believe in. Do your own research if you are considering participating as well - you should never take an investment just because someone else does.
SEC Releases Complaint Against Ripple
The complaint filed by the SEC is 71 pages long, but a summary can be found at the link above. It's a wise idea for investors to skim through this document before making a rash decision regarding XRP. One thing that seems to be certain is that a test from 1946 which determines whether something is a security probably isn't well suited for an emerging asset class. Many cryptocurrencies sit in legal grey areas regarding their generation, tokenomics, ICO’s, and distribution models. Talking heads from the crypto community have thrown a lot of hate at Ripple but I personally don't underestimate its widespread reach and acceptance. As I continue to report on the development of the case, I will try to stay as neutral as possible. I just want you to make money. In my opinion, a Ripple win against the SEC is good the entire ecosystem.
Anthony Scaramucci Reveals Details For Bitcoin Fund, Skybridge Capital
Famous Investor Anthony Scaramucci's fund has invested 25M in Bitcoin. The opening of their firm is set for early 2021 - good timing, as recent reports from Grayscale indicate that they are unable to accept new clients after hitting capacity. Skybridge will operate similar to Grayscale’s trust in that they will custody Bitcoin and require a minimum $50,000 investment. According to Anthony, when he was asked if he thinks he is late to the party he responded with, “If anything, it’s the first inning. You’re about to see that wave of early adoption by the institutional community. I’d like to get our investors involved before that goes into full throttle.”
Blockchain Is Headed To Space
"The idea is that if you can provide a root of trust that is literally in outer space, you have something that has an unprecedented level of security because this is a fully tamper-proof Trusted Execution Environment." That's right, a team is currently working on sending an entire constellation of crypto satellites into space to bolster the strength of the network. The plan is genius and supposedly anything can be done in the devices including mining, timestamping documents, and more. The connection between the devices will be monitored here on Earth, providing assurance that the devices aren't being physically tampered with.
Blockchain is so cool.
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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.