The Wolf Den #210 - Trade Like A Samurai
Bitcoin On-Chain Indicators Remain Strong - 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 on-chain indicators remain strong
Bitcoin and broader crypto markets retraced significantly over the past few days. However, on-chain indicators remain strong.
IntoTheBlock classifies hodlers as all addresses that have been holding an asset for a weighted average time of at least one year. Growing numbers of long-term investors suggest a strong belief that an asset will retain or increase its value over time, which is a key characteristic of store of value assets.
As of Mar. 31, 2021 using IntoTheBlock’s Bitcoin ownership indicators
In Bitcoin’s case, the number of hodlers has grown consistently regardless of price volatility, managing to grow through the recent correction and even through the steep crash experienced in March 2020.
This hodl trend can also be represented by the number of old coins that have been moved over the past six months. IntoTheBlock's UTXO Age indicator is helpful to grasp the volume of transaction activity occurring relative to the blockchain’s historical transactions.
The UTXO Age metric is helpful to understand long-term market cycles. When long-term UTXOs (marked in green to blue waves) are decreasing it points to older coins that can be sold for profit, suggesting an end to the bull cycle. But that doesn't seem to be the case, as investors are holding on to their BTC assets.
As of Mar. 31, 2021 using IntoTheBlock’s Bitcoin network indicators
With a current circulating supply of 18.664 million, at least 9.49m BTC hasn't been moved in over 12 months, and taking into consideration that a large portion is reported to be lost or stolen, it is clear that investors see that this bull-trend still has a long way up, increasing the supply side scarcity of the asset.
The UTXO Age indicator suggests that short-term unspent transaction outputs are moving the market, and denotes a high amount of transaction volume taking place and new holders coming in.
Along with the number of long-term investors, the total number of Bitcoin holders has also been increasing.
As of Mar. 31, 2021 using IntoTheBlock’s Bitcoin network indicators
The total number of addresses with a balance (holders) reached a new high of 37.32 million this week. This suggests growing adoption in Bitcoin in spite of short-term price corrections.
While both of these indicators point to a positive outlook, institutional activity in Bitcoin appears to be slowing down. Large transactions volume — which IntoTheBlock classifies as the aggregate amount sent in transactions of over $100,000 — has been declining throughout the last month.
As of Mar. 31, 2021 using IntoTheBlock’s Bitcoin financial indicators
This decrease comes after multiple consecutive months of growing institutional adoption of Bitcoin. However, this growth is likely to continue, especially with a Bitcoin ETF potentially launching and the likelihood of more companies adding Bitcoin to their balance sheets, as renowned investor Anthony Scaramucci suggested.
Overall, the outlook for Bitcoin remains strong despite the recent price correction. While market downturns are common, savvy investors should keep an eye on key indicators to spot fundamental value emerging from recent and upcoming developments.
Bitcoin Thoughts And Analysis
4-HOUR CHART
Not much has changed, except that we now have a beautiful retest of the previous descending resistance as support. That was an ideal long entry for a scalper or swing trader. That coincided with local 4 hour demand as well, on a nice bullish hammer reversal candle with a long wick down. Everything still looks great here, in my opinion.
Altcoin Charts
DOT/BTC
This is at resistance, so not a buy yet. It made a strong move against both BTC and USD, so I am watching closely. A break of the descending line should send it back to the recent high around .00075. I am very bullish on DOT fundamentally long term, so I have a position that I view as an investment. If it can break the recent highs, it would head into price discovery. You can see the previous trades on this pair on the chart. If you are trading this shorter term, the immediate target is the highs, and stops would be somewhere below the recent lows below that long wick.
DOT/USDT
This looks great. I was tempted to share this yesterday, but was a bit worried about the alt market as a whole. As you can see, price flipped the EQ of the trading range back to support at the dashed line. It held for many candles before ultimately popping up above. That was the best entry, to be honest, and I would love to see it drop back just above there for another test, but not sure that is likely. For now, it is also breaking another local resistance and retesting it as support at $36.1468. Regardless, after such a strong flip at the
DUSK/BTC
Update from the recent setup. Simply pointing out that price dropped down to retest the top of the flag as support. As long as that holds, this should head up with strength.
ETH/USD
Ethereum continues to look interesting on both pairs. I have shared the BTC pair a number of times, with the bullish SFP and break of it's own descending resistance.
