The Wolf Den #195 - Is The Correction Over?
We Are Bullish On ETH 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.
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The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
This Week Analysis: We are bullish on ETH
After peaking at around $2,040 on February 20, Ethereum began to slump lower last week but already surpassed the $1,800 mark again. Although ETH has experienced a minor correction, signals of bullish momentum are everywhere.
In today's edition, we will share 4 analytics that help to explain why Ethereum currently has bullish momentum.
1. Bitcoin on Ethereum is just getting started
Since Bitcoin cannot be easily moved cross-chain, tokenized versions of Bitcoin are available on the Ethereum blockchain. These ERC-20s are pegged 1:1 to the price of BTC being backed by the equivalent amount of Bitcoin (examples: WBTC, tBTC, renBTC).
At the moment, 33.28k BTC, which represents 0.18% of the circulating supply has been tokenized and locked on DeFi Protocols.
2. There are over 1.3 million DeFi users
DeFi has seen explosive growth throughout 2020, as the number of users increased by over 13.5x compared to January of 2020. This shows that DeFi is here to stay with real use cases and applications.
3. There are more addresses profiting on their ETH positions than those holding BTC
See the Ethereum Addresses Stats
The Ethereum network has seen explosive growth throughout 2020. As can be seen in the graph above, the total number of addresses with a positive Ethereum balance grew by almost 20 million over the past year. To put things in perspective, during the entire year 2019, Ethereum added 12.89 million (funded) addresses, which means that the network has already broken last year's record.
By comparing this metric to the Bitcoin network, we can establish that there are 17.86 million more addresses currently holding ETH than those holding BTC. This also means that the number of Ether addresses experiencing profit (53.49 million) has now surpassed the total number of Bitcoin addresses with a balance (36.56 million). In other words, more addresses are making money in Ethereum than the total number of addresses holding Bitcoin.
4. HODLING trend on Ethereum
See Ethereum’s Ownership by Time Held Chart
At IntoTheBlock, we classify an address with a holding time of over one year as a hodler. As can be seen in the graph below, the number of ETH hodlers has increased by over 11.45 million within the last twelve months.
Our Hodlers Indicator has continuously shown an almost linear growth every month, despite Ethereum’s price drop of about 50% back in March. The Hodlers Indicator is now at about 31.38m addresses, an All-Time-High for this metric, representing 57.67% of all ETH holders.
Bitcoin Thoughts And Analysis
Bitcoin continues to look strong, rapidly approaching the recent all time high. It could drop again, of course, but all technical signals indicate that the correction is effectively over.
Bitcoin had a single down candle last night on it's first attempt to break back over 55K. Someone was waiting to sell a lot of Bitcoin and punish overleveraged longs. That candle has already been erased, with price rebounding and retesting those highs. I want to see a close over $55,046 (roughly), the blue line from the swing high on the left of the chart. Then the only resistance left is the supply around the all time high. This is really simple, so far. Higher highs and lows building since the bottom, a clean range break that we discussed yesterday and steady movement up.
Another look at the 4-hour gives an interesting picture. We clearly have price rounding out since the bottom, which could eventually form a cup and handle pattern, but that is just the idea. This would be the cup. If price stop around the previous all time high and forms a flag, we would have the handle.
We also have a bit of an ugly inverse head and shoulders, shown by the 3 small blue lines. The blue line on top represents the neckline, which has been broken and retested as support.
Nothing bearish here for the moment.
Altcoin Charts
Bitcoin looks poised to make a move, so I feel it's better to watch and wait on alts. We should get more clarity on alts on the livestream. Ethernity went up over 50% yesterday, so that was awesome! Here's one chart I am watching, though I have been in DOT from way below.
DOT/USD
DOT looks strong on the USD pair and is holding well against BTC. You can see that price held support and is breaking through and retesting both descending and horizontal resistance. Not much to say here, DOT continues to look really good to me, both technically and fundamentally. Ultimately, if you want to be super safe, you can wait for a break of the recent all time high around $42 and watch this head into price discovery.
JPMorgan Is Launching A Crypto-Related Stock Basket
Demand for indirect Bitcoin and crypto exposure have grown so much that JPMorgan has filed to have its own debt instrument based on the top 11 “cryptocurrency-focused companies.” JPMorgan is essentially making it ridiculously easy for other institutions to gain access to the sector with diversified risk within a note that investors can buy.
According to the official filing, “the weights of the reference stocks were determined based in part on exposure to bitcoin, correlation to bitcoin and liquidity.” Each of the 11 stocks makes up its own independent percentage of the entire note. MicroStrategy holds the most (20%), then Square (18%), Riot Blockchain (15%), NVIDIA (15%), etc.
The notes will cost a $1,000 minimum and have a maturation date of May 2022. This is truly an ideal way for investors to gain access to indirect exposure to Bitcoin at a low entrance fee with dispersed risk. Click this link for the exact details on the note and see all 11 companies listed. As a pro tip, if you are looking for indirect exposure, you could model the note into your own portfolio and skip the 1.5% fee.
Will Oracle Buy Bitcoin?
This is the second rumor I’ve seen regarding Oracle's plans to announce a large Bitcoin purchase. I have no idea if the rumors are true, but it seems likely that another major tech company already involved in blockchain would take the leap. Time will tell.
Jack Dorsey Is Selling His First Tweet
This story began a few days ago, but is beginning to feel more important as it unfolds. We are currently witnessing seemingly anything and everything being made into an NFT, largely successfully. Twitter CEO Jack Dorsey is selling his first tweet - and the current bid is sitting at $2.5m! The tweet reads “just setting up my twttr” and will be sold for 2.5m unless there is a larger bid placed between now and March 21st. The hype right now in the NFT space is tangible. To end on a positive note, the winning bid will be converted to Bitcoin and donated to charity - a win-win.
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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.