The Wolf Den #442 - Making Sense Of Bitcoin And Russia
Ethereum HODLERS Accumulating And Bitcoin Illiquid Supply - 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.
Ethereum HODLERS Accumulating
IntoTheBlock’s new ETH ownership indicators
Hodlers Accumulate 4M+ ETH in 2022 — Since the beginning of the year, the total balance belonging to hodlers has grown significantly.
In November hodlers appeared to unload 2 million ETH after it failed to reach the $5,000 level, marking the most recent top.
Then in mid-January hodlers' balances grew significantly as ETH’s price crashed to $2,200
While this does not necessarily mean this is the bottom, it does show long-term holders continue to have strong conviction in Ethereum. This mirrors Bitcoin’s historical distribution where main players with long-term horizons grow their holdings amid volatile times.
Bitcoin Illiquid Supply Reaches A 14-Month High.
We have talked about this before, but even as Bitcoin has been experiencing extreme volatility, the percentage of Bitcoin that hasn’t been moved for more than 1 year is approaching its previous record.
IntoTheBlock’s Bitcoin UTXO indicators
Diving into the numbers - The UTXO Age indicator is helpful to grasp the volume of transaction activity occurring relative to the blockchain’s historical transactions.
For the first time since late 2020, the percentage of Bitcoin circulating supply that hasn’t been moved for more than 1 year has surpassed 60%.
This has only happened two times before. Early 2016 - back when Bitcoin was in the $400 range, and Mid 2020 with Bitcoin approaching $9,000.
These periods of accumulation and longer consolidation have driven huge upside movements in the past.
While this doesn’t necessarily mean that this is happening, it does point out the stubbornness of Bitcoin long-term holders, a differentiating characteristic against other crypto-assets.
Bitcoin Thoughts And Analysis
I am still long Bitcoin from $37,100, with the first immediate area of interest being the obvious resistance around $39,600. Oversold bullish divergence was once again an easy long for a short term trade, which can hopefully be a trigger for longer term bullishness. That remains to be seen.
WEEKLY CHART
It is only Wednesday, so it's way too early to judge this candle. That said, we currently have a nice little hammer with a long down wick, showing some demand at the weekly lows. Ultimately we want to see price back above $39,600 and then $42,000 to start to feel optimistic again.
DAILY CHART
Nice bounce off of the descending blue support so far. I was watching for this on Monday, so for now it remains valid. This is just a relief bounce at the moment - we need to see key levels flipped back to support to start to get excited.
4-HOUR CHART
Beautiful bullish divergence playing out once again. Price needs to get above $39,335 to invalidate any potential hidden bearish divergence, with higher highs on RSI and a lower high on price.
Altcoin Charts
I am still hesitant to share altcoin charts. They are moving nicely today, but for now it is hard to call it anything more than a simple relief bounce. I will reevaluate after chartapalooza today, when we dig into more charts.
Tether Updates Its Reserves
In line with keeping their promise to the public regarding their reserves, Tether’s newest quarterly backing report is showing significant improvement. According to an update yesterday, “the group’s consolidated assets exceed its consolidated liabilities” and “Tether recorded a 21% decrease in its commercial paper holdings over the prior quarter.”
What this means is that Tether has more than enough investments to cover the supply. This news should put to rest lingering fears that Evergrande would tear down Tether. We have continued to see no correlation on this front and Tether is decreasing their commercial paper holding - two good signs.
30% Of The Bitcoin Supply Is In The Red
The moment Bitcoin descends from an all-time high, the percentage of holders in the red steadily begins to increase. For all of the doom and gloom that we are currently seeing, only 30% of the supply is in the red. Long-term holders are still unaffected, meaning it’s newcomers that are being hit the hardest.
Brazil Proposes Crypto Regulation
This is the first proposed legislation of it's kind in South America, and could offer some guidance to other countries looking to regulate the crypto space.
"The aim of the bill, proponents claim, will be to regulate crypto-related crime and bring the unregulated market under the gaze of financial watchdogs in an attempt to monetize and police the budding industry. The guidelines draw up exact definitions of what constitutes virtual asset service providers, such as exchanges, and what constitutes crypto."
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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.