The Wolf Den #369 - Invest Like A Master Chess Player
Litecoin From An On-Chain Perspective - 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.
Litecoin 6-month high from an on-chain perspective
As Scott accurately shared in previous editions, Litecoin was poised for a breakout and yesterday the price soared by 20%, hitting a 6-month high. Using on-chain data, we’ll have a closer look at the recent activity taking place around Litecoin and assess the possible next moves.
Beyond the most recent rally, Litecoin has outperformed Bitcoin and several top crypto-assets over the past week. Thanks to the remarkable price action, the average balance of a Litecoin holder went from $2,874 on October 9th of 2021 to over $4,131 yesterday.
As of November 10, 2021 using IntoTheBlock’s Litecoin Financial Indicators
This increase in average balance is certainly remarkable (43%), though not as high as its price appreciation (51%).
But the recent hype was also reflected in the derivatives activity, as perpetual swaps traders did over $15 billion in volume combined over the past two days. Moreover, the volume of these derivatives increased by roughly 8x in a span of two days.
As of November 10, 2021 using IntoTheBlock’s Litecoin Derivatives Indicators
Potential next steps for LTC’s price
While this pattern implies positive expectations for Litecoin, LTC’s price has some small roadblocks ahead before it is able to climb higher. Using the In/Out of the Money Around Price, clusters pointing whether addresses are profiting (in the money) or losing (out of the money) signal price levels where activity is concentrated.
As of November 10, 2021 using IntoTheBlock’s Litecoin Financial Indicators
In Litecoin’s case, we observe that 53,530 addresses had previously bought 699 thousand LTC at a price of approximately $233. This level was previously the highest level of resistance, but now that it broke, holders at this level may look to buy again given the strong amount of activity at this level. Were Litecoin to drop below $228, a move towards $200 is to be expected.
With Litecoin currently sitting at $269, $273 is expected to be a range with strong resistance since buying activity had previously been concentrated here and short-term traders may look to close positions at this level. If Litecoin closes above $277, a move higher towards $285 (the next large cluster) is likely.
Overall, short-term the direction for Liecoin’s looks promising. Previous resistance now became support and there doesn’t appear to be much resistance in the path to $300.
Bitcoin Thoughts And Analysis
DAILY CHART
There's very little to analyze on Bitcoin at the moment.
Bitcoin made a strong move to a new all time high just two days ago, and appears to now be taking a breather, allowing large cap altcoins to shine. As you can see, price is now retesting the previous high as support, having closed slightly below yesterday and trading slightly below right now. Yesterday's candle was a spinning top, with long wicks up and down, showing indecision. Today looks the same, so far, albeit more of a doji with a small body. This is irrelevant until 12 hours from now.
My expectation is that Bitcoin will cool off for a while, perhaps retracing a bit and consolidating before the next leg up, but this is just a guess. Bitcoin can rip any time!
We have clear overbought bearish divergence on the daily, also forming on the higher time frames. This is inevitable, considering the how high RSI pushed previously, so not of major concern. This is also slightly over 14 days, below which is the ideal measurement for divs.
Still, this gives me a bit of pause and makes me believe RSI may take another breather and could drop as price chops sideways, eventually giving us hidden bullish divergence.
If there is a major dip, I am buying.
Altcoin Charts
"Dinosaur" coins continue to perform. ADA and EOS both retested resistance as support, as discussed yesterday and LTC has continued to push hard. XRP looks good now as well. I'm not a huge fan of many of these projects, but that would never prevent me from trading them.
ADA/USDT
There is the retest of resistance as support from yesterday's setup.
EOS/USD
EOS closed above the trading range and retested the range highs as support. This is exactly what we were looking for yesterday.
WOO/USDT
Revisiting an old setup, we can see that WOO hit it's first target (repeatedly), the previous all time high. We still have higher targets in play from the bull pennant, with blues skies ahead if price can break and hold the ATH as support. Yesterday's candle wicked through, which could be a bearish SFP if price drops. We are at resistance, so we want to see a CLOSE above the previous high and then ideally a retest as support. Keep an eye on this one.
XRP/USD
Have you ever seen the movie "Better Off Dead?" It's an 80s classic, where the paper boy is constantly harassing John Cusack to pay the $2 that he is owed.
I WANT MY $2!
That applies to $XRP, believe it or not. We had a minor breakout of the grey bull flag, and then the break through the key descending black resistance 2 days ago. That gives us a target of the April high, just below $2.
Price has already broken resistance and retested it as support.
Apple CEO Owns Bitcoin
Billionaires are piling into the crypto space. Tim Cook, the CEO of Apple, owns cryptocurrency and “thinks it’s reasonable to own it as part of a diversified portfolio.” Apple is currently the second-largest company in the world, but Cook made it explicitly clear his interest in crypto was personal and not related to the company. When asked about the company’s plans regarding cryptocurrency, Cook responded, “it’s not something we have immediate plans to do,” which does leave the door open. You know you are on to something when some of the best innovators of our time i.e., Elon Musk, Jack Dorsey, and Tim Cook all share a similar interest in your beloved asset.
Coinbase Releases Q3 Report
If you are invested in $COIN, I suggest you read their third-quarter earnings report. As expected, they saw a sizable decrease in Q3 in both users and revenue. They warned well in advance that this was inevitable, and we all know that the summer was painfully slow for the crypto market. As Coinbase eloquently puts it, “Coinbase is not a quarter-to-quarter investment, but rather a long-term investment in the growth of the cryptoeconomy and our ability to serve users through our products and services. We encourage our investors to take this point of view.”
From the Q3 report, one of the major diverging sets of metrics is the fact that “Coinbase’s user base and trading volume fell in the third quarter of 2021, while the total assets on the platform increased.” This isn’t necessarily bad. Users tend to come and go in waves, even in a macro bull market. Coinbase is without a doubt a strong company and should perform well over the long term.
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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.