The Wolf Den #349 - Crypto Mom's Mic Drop Moment
Key Indicators Leading To BTC's Growing Strength - 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.
Key indicators and near-term catalysts leading to BTC’s growing strength
Bitcoin outperformed all crypto-assets in the top 10 by market cap over the past seven days. As a result, Bitcoin's dominance has climbed to 45%, the highest it's been since August based on CoinMarketCap data.
As well, despite the stock market’s bearish trend, Bitcoin continues to push higher and is showing a negative correlation with Traditional Finance, which had not been the case in prior drops.
As of October 13, 2021 through IntoTheBlock’s Capital Market Insights
As evidenced by the graph above, this reinforces the uncorrelated asset thesis, which makes it more appealing to investors seeking diversification.
But what have been the key on-chain indicators and catalysts driving the recent move up? One of the main drivers has been the growing institutional interest, evidenced by analyzing the on-chain data.
As of October 13 using IntoTheBlock's BTC financial indicators
Large transactions - the amount of transactions worth over $100,000 taking place on a given day. Due to their magnitude, large transactions act as a proxy to institutional activity.
The number of Bitcoin large transactions hit a four-month high, with over $240B transferred per day three days in a row
This highlights the growing appetite among institutions investing in Bitcoin
And by going deeper into the on-chain data, we can conclude that not only is institutional adoption here, but it also makes up the majority of all volume.
Transaction volume on Bitcoin’s blockchain has been on a strong upward trend, reaching new highs despite price remaining below $60k. Thus far in October, Bitcoin has seen an average of $205B being settled *per day.*
Institutions and whales have been actively using Bitcoin, with 99.2% of all transaction volume coming from transactions of over $100k (“large transactions”) in October.
There also appears to be growing optimism surrounding a Bitcoin ETF being approved as early as this month. With four futures-backed Bitcoin ETFs awaiting a decision over the next three weeks, Eric Balchunas, Senior ETF Analyst at Bloomberg, gives a 75% chance of one being approved in October.
Overall, Bitcoin has been gaining strength by many metrics over the past few weeks.
Bitcoin Thoughts And Analysis
Let's be honest - there is very little to analyze on the Bitcoin chart at the moment - or on any altcoin chart. Sometimes the market has little to give, so we just sit and watch. That said, let's take a look.
WEEKLY CHART
Strong resistance in supply, as expected. At the moment we have a potential shooting star candle, but it is only Wednesday. Nothing to worry about at the moment.
As I have been saying, after a major breakout like the blue line and black horizontal, you somewhat expect and eventual retest. That would be fine. We are hitting resistance on multiple time frames.
DAILY CHART
Nothing to see here. Price hit resistance, threatened to hold it as support but failed. Not a big deal, just strong resistance on multiple time frames. Key supports are below, if we see a drop. Nothing above 48K would surprise me at all after the major move up.
The daily also has a potential hidden bullish div, although not certain at all. You can see the idea on the chart above.
We actually have mixed signals from divs at the moment. The 3D and 12 hour both have bearish divs, most time frames have potential hidden bullish divs. Clearly there's a lot of indecision here at resistance.
4-HOUR CHART
Not much to see on lower time frames, but we do have an interesting local support that has held on candles closes quite a few times, the ascending blue line. This could be a nice support to watch. If it breaks, it could be a good indication that more short term downside is coming.
NFTs Are Coming To Coinbase
The most popular U.S. exchange has announced major plans to bring NFTs to the platform. From their official blog, “Coinbase NFT is a peer-to-peer marketplace that will make minting, purchasing, showcasing, and discovering NFTs easier than ever.” Considering FTX and Binance have both made progress in the NFT space, the next logical step was for Coinbase to join in. This should come as a relief for newcomers to the NFT space that are intimidated by the lack of user-friendly platforms. If there is one thing Coinbase does well, it is to simplify, educate, and intuitively design interfaces. If this sounds like something of interest to you, there is a waitlist that you can join here.
PlanB Remains Bullish
PlanB has an incredible track record of accurately predicting price. He recently hit 1 million followers on Twitter, likely because he correctly called the August and September prices. For this month, he has his eyes set on Bitcoin at $63,000, which is only a little more than 10% from here. His longer predictions are much higher. He recently did an interview and shared his thoughts. Here's what what he said:
If we look at the on-chain signals right now, I would say that top is at least a couple of months, say six months from here, so that would be end of Q1 [of 2022], maybe later.
I would be very, very surprised if Bitcoin’s price would be below $100,000 at the end of the year. That would sort of invalidate my view, my models, and that would certainly surprise me. I do think we will see a price that is at least $135,000 by Christmas because that’s what my floor model says. Basically, I’m using three kind of models that all say the same thing.
I guess we will be above $100,000 [or] above $135,000 at the end of the year, and we’ll continue to grow maybe towards the S2FX model targets, $288,000 or even above. I would not be surprised even to see in Q1 or Q2 next year, prices of $300,000, $400,000, $500,000…
The supercycle is certainly a possibility based on these numbers, and even his "conservative guess" of $288,000 would be a dream.
Hopefully, PlanB is right. There will be a lot of happy people.
Litecoin Surpasses Ethereum In Address Activity
This headline surprised me, so I decided to share it. My assumption has been that Litecoin has been on the decline for years, but clearly I was misinformed.
According to recently shared on-chain data, Litecoin has surpassed the second-biggest blockchain, Ethereum, by the number of active addresses. Litecoin's payment count has also reached a new all-time high.
Considering the fact that Litecoin price is sitting at nearly an all time low against Bitcoin, it could be worth watching.
Bitcoin Searches Near Lows
Bitcoin circles $55,000 amid an ongoing lack of mainstream interest in BTC price action.
Bitcoin is threatening all time highs in price, but also hitting yearly lows in google searches. My assumption is that interest in other facets of the crypto space are exploding - NFTs in particular. Most people either have a superficial understanding of Bitcoin by now, or are just more interest in the shiny new objects.
Either way, prices rising without euphoria is a very good thing. That means that it can hit much higher levels before the greed and euphoria kick in.
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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.