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The Current State Of Bitcoin And Ether 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.
The current state of Bitcoin
Bitcoin price is currently sitting at $54,797.59 and investors seem to be uncertain about its next potential move. 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.
As of April. 28, 2021 using IntoTheBlock’s Bitcoin financial indicators
At the time of writing, Bitcoin bulls and bears are fighting to claim the highly-contested price around $55,000. The IOMAP indicates a large cluster of addresses (903k) and volume (520k BTC) had been bought slightly below $54.8. This price range, which already saw high levels of trading activity, points to the likelihood of investors looking to buy back near this range and create support before price lowers further. If this range is broken, there’s a similar area with a concentration of buyers between $51,478 and $53,118. Here, approximately 743.66k addresses had previously purchased roughly 385k BTC.
On the resistance side, the IOMAP indicates that the most crucial resistance level sits at $55,500. Roughly 1.23 million addresses previously purchased 588 thousand BTC at the range between $54,802 and $56,462 a critical resistance level. This price range, which already saw high levels of trading activity, is expected to act as strong resistance short-term as investors in this price range may look to break-even on their positions at this point.
But despite the recent downward price action, on-chain indicators are looking as strong as before. 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 BTC hodlers has increased by over 2.84 million within the last twelve months.
As of April. 28, 2021 using IntoTheBlock’s Bitcoin ownership indicators
Our Hodlers indicator has continuously shown an almost linear growth every month. Despite Bitcoin's recent price action, it is now at about 21.76m addresses, an All-Time-High for this metric, and it represents 56% of the total BTC holders.
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 a likelihood that older coins will 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 April. 28, 2021 using IntoTheBlock’s Bitcoin network indicators
With a current circulating supply of 18.693 million, at least 9.49m BTC hasn't been moved in over 12 months. Taking into consideration that a large portion is reported to be lost or stolen, it is clear that investors believe that this bull-trend still has a long way to go up, increasing the supply scarcity of the asset.
The UTXO Age indicator suggests that short-term unspent transactions outputs are moving the market and denotes a high amount of transaction volume taking place and new holders coming in.
Ether price action takes the correlation against Bitcoin to a multi-year low
ETH 30-day price correlation with $BTC reaches its lowest number in over two years.
Remember that a correlation of any two variables varies between -1 and 1, with values close to -1 suggesting a high inverse relationship between the two and values close to 1 suggesting a high positive relationship. The closer the number is to 1, the stronger the relationship between the two crypto-assets’ prices; meaning that both are likely to move in the same direction in a given day.
As of April. 28, 2021 using IntoTheBlock’s Ether financial indicators
The recent incredible price action of ETH, which broke a new ATH yesterday, took the price correlation against the top crypto-asset to a multi-year low of -0.18. Not only are that not correlated, which would be a 0, they have entered the realm of inversely correlated. To note, we saw ETH/BTC move up significantly on the BTC drop.
Bitcoin Thoughts And Analysis
DAILY CHART
Price predictably found resistance in the red supply zone that I denoted yesterday, also right at the 50% retracement level which we discussed. Nothing surprising here, and nothing new to analyze. Either price gets rejected and heads down to find more demand, or it consolidates against resistance for a push up. Time to sit back and watch, as I said yesterday.
What Is Bitcoin?
With the massive influx of new people in crypto, I feel we need to go back to basics.
My team is writing an entire series to help those who know absolutely nothing about crypto become experts.
Here is the first one.
The Likelihood Of Big Tech Buying Bitcoin
With Facebook’s quarterly earnings call today and rumors of Bitcoin being added to their balance sheet, I wanted to share a chart I found on Twitter that someone created which breaks down the possible likelihood of big tech companies buying Bitcoin. The chart features major tech companies, including Microsoft, Google, Apple, Amazon, Ford, Cisco, and more. Each company on the chart is rated on “available cash, board members, public Bitcoin awareness, Bitcoin synergy potential, and shareholder power.”
According to the chart, Facebook has the highest likelihood of adding Bitcoin to the balance sheet, with Microsoft coming in second due to the lack of central power behind the outstanding shares. Apple, Cisco, and Berkshire Hathaway were considered the least likely to add Bitcoin to the balance sheet. And to no one’s surprise, Warren Buffet’s comments on Bitcoin being “rat poison” put Berkshire Hathaway in last place.
The chart is simply just one researcher’s speculation and predictions, but it is based on facts that represent how each major tech company could view Bitcoin.
Ethereum Bulls Are Winning This Month's Option Expiry
With record-setting interest around options trading in the crypto market, a "bearish" pattern has begun to emerge at the end of each month. In the past 4 months, bears have rallied against bulls, pushing price down to meet put target options that expire at the end of the month. For the month of April, Ethereum bears are behind, placing 90% of their puts at or below $2,400. Bulls did a better job predicting this month’s price action, but almost half of the call options lie at $2,880 and above.
At this point, bears need help and have probably begun to pack their bags and place their bets on next month. Bulls on the other hand have a lot to gain if the price hits $2,880. Either way, since the winners and losers are mostly determined at this point, it's reasonable to believe that there won't be any extreme movements in price towards the end of the month when options expire. EIP-1559 stories are begging to circulate faster through mainstream sources, arming bulls with reason to push price higher, counter trading bears that aren't following the fundamentals or don't recognize the significance of the upcoming London Hard Fork.
U.S. Bank Is Preparing For A Crypto Future
U.S. Bank, the fifth-largest bank in the U.S., has come forward and publicly declared their preparation for supporting a Bitcoin ETF and a digital asset custody service. The ETF is obviously pending SEC approval, but the OCC has already green-lighted banks holding stable coin reserves, which U.S. Bank intends to capitalize on.
Historically, banks are some of the most conservative and slow-moving financial institutions, but U.S. Bank has been developing its “blockchain initiatives” since 2015 to position itself for this future trend. According to the strategy chief, involvement in crypto is not an option, “it’s something we’re going to end up having to hold.”
Facebook Earnings Call Today - Bitcoin On The Balance Sheet?
Facebook has their Q1 earnings call today at 2 pm PST. There’s speculation they will announce Bitcoin on their balance sheet.
Not sure where this rumor started, but it is still only a rumor. If they do make the announcement, I would expect significant volatility to the upside. If they do not, we could see a push from bears.
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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.