The Wolf Den #315 - The MicroStrategy Monster
On-Chain Data Shows Bitcoin Accumulation - 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.
On-Chain Data Shows Bitcoin Accumulation
As many will already know, blockchain data can be extremely valuable to get a better understanding of what is happening in crypto markets behind the scenes. This is enabled by blockchain’s transparency and displayed conveniently in IntoTheBlock’s 50+ on-chain indicators.
When it comes to Bitcoin, we have been keeping an eye on ownership metrics. One key trend that has developed throughout this quarter is the increase in the number of addresses holding at least one Bitcoin. Since February 2021, the number of addresses holding at least one Bitcoin declined by 40,000, beginning when prices first reached $50,000 and accelerating in June as prices dipped below $30,000. This likely shows addresses first taking profits and then potentially some of the panic-selling into the crash.
This trend has taken a quick turn in the opposite direction as the number of addresses holding one or more Bitcoin is back above 800,000, pointing to renewed interest and accumulation of holders to reach a full Bitcoin. (CHART NOT SHOWN)
A similar pattern can be observed in the volume held by addresses with over 1,000 Bitcoin.
Here we can see the high decline that took place in the aggregate holdings of addresses with 1,000 Bitcoin or more. These addresses — which are presumably institutions or whales holding approximately $47 million worth of Bitcoin — appeared to have sold off a sizable portion of their holdings just before Bitcoin’s price peaked.
Then, as prices crashed, holdings of these institutions surged back as they looked to accumulate. This trend continued with the total volume held in addresses with at least 1,000 BTC reaching a six month high this week, showing strong conviction from large players.
A very interesting trend worth highlighting is that the volume in addresses with at least 1,000 Bitcoin had a strong negative correlation with BTC’s price of -0.85 throughout Q2, but has completely reversed in Q3 with a correlation of 0.75 between the two. This points to institutions and whales getting increasingly bullish on Bitcoin as prices have climbed over the past few weeks.
Bitcoin Thoughts And Analysis
DAILY CHART
Price has continued to correct, losing the local support at $48,190. Not a huge deal, but I will be looking for price to break back above. We have a steep ascending support as well, which price has held thus far on the daily, but the candle is not closed.
For now, this still looks like simply corrective price action. Anything above 40-42K for me remains very bullish.
4-HOUR CHART
Thus far, price bounced exactly from the demand zone that I shared yesterday, after barely touching the top. I would like to see that hold. If it does not, watch for the blue zone below as a likely area for a bounce.
HOURLY CHART
I rarely zoom in this far, but we have oversold bullish divergence confirmed with RSI, which can be the first signal of a reversal. When added to the fact that price bounced from 4-hour support, this could show us that the bottom is either in or near. If we see another drop and form more divergence, it would confirm further. I do not see these on higher time frames, so this is a weak signal for now,
Altcoin Charts
INJ/USDT
If Bitcoin bounces here, this should be a great trade. As you can see, price is currently holding support at $11.584 after testing the 200 MA on the daily as support with two wicks. The double bottom shown already played out, but this should head up to the next resistance levels assuming support holds.
TLM/USDT
I shared this setup a few days ago and it appears to be breaking out. Confirmation would come with a clean close above the blue bull flag. Ideally, there would be an entry with a retest of the flag as support, but no guarantees.
Targets are shown based on the length of the two flagpoles.
MicroStrategy Buys More Bitcoin
Like clockwork, MicroStrategy had access to more cash and bought more Bitcoin. The 3,907 Bitcoin cost $177M and were purchased for an average price of $45,294 per coin. MicroStrategy now holds 108,992 Bitcoin, acquired for $2.918 billion with an average purchase price of $26,769. Their total holdings are worth about $5.3 billion, totaling .5% of the entire market cap/total supply. As I always say, I don't expect this to be the last time MicroStrategy buys Bitcoin and following in their footsteps is one the simplest and most effective strategies you can adopt.
Dogecoin Is Saving Dogs
“Dogenations” are now accepted at PAWS Chicago, the largest no-kill animal shelter in the Midwest region of the US. Partnering with Leo Burnett, a prominent advertising agency, PAWS Chicago has now set up the infrastructure to collect Doge donations. Aside from the memes and comedy of Dogecoiners, charitable efforts have always been a pillar of the community. PAWS Chicago is on a mission to turn the entire city of Chicago into a no-kill state, with this campaign designed to help achieve that goal.
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