The Wolf Den #150 - Market Cap Is Heavily Weighted
Bitcoin And Ethereum Analysis 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.
Bitcoin Price Analysis
Bitcoin is continuing to set new highs, breaking above $35,700 for the first time ever on Jan 5. BTC is now up 74.9% since breaking the previous ATH on December 16.
The In/Out of the Money Around Price (IOMAP) indicator spots key buying and selling areas that are expected to act as support and resistance.
See the Bitcoin In/Out of the Money
The IOMAP analysis reveals three key on-chain support levels that could prevent BTC from dropping further than $30,000.
The first level of support is located at the range between $33,352.37 and $33,791.66, where approximately 271 thousand addresses previously acquired 180 thousand BTC. If the price of Bitcoin drops below that, it would find an even larger level of support at an average price of $32,473.79 with 471 thousand addresses holding 298.21 thousand BTC. Lastly, the largest level of on-chain support is located between $30,716.62 and $31,089.98, where there are over 516 thousand addresses holding more than 313 thousand BTC. This is expected to act as support as holders in this range will attempt to remain profitable on their positions and push prices above this level.
The strength of these price ranges, as demonstrated by the magnitude in the volume of these clusters, points to the possibility of Bitcoin staying above $30,000 in the short-mid term.
Large Investors are behind the ETH Price Increase
Ethereum has been experiencing a remarkable bullish momentum in the last few weeks. The initial rally was attributed to the positive momentum in Bitcoin but recently Ethereum has deviated from that correlation and continues climbing despite some resistance encountered in Bitcoin.
One key aspect is that the Ethereum rally is not all about small trades. IntoTheBlock’s Large Transaction analysis provides an indicator of transactions that deviate from the normal average. The indicator reveals a significant increase in the number of large ETH transactions in the last month.
See the Ethereum Large Transactions Stats
Comparing the average large transaction volume on the Ethereum blockchain for January 2021 relative to January 2020, we observe it has more than quadrupled from an average of $100 million per day to over $10 billion.
Bitcoin Thoughts And Analysis
Bitcoin made yet another all time high. Par for the course at this point, and seems to happen daily.
There are quite a few POTENTIAL bear divs, from the daily all of the way down to the 4-hour. The one shown above is on the 12 hour. These are NOT CONFIRMED, because the candles have not closed and there is no definitive elbow down on RSI. Worth watching, could cause a pullback or at least a halt in the upward trajectory. I dare not attempt to find a top of this move!
The 4 hour chart shows a clear break of the recent highs (purple line) and two consecutive candles finding support. The second candle is NOT closed yet, but looks likely to close above. There is clearly still demand in the market, as pushes down in the last 2 4 hour periods were met with strong buying, as evidenced by the wicks down.
Altcoin Charts
Altcoins still look decent at the moment. Yesterday I was prepared to share trades on a few more coins but held off - and they did well! Namely VET and UTK. Here is one trade I am watching today.
AGI/BTC
I was watching this yesterday as well, but was not sure about the breakout at the time. Now it looks like the breakout is done and has been retested as support. Slightly below was a better entry, but this should continue to head up, targeting the lines above and ultimately the top line in confluence with the beginning of the pattern. At the least, this should hit the first line for a roughly 20% gain, but nothing is guaranteed in trading. I would rethink this if the blue line breaks down as support.
Major Investor Is Suing Ripple
As if the lawsuit facing Ripple for their XRP token wasn't bad enough, Tetragon a major investor in the company is now suing Ripple, seeking to enforce its contractual right to require Ripple to redeem Series C preferred stock. In simpler terms, because XRP was deemed a security, Tetragon wants out of its investment in the company and wants Ripple to cover the costs. Ripple was planning to IPO soon, unlikely in context of their current situation.
Tetragon is looking to block Ripple from using any cash or other liquid assets until the payment is made. The entire company and coin look like a dumpster fire, all because one government entity made an allegation about their token. This entire fiasco is continuing to prove my belief that the SEC holds serious power over the entire crypto ecosystem, I am seriously making sure to cover my bases with the coins I plan on holding in the long run.
Grayscale’s Large Cap Crypto Fund Removed XRP
Just yesterday, Grayscale decided to drop XRP from its large-cap fund. Grayscale hasn’t parted ways entirely with the asset, because it still has a separate XRP trust with 8.9 million invested. This a small number for Grayscale, considering they hold 10x the amount in Bitcoin Cash and they hold 19,478m worth of Bitcoin. The large-cap fund now only holds Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
Crypto Investors Can Potentially Mark “No” On Tax Return
Just like last year, everyone in the U.S. will have to check a “yes” or “no” box depending on their status as a cryptocurrency holder. All instructions should be followed precisely once you fill out your official form, but there is a catch. It is being reported that if you are a long-time holder and did not receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency then you may mark “no.” I predict most people will not be able to mark “no” that read this letter, but long-time investors that sat on their hands in 2020 may be able to report “no,” potentially benefitting holders. I am not an expert on the subject and expect most people reading this letter will be marking “yes,” but it's good to know that those that did nothing this year might be afforded the luxury of having minimal or no taxes in this regard. This is only referring to Form 1040 of the U.S. Individual Income Tax Return. There will probably be a different area, Schedule D on Form 1040, where investors will have to go over gains. Read more at the link above.
Phemex Crypto Talk Tomorrow
This is going to be a great livestream! Tune in tomorrow.
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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.