The Wolf Den #170 - Technical Analysis For Risk Management
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
By analyzing the profitability of traders near the current price of BTC, we can understand the circumstances and price ranges expected to act as support and resistance now.
The IOMAP is useful for traders to know the next price levels where addresses are expected to buy and sell based on users’ on-chain positions and profits. The size of each cluster in the IOMAP represents the volume of BTC previously bought at a specified price range.
See the IntoTheBlock In/Out of the Money Around Price Indicator
Through the In/Out of the Money Around Price (IOMAP), we observe that Bitcoin is sitting above significant support that could prevent BTC from returning to the low $33,000. The first clear level of on-chain support is between $34,4k to $35,5k, where more than 1.23 million addresses previously acquired 648 thousand BTC. If this range is broken, the next level to watch out for is between $33,39K to $34,4K, where 488k BTC had previously been bought. Overall, this highlights two strong support levels to hold before Bitcoin could be able to sustain above $33,000 in the short term.
On the other hand, the (IOMAP) indicator reveals that there isn't much resistance ahead that would stop BTC from continuing to climb towards $40,000. The next level of resistance is located between $36,6k and $37,36k, where 219 thousand addresses previously bought 163 thousand BTC. If Bitcoin breaks that level, the last important on-chain resistance would be around $38,374, where 230k BTC are being held by over 344 thousand addresses.
The strength of these price ranges, as demonstrated by the magnitude in volume of these clusters, points to the possibility of Bitcoin going higher without much resistance if it were to break the $38,700 barrier.
ETH Short-Term Trading Reaches Yearly Highs
Given the high amount of interest picking up for Ethereum, a significant portion of its total volume and holders has changed hands over the past month.
IntoTheBlock classifies as traders those addresses that have held a crypto-asset for under 30 days. The number of traders for Ether reached a multi-year high.
See the Ethereum Ownership by Time Held Indicator
More remarkable, though, is the total volume of Ether held by these addresses. As displayed in the graph above, this value has increased to over 26.5 million ETH in February. This means that over 23% of Ether’s circulating supply switched addresses this month.
While this could be due to the aforementioned institutional demand, it also highlights the predominance of short-term trading.
Bitcoin Thoughts And Analysis
Nothing has really changed on higher time frames, everything still look bullish to me. Here is the hourly setup that I shared yesterday - almost at the target of both patterns.
Altcoin Charts
Ethereum is officially in price discovery on the USD pair. If it merely does what Bitcoin did after breaking the all time high, it would double from here. I have no idea what will happen, but for my money there are few better trades then simply buying some Ethereum and holding for a while. We don't even need a chart.
DOT/USDT
I am still in this trade from below, and have shared it a few times. That said, price is attempting to break out of the trading range and head into price discovery for a new all time high. This is presently AT RESISTANCE, so ideally a trader wants to see a clean break of the high and close above before entering. If you see a close above and can catch a retest as support, that's a great technical entry. We want to avoid a bearish SFP here, a wick above the range and close back inside.
If this closes above the range, it should be an easy trade for price discovery.
Many of you are already in this trade and in significant profit.
LINA/BTC
I have had about 10 people ask me about Linear Finance in the past few days, so I finally decided to open up the chart on Huobi and take a look. And it's quite a chart. This thing has really done nothing but go up, so my approach to this if you are looking to trade it would be to buy dips. Price is technically retesting local former resistance as support now, but it's a risky entry at this level. For me, I would put bids at the lower level and see if they fill - you might get lucky with a nice wick coming down to test that support which has not yet been touched. Of course, you are likely to miss a trade on LINA, but that is my personal way of trying to get a great entry and I generally don't care if I miss a trade, knowing there's always another asset.
Riskier is to buy here, testing this local support. The safest is to wait until it breaks the recent high and buy in, hoping for continuation and further price discovery.
This also looks like an interesting project, fundamentally, so might be worth digging into a bit more.
The Distribution Of Bitcoin’s Supply, Broken Down
One of the most common criticisms of Bitcoin is that a supermajority of its supply is held by 1% or 2% of holders. The claimed supply numbers have reached as high as 90% or 95% in the hands of 2%, but the data does not support this. As of now, existing data shows that at most, 71% of the supply is held by 2% of the holders. This sounds bad and is higher than I would like the number to be, but this isn’t terrible. Within the top 2%, the supply is nicely spread across entities holding anywhere from 100 to 5,000+ Bitcoin. This means there aren’t 5 individuals that make up the top 2%, but rather it is a very diverse group at significantly different wealth levels. There is also a reported dispersion of lower net worth individuals over the past few years controlling more of the supply and large entities decreasing their supply. On a short-term time frame, as supported by the research, “we have seen a significant increase of #Bitcoin whales (and their supply) since 2020. Suggesting that institutional investors, funds, family offices, and other HNWI have been entering the space.” In comparison to global finance, it was reported in 2017 by CNBC that the top 1% of the world controls over half of the world’s wealth, and the bottom half controls less than 1%. Wealth inequality isn't new, but access to a better financial system is and Bitcoin offers this.
The Internet Grew Fast - Bitcoin Is Growing Faster
Willy Woo, an on-chain data analyst pointed out an interesting fact: Bitcoin has roughly the same amount of users as the Internet had in 1997. Today Bitcoin is only 12 years old, but in 1997 the internet was about 14 years old. According to the rate of growth for Bitcoin, the next 4 years of Bitcoin will equal likely equal the growth of the internet over 8 years, after 1997. The internet has become the backbone of almost everything we do digitally. The world is still far from coming to a consensus about Bitcoin, but they are adopting it faster than they did the internet.
My Recommended Platforms And Tools
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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.