The Wolf Den #437 - Is Crypto As Toxic As We Think?
Analyzing Ethereum Holder Adoption - 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.
Analyzing Ethereum Holder Adoption
Regardless of the recent cool down in network activity on the Ethereum network, the adoption has continued to grow dramatically.
On a long-term time horizon, the total number of addresses with a balance is indicative of the interest in holding and investing in a given crypto-asset. In general, an increase in the number of addresses with a balance is positive as it signals a more robust and growing user base.
While the total number of addresses with a balance does not exactly match the number of holders, it offers a valuable approximation to the amount of people holding a crypto-asset.
IntoTheBlock’s Ethereum network indicators
As we take a closer look at Ethereum, there are some interesting conclusions that we can derive from the chart above.
Even as L1 and L2 competitors are in fierce competition for market share, just in 2021, with the explosion of DeFi and NFTs, Ethereum added a total of 18.36 million new holders.
By breaking down the 2021 growth, it works out to an impressive growth rate of 1.53 million new addresses holding ETH per month.
But that growth not only happened in 2021, as, in the previous year, the network also added 15.93 million addresses with a balance, growing by 48%.
What’s important here is that the number of holders in the network is not showing a direct correlation with the price, unlike other indicators like Daily Active Addresses or Active Addresses Ratio, in which new users tend to follow the price action of ETH.
While the overall network activity is down from the recent highs, the number of holders continues to grow, while long term holders continue to add to their positions.
Bitcoin Thoughts And Analysis
Nothing has changed on the Bitcoin chart since yesterday. I am struggling to find something different to show you!
WEEKLY CHART
Operation Invalidate Gravestone Doji is underway on the weekly. Last week's candle was ugly, but requires confirmation in the form of another down candle this week, something that we do not have at the moment. Bulls have continued to push thus far, trying to fill last week's upwick.
It is only Wednesday, so too early to discern much.
DAILY CHART
The Bollinger Bands have taken a turn in the right direction, with both bands and the centerline moving up. The centerline would be the next key support on this indicator if price drop, which is in the low 41Ks at the moment and moving up with each passing day. This looks bullish for the moment.
MACD remains bullish and looks ready to head to the top. The bullish divergence with this indicator and RSI was a great bottom signal, and there's no reason this won't continue up. This looks bullish as well.
Altcoin Charts
AVAX/USDT
AVAX has already made a significant move off of the recent lows and is one of the more bullish assets in crypto. I often talk about having exposure to the various L1s, this being one of the leaders that I want to own long term.
If you are trading it rather than investing, then the blue line and $97.26 are key levels to watch. A flip of both of these to support should send AVAX on the journey back to the all time high.
This can only happen if Bitcoin has bottomed and is heading up, but this should outperform if that is the case.
This Major Oil Company Is Profiting From Bitcoin
ConocoPhillips, the largest E&P company, known for its hydrocarbon exploration and production is now reportedly selling excess gas to Bitcoin miners in the Bakken. The Bakken is an oil abundant region in the U.S. that is now indirectly involved in Bitcoin mining. It’s long been said that the cross-section of oil and gas with Bitcoin mining would lead to revolutionary green success in the oil industry and that’s exactly what we are seeing here. The best part of this story is that the excess flare gas being sold to miners is phasing out ConocoPhillip's harmful release of waste into the environment - which they intend to end by the end of the decade. This story is a win-win for mainstream adoption and the environment.
White Hat Hacker Strengthens Ethereum Network
$2M has been awarded as a bounty to the popular white-hat hacker “Saurik” who discovered the bug in the Ethereum protocol. If the vulnerability was left undiscovered, it could have led to catastrophe. “An attacker could have withdrawn virtually unlimited amount of ETH from the Optimism rollup solution.”
Some might say this is a reason not to invest in crypto, but I prefer to believe that this story proves that good actors exist in the community. Furthermore, Ethereum 2.0 developers are dotting their I’s and crossing their T’s to ensure that bugs are found before it is too late. It’s much better to have extensive testing and bounties than to rush to release an unfinished product.
Bybit Sponsors Red Bull Racing
The partnership fee will be settled with a combination of fiat and crypto.
Another crypto exchange has entered the sporting world, this time in the form of a $50M a year sponsorship of Formula 1. Bybit signed on as Red Bull Racing's sponsor for the next 3 years, a deal that will paid out in a combination of fiat and crypto.
One more step towards mainstream awareness.
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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.