The Wolf Den #382 - Digital Real Estate
Metaverse Tokens Running Hot - 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.
Metaverse Tokens Running Hot
Since Facebook’s rebranding to Meta, the market has become increasingly bullish on the metaverse. The main beneficiaries of this trend have been projects building digital worlds and in-game economies. This has led to triple-digit gains within a month for four out of the five largest crypto protocols fitting this description.
Check out more key metrics for AXS, MANA, SAND, ENJ and GALA
Behind The Hype
Aside from Facebook’s rebranding, metaverse-related tokens have been gaining momentum with a few major events.
$2.4 million — a piece of digital land (“parcel”) in Decentraland sold for this record amount
Adidas partnership — the german brand teased the “adiVerse” concept on top of Sandbox.
Though metaverse projects are showing promising signs, many of them are also showing signs of it still being too early relative to the level of speculation taking place.
Bubble or new paradigm? Looking at the triple-digit gains these metaverse tokens have recorded, it is worth taking a step back to analyze their traction (beyond price).
1,390 monthly active users — Decentraland saw less than 2,000 users access its metaverse as per DappRadar, implying a valuation of $5M/user.
Not live yet — Sandbox plans to release its alpha version this month, but is still worth multiple billions pre-launch
On-chain data also shows signs of metaverse tokens getting frothy.
Learn more with IntoTheBlock’s MANA ownership stats
“Traders” reach new high — The number of addresses that have been holding MANA for less than 30 days set a new record of nearly 53k addresses.
33% of MANA holders bought the token this month; this percentage is even larger for Sandbox (56%) and Gala (43%)
Spikes in the number of traders point to excessive speculative activity and can often be seen prior to a correction, as was the case recently with SHIB
The 24 hour volume traded for several of these tokens surpassed their market cap, further validating the high amount of speculation
Overall, metaverse tokens are showing several warning signs. While these projects have large ambitious ideas likely to shape the digital world, it is worth proceeding with caution given the level of speculation and recent price spikes recorded.
Bitcoin Thoughts And Analysis
Bitcoin continues to chop sideways, with fakeouts left and right to confuse traders. We have confirmed hidden bearish divergence now on most time frames, so the "power of the bull divs" is canceled for now. Hard to make a convincing case for a significant move in either direction for the moment, so perhaps we continue chopping sideways for a bit.
DAILY CHART
The Bollinger Bands are tightening a bit, with the lower band flattening out. This is a decent sign for bulls. The less encouraging sign is that price was rejected at the centerline, but that is expected on the first attempt. Bulls want to see the centerline flipped to support and expansion upwards.
4-HOUR CHART
Good morning, blue line of death.
Strong resistance at this blue line, with endless wicks above and closes below. This is a breakout traders worst nightmare, with fake outs over and over again above resistance. We really want to see a close above that blue line to start thinking bullish again.
Altcoin Charts
EGLD/BTC
Elrond is cooling off after an epic run. The BTC pair appears to be attempting a perfect (almost to the sat) flip of the former all time high resistance to support. 4-hour RSI is now oversold as well, and any further drop would likely form bullish divergence.
If you have been looking for an entry on this pair (remember, this is the BTC pair), this would be logical place to take a shot.
LUNA/USDT
I shared this idea on Monday, which immediately was good for a 20% gain. As you can see, price dropped down to retest the previous all time high as support, front running it slightly and bouncing. That retest may still happen, but this is officially back in price discovery and should continue up, one way or another. This looks good.
Bitcoin Fixes This
One of the popular jokes in the crypto space is the catch-all phrase that “Bitcoin Fixes This.” To some Bitcoin believers, the phrase isn't a joke, but is rather an ardent belief that Bitcoin can and literally will fix everything. The phrase raises a series of questions regarding the extent to which Bitcoin can improve our lives. The logic beyond the phrase is that money is the root of all problems and when you fix the money, you fix the world. I wrote a blog going deeper into this idea, along with exploring an even more relevant question: is this technology ready to fix our current broken tech systems and money? As grand as our space is hyped up to be, there are still a number of legitimate concerns.
Canada Launches Ethereum ETF
Canada has continued to push the pace on crypto products. They now have their own Ethereum based ETF, which offers a monthly yield for holding shares. Purpose Investments, the company behind the approved ETFs, said that “it can’t guarantee the payout amount due to volatility, but expects an annual yield of between eight and ten percent for both the Bitcoin and Ethereum ETFs.” I think Canada’s progress is a good indicator for what will eventually come to the U.S.
Canada Approves Bitcoin Spot ETF
Canada is, once again, two steps ahead. There is no doubt in my mind U.S. regulators will be watching the performance of this ETF. Sooner or later, they will feel the FOMO, but it could take years to clear the red tape.
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
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
Mining for everyone! You can buy an ASIC and have it set up at a destination of your choice by them, and you only pay the electricity cost. Absolutely awesome.
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.
Subscribe to my YouTube channel for free daily content.
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.