As you can see, RSI broke resistance and is currently attempting a retest as support. RSI will move throughout the day, so impossible to judge at this point. Breakouts of patterns on RSI often precede the same move on price, which is notable here because price has reached the main descending resistance and top of the bull pennant. It was rejected thus far, but we often see consolidation below resistance before a push. I will be watching closely for a break of that line, which is the only viable trade at the moment. Buying at resistance before a break is very risky.
CME Is Catering To Smaller Investors And Traders
If you want to trade a Bitcoin options contract on CME, the standard contract size is 5 BTC. As a rule of thumb, options contracts represent 100 shares of the security, and the buyer pays a premium for the contract. Since Bitcoin is entirely its own beast, the CME has set the contract size to 5 Bitcoin, meaning the minimum price movement of the contract is $25. Taken from their site, “5.00 per Bitcoin = $25.00 and spreads: 1.00 per bitcoin = $5.00.” With Bitcoin becoming more expensive, the contracts rise in value. To combat this, the CME has proposed “micro-futures contracts.”
The new micro futures contract will be worth 0.1 BTC or a little under $6,000 at current prices. This is a huge reduction, considering the contracts are currently just under $300,000 a piece. Smaller investors will be more encouraged to trade the contracts and hedge their positions with these contracts. This also sets up CME to capture more investors as the price continues to rise throughout the year. Currently, the new trend is major institutions (Morgan Stanley) only offering crypto to their wealthier clients. CME is fighting back and hopefully will soon prove that accessibility is more advantageous and profitable than wealth barriers to entry.
Coinbase Going Bankrupt? Peter Brandt Thinks So.
“America’s most trusted exchange,” aka Coinbase, has left a lot of users unsatisfied over the years. Being an early innovator and popular exchange, naturally one would expect it to take a lot of flak for every mistake. Peter Brandt took this one step furthe, claiming that “I’ve learned the clues of these bankruptcies, @coinbase displays all the signs of a bankruptcy to happen.” The clues he cited were “difficulty to withdraw money, slow inquiry response time, and lack of a company phone number.”
Brandt might be right that the exchange is inefficient, but it seems unlikely they are about to go bankrupt considering they have an IPO on the way and have millions of users. These certainly could be telltale signs of bankruptcy or a scam, but context also matters. Coinbase’s CEO, Brian Armstrong, has been a vocal advocate for the crypto space and a leader. If Coinbase were headed towards bankruptcy, it would be worldwide news. For now, bankruptcy sounds like more of a conspiracy theory than an actual evidence-based claim.
Chipotle Is Giving Away Bitcoin. And Indigestion.
Although this feels like an April Fool's joke with an April 1 content, it's being reported widely. If you want to try your luck at winning either Bitcoin or a burrito, click below and try guessing a correct 6-digit phrase to win Chipotle’s contest. 10,000 people will win a burrito, 50 people will win $500 in Bitcoin, and 3 people will win $25,000 in Bitcoin. Each person is given ten tries to guess a random winning number, which I believe is supposed to simulate Bitcoin mining.
You don't have to buy a burrito to enter, so no need to grab a bottle of Pepto.
KIRA Network Public Testnet Launch
KIRA network is one of the most hyped projects of the year. They describe themselves as the first decentralized network that enables market access to any digital asset. They announced yesterday that their public testnet is launching today and you can sign up to become a Validator. All of the necessary info on the project and testnet is in the Medium article above.
Polkamon - Scarce Digital Collectibles
Over the past year, a group of engineers worked tirelessly to merge anime, NFTs, and cryptography into a collectible monster universe. Their IDO (initial dex offering) is finally taking place today, and I am really excited watch it come to fruition. I invested in this project long ago - frankly, much less than I wanted to, but they were wildly oversubscribed. In fact, I actually tried to get whitelisted like everyone else for the IDO today by buying an egg so that I could invest more, but sadly failed.
Collectors will seek out rare Polkamon NFTs and then show them off and use them for different things.
Each Polkamon is backed by a truly unique NFT that is indistinguishable from any other NFT and can be unpacked with $PMON tokens, the native ERC-20 token on the Polkamon platform. Each collectible is inimitable, authentic, and differs in rarity. The Polkamon NFT collection can easily be integrated into modern games, art, and other blockchain connected products. The coin itself is deflationary, burned when a user opens a pack.
Anyone that has been following the timeline of events for this project knows that their claimed egg will determine if they’ve been lucky enough to win a ticket to purchase $PMON tokens on Polkastarter - which is today. I think there is huge potential in this project. Historically, people love to collect, and the art looks amazing so far. I can’t wait to see where this goes.
IDO info below.
My Recommended Platforms And Tools
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Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
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.