The Wolf Den #339 - Janet Yellen Has Lost Her Mind
China, Exchanges and DEXes - 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.
China, Exchanges and DEXes
This is the 19th time the Chinese regulators have attempted to ban Bitcoin and cryptocurrencies over the past 12 years. On September 24, the PBoC announced that all cryptocurrency transactions in China are illegal.
The recent announcement made homegrown crypto exchanges such as Huobi take proactive measures to protect their user’s assets. As the crypto exchange stopped taking new mainland customers, existing customers rushed to withdraw their assets.
By analyzing the “Miner Netflows”, which are the net amount of inflows minus outflows coming from mining pools' addresses, we can clearly see how the recent China regulation resulted in the eighth biggest Bitcoin mining pool, Huobi pool, moving a large amount of their funds.
As of September 29 using IntoTheBlock’s Bitcoin Mining Indicators
As can be seen in the graph above, more than 100k $BTC ($4.21b) flowed out from miners, the largest since Dec 18, 2017. Could it be to cover the client withdrawal needs on their exchange?
At the same time, as exchanges like Binance and Huobi were affected by the latest regulation, tokens of decentralized trading platforms such as Uniswap and Sushiswap saw a significant boost.
The price of UNI rose by almost 50% in a span of 24 hours, and many of the top rivaling DEX tokens experienced a significant boost as well. China’s intensifying crackdown increased the appeal of the decentralized platforms and their tokens amongst speculative and large investors.
But what’s remarkable about the recent UNI price increase is that it was mostly driven by large investors. IntoTheBlock’s large transactions indicator reveals that on this Sunday, UNI experienced the largest number of transactions greater than $100k since May 26 of this year.
As of September 29 using IntoTheBlock’s UNI Large Transactions Indicator
On that day a total of 723 transactions with a value greater than $100k occurred, aggregating a total volume of over $421 million. Looks like it wasn’t all speculation.
Bitcoin Thoughts And Analysis
DAILY CHART
There is very little to analyze on Bitcoin right now. I know people want analysis all of the time, but the truth is that sometimes price is just testing support and moving sideways. This seems to always drive traders mad.
Just wanted to quickly point out that RSI is once again attempting a breakout on the daily chart. If RSI closes above that blue line, we can anticipate that price will likely follow.
Price is clearly in a descending wedge, confirmed by 2 alternating touches up and down. This should eventually break up, but that does not mean price cannot drop further down in the wedge first.
Altcoin Charts
I am still generally staying away from the crypto market for the moment, as global market dust settles and Bitcoin makes a decision.
FTM/USDT
I already shared the entry in the circle, and price once again appears to be attempting a breakout. I personally think this is risky, as we already saw a bit of a failed attempt, but this is a technically good entry for another move up. Very simple and you can revisit the previous setups, but a breakout here should send price back to the all time high. We can revisit if we get above that and head into price discovery.
Legacy Markets
DXY (DOLLAR INDEX)
Most assets have an inverse correlation with dollar strength, and the DXY is the gauge of the strength of the dollar vs. a basket of foreign currencies. To be clear, that means the dollar can still be weakening in a vacuum, but can rise anyway as compared to other currencies.
We have been watching this potential double bottom and breakout from the blue channel for months, and the dollar is finally showing real strength. The neckline is now convincingly broken, so the dollar should continue up on lower time frames.
You can see what has happened to the stock market as a result, and there's clear downward pressure on metals as well. Even Bitcoin is not immune in the short term.
I still expect far more eventual downside on the monthly chart after the breakdown of the channel, but that's over years, not months. We could be in for a rough ride on stocks etc. if the dollar continues this lower time frame breakout.
Are Most Crypto's Securities?
I have written about Gary Gensler and the SEC a number of times in the newsletter, but wanted to share this blog that contains all of my recent thoughts in long-form. In this blog, I have captured some of Gary’s most relevant quotes along with the implications of a large portion of the crypto market being potentially hit with the “security” label. It wouldn't be pretty. To save you some time, below were my final takeaways from the extended article:
The market is still very much intact
Many altcoins will likely be labeled as securities (down the road)
Broad security labeling can induce a very strong bear market (down the road)
An ETF will eventually come
Holding the majority of your investments in Bitcoin and Ethereum is probably your safest play. (After all, these are the only two coins that have been officially declared not a security by the SEC.)
Ethereum 2.0 Receives First Upgrade
All the latests news on Crypto, Blockchain, Bitcoin, Ethereum, Tokens, ICOs, Fintech, and more.
Developers are working diligently on Ethereum 2.0 behind the scenes. The first ETH 2.0 upgrade, dubbed Altair, is set to happen next week, bringing new features to the chain and adding to its robustness and foundation. Developers are thinking of the upgrade as a “warm-up” or “dress rehearsal” for the merge, when all functionalities need to be perfect. Assuming Altair goes according to plan, the subsequent upgrade will take place in December, making Ethereum nearly impossible to mine. This upgrade will begin incentivizing everyone to switch to Proof Of Stake. Realistically, the major 2.0 merge won't happen until sometime next year, considering a repeated history of delays. While it is a bit annoying that the project has been consistently delayed, progress has been steady and each step has been a success.
The NFL Gets A Version Of Top Shot
"Dapper Labs, the firm behind NBA Top Shot, is preparing to announce a marketplace for National Football League NFTs, Sports Business Journal reported today, citing anonymous sources."
This was inevitable and is huge. We are going to see the NFT collectible space continue to explode into the mainstream, especially in the sports space. There's no reason that every professional sports league is lacking this piece after the success of NBA Top Shot.
El Salvador Volcano Mining
Nayib Bukele sent a tweet that set the crypto world on fire. The video appears to share a first glimpse at El Salvador's mining facilities, which famously use volcanic geothermal energy to power the ASICS that mine Bitcoin.
Whether the video is authentic and how close to this becoming a reality are huge questions, but it is clear that the President is moving forward with his plans to mine Bitcoin from volcanoes, and the entire world is watching.
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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.