The Wolf Den #181 - More Companies Are Buying
DOGE Frenzy + Bitcoin At 50K 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.
DOGE Frenzy was fueled by short-term speculators
From Elon Musk to Gene Simmons to Snoop Dogg to Mia Khalifa… everyone seemed to be jumping on the Dogecoin train. The meme cryptocurrency that started as a joke has managed to reach a market capitalization of over $6.7B.
Along with the remarkable price action, Dogecoin speculation has followed. This is evidenced by the number of addresses that have been holding Doge for under 30 days — categorized as traders by IntoTheBlock.
Dogecoin Ownership by Time Held Indicator
Within the last month, the number of traders in Dogecoin has reached new highs, increasing over 75% in the last month alone.
BTC breaks $50,000, propelled by MicroStrategy’s 900M announcement
Approximately 670,838 blocks after its genesis block, Bitcoin has managed to reach a price of $50,000 for the first time. This recent milestone came shortly after MicroStrategy announced that it intends to offer $600 million aggregate principal amount of convertible senior notes due 2027, which it has adjusted to 900M.
This would be the second time MicroStrategy has done this, the first being in December of 2020, proposing a $400 million convertible senior note with the purpose of investing the net proceeds of the sale in Bitcoin. It may come as no surprise that with these recent actions, the stock MSTR has been trading almost in tandem with the price of Bitcoin.
IntoTheBlock’s Capital Markets Insights
And by analyzing the historical correlation, it has been incredibly strong, increasing to 0.93 at the moment of writing.
MicroStrategy is just one of the institutions that are looking into Bitcoin, and at IntoTheBlock we have extensively covered Bitcoin’s institutional adoption.
One key indicator we usually use to measure institutional activity is the Average Transaction Size, meaning the total value of transactions divided by the number of transactions.
The average transaction size recorded on the Bitcoin blockchain recently hit a record of a whopping $440,000 average transaction. The high magnitude of six-figure transactions points to institutional activity in Bitcoin reaching new highs. The day MicroStrategy announced the convertible note, the average transaction size increased by 14.4% compared to the previous day.
IntoTheBlock’s Average Transaction Size
Another indicator that we love at IntoTheBlock is the large transactions volume indicator, which aggregates the total volume sent in transfers worth over $100,000. Given the magnitude of this amount, large transactions volume act as a proxy to the level of institutional activity taking place on-chain.
IntoTheBlock’s Large Transactions
The growth in the volume of on-chain transactions greater than $100k has been remarkable, averaging above $80 billion this week and representing an outstanding 10x increase compared to the $8 billion on average recorded a year ago.
Bitcoin Thoughts And Analysis
Bitcoin remains bullish, there's very little to see on the chart.
The 63K target remains intact, as shown on the daily chart. I anticipate price getting their eventually, so I see no reason to turn bearish. Price and RSI also invalidated the bearish divergences that were showing up on the daily chart with the recent move up. That's good. Both price and RSI made higher highs.
Altcoin Charts
DUSK/BTC
Dusk has moved beautifully since I posted it just days ago. If you missed it before, it is currently at resistance and is not a buy... yet. I am looking for the same thing to play out again, with a move through resistance (the 38.2% Fib) and then a retest as support. This is how I would play it, you need to do what works for you if this fits your system. Waiting for the retest sometimes causes you to miss the move. But buying the break out also often ends up being a trap!
EGLD/USDT
EGLD has been leading the altcoin pack for weeks, topping out at over a 20X from our entry recently. Of course it dropped and cooled off - nothing goes straight up! That said, price seems to be breaking out of consolidation and heading back up, as evidenced by the move through the purple line. That wick the other day was perhaps the greatest buying opportunity of all time for those who were smart and had "stink bids" sitting below, just in case. Imagine filling on EGLD at $66! Based on this breakout, we should expect at least a move to the recent all time high, but nothing is ever certain in trading.
Chart Requests
Here are yesterday's chart requests. $1NCH $ALBT $ALGO $AR $ARK $BEL $BOLT $BTC $BTT $BZRX $ETH $GRT $IOTA $LINK $LTO $LUNA $MSTR $NVDA $ONT $PHA $RSR $SRM $STX $THETA $TOMO $UBT $VGX $WABI $XLM $XPEV $XRP $XTZ $YFII $YFL
The Motley Fool Buys Bitcoin
Motley Fool’s newest campaign, Discovery: 10X is designed around the search for opportunities that will 10x in value in the next 5,10 and 15 years. When they announced the campaign, they stated that it was built on 40 unique investments - 39 were said to be equities and one was said to be a cryptocurrency. They have now come forward that their company is buying $5 million in Bitcoin because, “Bitcoin may very well continue to be volatile in the short term, we think it has 10x potential from today's levels over the long term as part of a diversified portfolio. We plan to hold this Bitcoin investment for many years.”
The $5 million reported is going straight to the balance sheet. The 10x investment portfolio will also hold an undisclosed amount of Bitcoin. Motley Fool also came out and said they are not purchasing, “overpriced ETFs as our route into Bitcoin. We are buying Bitcoin directly.” As an end to this segment, I wanted to quote Motley’s simple reasoning for buying:
“We believe it will store value more effectively than gold over the long term.”
“We believe it may become a medium for transactions, as/if pricing stabilizes in the decade ahead.”
“We believe it can act as a productive hedge against inflation.”
Tesla Taps Coinbase For Bitcoin Purchase
Tesla’s $1.5B Bitcoin buy reportedly went through Coinbase during the first week of February, taking several days to complete. It has also been reported that MicroStrategy tapped into Coinbase for some of their earlier purchases. The source that claimed Coinbase was behind Tesla’s purchase said that there are more than 5 Fortune 500 companies that are clients of the prime brokerage arm responsible for assisting Tesla and MicroStrategy. That means that right now, there are likely at least 5 other companies that are preparing to buy, in the process of buying, or yet to announce their decision to purchase Bitcoin for their balance sheet using Coinbase. This doesn’t count other companies who have approached other exchanges for help. The market makers carrying out the transactions are under a lot of pressure to conduct the buys in stealth without spooking the market or causing significant upward movement. These purchases are likely occurring on dips and confirmed in small increments causing steady rises in price. For all we know, the push above 50K was the work of major institutions
Why China Is Pushing For The Digital Yuan
This is a great article on how China is using their new CBDC to reduce the roll of the US Dollar in international trade and promote the Renminbi. Very insightful and clear as to why China is pushing so hard in the race towards Central Bank Digital Currency domination.
The Wolf Of All Streets Podcast Ft. Catherine Coley
Almost 100 episodes ago, Binance.US CEO Catherine Coley was the first guest on the Wolf Of All Streets Podcast. Since her first appearance, the world was hit with Covid and the potential for an economic recession like no other, which accelerated the adoption of digital assets. Stepping into 2021, Binance.US has seen more trading volume in January than the entirety of 2020. Retail is coming, and in this episode, Coley opens up about the work being done behind the scenes to allow unprecedented amounts of fiat into the world of cryptocurrencies. According to Coley, Bitcoin’s 24/7 global accessibility and diverse functionality is its most advanced and novel aspect, driving the world to a financial revolution.
In this episode, we discuss a range of topics including:
Binance.US expanding to all 50 states
Bitcoin as a post-apocalyptic resource
Regulatory delays from Covid
Fast pace black swan events
An influx of Dogecoin traders
Pirate money
Stimulus checks and disposable income
Trade cost analysis
Women in crypto
TikTok traders
A new generation of traders
Tesla’s growing balance sheet
Wall Street Bets
Preparing for whales
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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. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.