The Wolf Den #407 - Are Your Biases Holding You Back?
Addresses Using USDT Have Doubled - 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.
Addresses Using USDT Have Doubled
Any investor engaging with cryptocurrencies likely needs to use stablecoins at some point. Whether they are moving money along the blockchain or buying and selling cryptocurrencies, stablecoins have become an essential part of the ecosystem. USDT is still the most popular pair on centralized exchanges, where the majority of trading volume happens.
Institutions often need to move capital between these centralized exchanges and their custodial wallets. The number of addresses that are using USDT is a phenomenal indicator to measure that activity.
As of January 5 using IntoTheBlock USDT Addresses Indicators.
As can be seen in the chart above, the number of addresses interacting with USDT increased from 1.99m on January 1st of 2021 to the peak of 3.9m experienced yesterday.
For the time being, the volume traded on DeFi is at least 10 times lower than on centralized exchanges. USDT is the leading stablecoin on these centralized exchanges. Other stablecoins such as DAI or USDC have seen considerable growth as well, largely because of an increase in usage of DAI and USDC on DeFi protocols.
Derivatives market remains cautiously bullish
For the uninitiated, perpetual swaps are a crypto-native derivative that acts like a futures contract without an expiration. In order to keep the contract’s price pegged to spot prices, they introduced the funding rate. If prices are at a premium, exchanges charge long holders to pay out fees to those going short and vice versa.
As perpetual swaps have outpaced spot volumes, the funding rate has become a predominant metric in crypto markets. It provides valuable information on the market’s positioning. As prices were flying high in November, funding rates were strongly positive as bullish expectations in price meant long traders did not mind being charged funding fees.
As of January 5, 2022 through ITB’s Bitcoin derivatives indicators
As Bitcoin ranges around $47,000, the market has become more confident in the up-trend, thus pushing funding rates further along. For the first time in 2022, the funding rates indicate that new longs are being opened, yet with caution as the market is still to mark a clear path ahead for the coming weeks.
Bitcoin Thoughts And Analysis
Bitcoin continues to drive people crazy as it chops sideways. Yesterday saw a small move up and people on twitter were celebrating like they had won the Olympics... right into resistance. There is nothing happening.
DAILY CHART
The macro range for Bitcoin is 42K - 53K or so, but we also have price trading in the tighter range between the blue lines above. As you can see, price almost tested support at the bottom of this range. Worth watching if it holds. Assuming it does, price should head back to the top and continue to chop sideways in this zone. 200 MA is a key resistance for the moment.
6-HOUR CHART
We once again have confirmed bullish divergence on the 6 hour chart (and 12 hour, with daily chart potential). We had a bull div, then a hidden bear div that canceled it. Now we are back to a bull div, so price should head up here, at least for a bit. Of course, hidden bearish divergence is likely once again if this does not make a significant move to the upside, so mostly we have indecision and back and forth. We need to see price above the recent highs. Still, I would be surprised if we go down much further here in the short term.
Altcoin Charts
ATOM/USD
There has seemingly been a rotation of interest from early Layer 1 movers to a second group, namely ATOM, NEAR, ONE etc. I have been talking about this a bit on livestreams as it has developed.
ATOM was just rejected at resistance, the previous all time high of $44.80. This coin has already had a huge move, so I do not view it as a buy right here. It is at resistance. What I will be looking for is a flip of that level to support and then a move into price discovery. We have seen a number of coins make massive gains after breaking all time highs, although this is no sure thing. Either way, that is an easy trade - a break of $44.80 and retest as support if it happens. It's easy to take a small loss if support fails.
NEXO Is Bullish on Bitcoin
Nexo co-founder Antoni Trenhcev injects some optimism for a Bitcoin Bull run in 2022.
One of the reasons our community is so strong is because most believers are forged in fire. Nexo is the perfect example of a company that was born out of dust and doubt, in the heart of the last bear market. Nexo's co-founder, Antoni Trenchev, echoed this sentiment in a recent interview.
"Every time that investors and the broader community write off Bitcoin, it outperforms significantly. This has been the case in 2020 when it rallied close to 1,000% and in 2021 where it rallied 63%. I’m quite bullish on Bitcoin."
Antoni believes that Bitcoin will hit 100K this year, a sentiment that many of us share. I find It quite entertaining that 100K is now a "bullish prediction" for 2022, when many believed that it would happen by the end of 2021. People's biases and predictions change with the wind, but what matters is that price will likely rise with time.
OpenSea Valued at $13.3B
The ubiquitous NFT site was valued at a mere $1.5 billion last July.
OpenSea raised 300M, giving the company a value of $13.3B - after "only" being valued at $1.5B 6 months ago. This is the best data we have to show just how much interest in NFTs has grown this year. The train has left the station.
Will The North American Bitcoin Conference Spark A Bull Run?
We all know that the market needs a kick in the rear end and, historically, large conference have been a catalyst for price appreciation. Remember the "Consensus pump" every year in May?
The North American Bitcoin Conference is in two weeks in Miami, and many are predicting big news coming out of South Florida. Bitcoin doesn't need narratives or news to grow, but it certainly can help. The news cycle has been dry as you know. The conference takes place in Miami in just a couple of weeks. I was actually scheduled to speak on an incredible panel, but had to cancel last minute. I look forward to following along virtually.
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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.