The Wolf Den #265 - The Evolution Of Money
El Salvador Puts Bitcoin Back On The Map - 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.
El Salvador Puts Bitcoin Back On The Map
Following the recent FUD-bath that led to one of the worst price draw-downs in Bitcoin history and its worst monthly performance since September 2011, it looks like we finally received the catalyst we were waiting for.
With 62 favorable votes, the Legislative Assembly of El Salvador approved a bill to recognize Bitcoin as legal tender in the country.
With this passed legislation, El Salvador will now be able to accept crypto for all forms of monetary debt and makes several proposals on how the country should adopt Bitcoin, including exceptions from capital gains taxes for the cryptocurrency holders, the creation of a trust in the Development Bank of El Salvador to enable the conversion of Bitcoin into USD and even the creation of volcano-powered crypto miners.
After the announcement from El Salvador President, the flagship cryptocurrency surged by 26%, currently trading at $39,152. With this announcement, almost 3 million addresses returned to a state of unrealized profits or “in the money”.
As of June 16 using IntoTheBlock’s Bitcoin financial analytics
The Historical In/Out of the Money indicator provides the variation of holders’ profits over time. It shows the percentage of addresses that would have made money or lost money if they had sold at a particular point in time.
What this analysis shows is that roughly 8% of the Bitcoin circulating supply have an on-chain cost basis between $31,700 and $37,000. Currently, 13,89m BTC are in a state of profit.
The recent enthusiasm in Bitcoin in Latin America has the potential to be a catalyst for future growth. This attraction of capital and labor creates incentives for other countries to adopt Bitcoin and crypto broadly. In turn, this should increase activity on the Bitcoin blockchain and lightning network. This comes at a critical time as transaction activity has dropped steeply to levels not seen since 2018.
As Bitcoin pushes back to $40,000 again, key on-chain indicators may follow.
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin continues to consolidate and hang around 39-40K (for now). This is somewhat encouraging, as it was not quickly rejected from this entire area of resistance. That said, since so many people are watching the 200 MA and potential death cross, that line (red) has clearly become meaningful. We have two days of rejection and then a drop away, so MA traders want to see price above that line sooner than later. Yesterday's candle was a spinning top, which shows indecision.
4-HOUR CHART
Nothing has really changed. Still holding the local demand zone I drew and still struggling at the blue supply resistance and 200 MA. Ultimately price needs to break 42K then exit the top of this range to start looking bullish.
We are in a holding pattern, many believe because of the FED meeting today.... so read below.
Markets Brace For FED Report
I just recorded a YouTube video about this, which I will share tomorrow, but the markets seem to be holding their breath in advance of the 2 PM Fed report and 2:30 PM (EST) speech from Jerome Powell.
Simply put - if the FED makes no changes and commits to further stimulus, numbers should go up. If they even hint at raising rates to combat inflation, number go down. Across all markets.
This is so stupid.
The entire world is waiting for one man to hint at potential changes in the longterm and are likely to react immediately. We all know they will keep printing and that inflation will continue to rise. If he even says one wrong word that hints at inflation being a problem, markets are likely to drop.
We have lost the plot, the economy is broken.
Major Investors Back Bitwise
Investors from tech, crypto, and finance teamed up to help Bitwise, a major crypto company, achieve their massive $70m Series B round of funding. Notable investors contributing to the $70m figure included Henry Kravis, Stanley Druckenmiller, David McCormick (Bridgewater CEO), Daniel Sundheim (D1 CIO, also lived on my freshman hall in college), and more. Major institutions are clearly here even though it feels like we are in a slump simply because of lowered prices. Bitwise is growing 20x year-over-year, boasts a $500m evaluation, and more than doubled the mean series B funding amount. The crypto space is bullish regardless of current prices.
Fox Is Bullish On NFTs
The hype around NFTs has begun to quiet down over the past couple of months, but that hasn’t stopped major corporations from wanting in on the market. Fox just announced the launch of a $100m NFT focused fund under their NFT firm Blockchain Creative Labs. An official Fox release stated the following, “funding will be used to support content creators, IP owners, and advertising partners end-to-end blockchain computer ecosystem solutions to build, launch, manage and sell NFT content and experiences, and fungible tokens, as well as digital goods and assets.” Basically, the fund will do everything and anything NFT related.
Last week, I had the pleasure of interviewing Duncan and Griffin Cock Foster, a set of twins who co-founded Nifty Gateway. The episode will release this Thursday and we talked for an entire hour on just NFTs. The NFT space is not dead by any means. What most people don’t realize is that NFTs have been around for years, and it had its first adoption cycle back in 2017. The world of NFTs is really only getting started - Fox wouldn't be investing $100m if they thought this was the tail end of their existence.
Retail Selling Into The Hands Of Eager Whales
Whales have accumulated 90,000 Bitcoins on the recent drop, with the number of 100-1000 BTC wallets rising steadily. As we know, the drop was primarily fueled by liquidations of retail traders, and the data suggest that new entrants into the market have panic sold their bags into the hands of big players. Whales now hold 48.7% of the total Bitcoin supply.
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions. Code Wolfsden50%off for a 50% discount on the first month.
This is where I invest, commission-free. They now let you earn interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
Rewards Code: WOLF25
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
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.