The Wolf Den #438 - Avoid Revenge Trading
Bitcoin Analysis - 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.
Bitcoin Analysis
Bitcoin has been holding above $43,000. Although multiple technical indicators suggest a potential breakout, the macro environment continues to bring uncertainty in the market.
While it is anybody’s guess what ends up happening with Fed policy and the Ukraine conflict, on-chain data can help us identify key price levels of buying and selling activity in the short-term.
Using IntoTheBlock’s IOMAP indicator, we can identify clusters of addresses concentrated around areas of high buying activity.
Using IntoTheBlock’s Bitcoin In/Out of the Money Around Price
By analyzing the graph above we identify that Bitcoin is facing stiff resistance ahead. The first key level to keep an eye on, as demonstrated by the high amount of buying activity, would be around $44k, where 1.22 million addresses previously bought 655k BTC. If Bitcoin clears that level a move to $47k is likely.
On the other hand, some support can be expected at $42.5k, where 607k BTC was acquired by 1.48m addresses. If this level fails to hold, Bitcoin should revisit the $38k lows.
Momentum is still on the bearish side, though, with 50% as many Bitcoin holdings near current price being held by addresses losing money on their positions
However, even as the macro environment is risky, we spotted a continued trend of outflows from exchanges, which has been increasing consistently over the last 3 weeks at an incredible pace.
Using IntoTheBlock’s Bitcoin On-chain Flows
Possible supply shock: IntoTheBlock’s Netflows indicator reveals an increasing trend of outflows as shown in the graph above.
More than 80,000 BTC has left centralized exchanges in 2022
On January 29th, we spotted the largest outflow since April 18, 2021, marking the recent bottom.
Remember that exchanges outflows mean that users are removing their funds from centralized exchanges to most likely cold storage wallets, decreasing the available supply for buying.
I will not be sharing my own Bitcoin charts today, as nothing has changed!
Altcoin Charts
ATOM/USDT
Quick update on this setup from earlier in the week, shown this time on the 4-hour chart rather than the daily.
As you can see, we have a clean breakout through descending blue resistance on a major spike in volume. This trade is now active. Black lines are targets and resistance, depending how you decide to play it.
Censorship Resistance Matters
One of the core tenets of sound money is censorship resistance. This attribute is often forgotten when comparing currencies, because physical tender like gold and cash appear to earn an A+ in this category. That is a false assumption.
There are a few times in history that gold has been confiscated, but generally speaking, owning gold and cash is safe. This changes when they are turned digital or transferred on a centralized platform. This is on currently on display in Canada, where the government is easily blocking funds being sent to certain people.
Who would have thought that Canada would be the country to remind us why censorship resistance is important?
Thanks to the blockchain, Bitcoin and other currencies outperform physical assets in the censorship resistance category. Yes, the government can crack down on intermediaries, payment providers, and financial bridges, but it is very difficult for them to take your private keys or stop you from sending someone coins directly. They are easier to hide, more complicated to input, can require multiple signatures, and provide secret memorized words. Yes, physical gold and cash are pretty safe, but nothing can beat the censorship resistance of Bitcoin.
Colorado Becomes More Crypto Friendly
Colorado was the first state to use blockchain technology in government infrastructure. Years after taking this first step, the state has announced that citizens can use cryptocurrencies to pay state taxes and for other transactions, a policy which will be in effect by the end of the summer. As of now, the state has no plans to hold cryptocurrency and plans to convert the incoming digital assets into dollars. Keep in mind though, as sweet as the deal sounds, investors will still have to pay income taxes on the transactions, because each time they pay a bill with their crypto it will be a taxable sale of that asset. Until the government allows citizens to interact with crypto in the same way they do cash, many people will avoid using it for payments.
This is still a big step.
Twitter Enables Ethereum Tipping
Twitter users can now use both Bitcoin and Ethereum to tip their favorite content creators directly on the platform. I do not believe that this feature has gained traction in the past, but perhaps it is still early. Either way, it's always cool to see Ethereum receive the same attention as Bitcoin, especially on a platform that was notoriously focused on a single asset.
The Wolf Of All Streets Podcast Ft. Michael Caras
Michael Caras is an ordained Rabbi that is both a Torah and Bitcoin maximalist. His unique perspective on moral money has led him down the Bitcoin rabbit hole, earning him the nickname “The Bitcoin Rabbi.” Not only does Michael make the case for Bitcoin, but he also leads by example. He wrote a brilliant children’s book about Bitcoin that has been widely dispersed and embraced, and he teaches others how Bitcoin can better their lives and communities.
In this episode with the Bitcoin Rabbi, we discussed:
Bitcoin Rabbi’s Bitcoin Journey
What Is Moral Money?
Why Write A Bitcoin Book?
A Financial Awakening Is Here
Boomer Rejection
Bitcoin And Judaism
Bitcoin On A Synagogues Balance Sheet
Is Bitcoin A Religion?
Bitcoin As A Global Reserve Currency
The Best Bitcoin Use Case
This episode is sponsored by: ARCULUS and BULLISH.
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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.