The Wolf Den #459 - Control Your Money, Control Your Destiny
Analyzing The Bitcoin Mining Industry - 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 The Bitcoin Mining Industry
Crypto markets have experienced highly volatile months, even by crypto’s standards. And the recent series of events have impacted the mining industry in a negative way.
Miner Reserves track the balance of addresses belonging to mining pools. Bitcoin miners appear to have been selling and decreasing the amount of Bitcoin in their addresses, which has dropped considerably from the beginning of 2022.
IntoTheBlock’s Bitcoin mining metrics
10-year low - The crypto dynamics are changing, and miners are having a smaller role in it, which has directly correlated to their holdings.
The amount of BTC held by miners has reached the lowest level since early 2010.
Miners' total amount sits at 1.95m BTC
Even if they are selling, their share of the Bitcoin daily volume is less than 1%
So the miner's reserves are decreasing sharply and one of the main reasons is the remarkable recovery of the Bitcoin Hash Rate. Since the great mining migration happened, Bitcoin’s hash rate has soared over the past few years, currently setting new highs at the 200m TH/s level.
IntoTheBlock’s Bitcoin mining metrics
Less profitability for Bitcoin miners - As the hash rate increases, the competition for mining does as well, making the industry less profitable for the existing miners.
As the number of miners increases and the price of Bitcoin has been on a consistent downward trend since November of 2021.
In just 9 months, Bitcoin Hash Rate was able to recover from the China ban and soar towards new highs.
Despite miner reserves having significantly dropped throughout the years, they are not creating a significant selling pressure that could negatively affect the price. Miners have faded into irrelevance in terms of their market impact.
Bitcoin Thoughts And Analysis
Bitcoin remains choppy, ranging sideways seemingly endlessly as we have been expecting for months. There's very little meaningful price action, and most moves in either direction are retraced quickly and aggressively. I am not looking to trade this at all. As always, continue to invest and dollar cost average, no reason to even look at a chart for the long term.
WEEKLY CHART
Take a quick gander at the two blue boxes and tell me what you see.
Let me help. When price crashed last summer, we saw consistent demand almost every week, with bulls buying up every dip on the weekly chart. This is indicated by the long wicks down on most of the candle. Wicks down indicate strong demand.
At the moment, we are seeing large upwicks, indicating the opposite. Every candle that pushes up is met with stiff resistance and selling.
The current candle has a chance to buck this trend - the higher we close on Sunday the better. That said, we have seen some rough weekends, and there is an equal possibility that price drops and created yet another ridiculous candle.
This weekly candle close will give us quite a bit more info.
The key levels remains the same. At the moment, we want to at least close above $39.6K, with a close above $42K being even better. Baby steps to Valhalla, eventually.
Altcoin Charts
I am still exercising extreme caution with altcoins and will NOT BE TRADING anything that I am posting. These are merely examples to illustrate how I look at charts for you to use to formulate your own system and views. I love charting, it is a valuable and enjoyable exercise for me that I want to share. But you should NEVER feel compelled to buy something because I have shared the chart.
BNB/USDT
BNB is in an interesting spot, pressing against both descending blue resistance and the daily 50 MA.
Bulls want to see a break of both of these lines on increased volume. A move that happens without volume confirmation in general is likely to be a fake out. Remember, volume confirms price action. Key levels are marked.
If we can see some meaningful movement up on large caps, it could signal at least a brief period of altcoin action.
ETH/BTC
This is not an actionable trade, but rather general analysis to hopefully give us an idea of what is happening with altcoins. Ethereum/Bitcoin is often touted as a weathervane for the alt market, although that is far less true now than in the past.
ETH is bouncing off the blue ascending support, and attempting to recapture the weekly 50 MA as support. Last week had a beautiful doji wicking down to support, so a bullish candle close this week would be a technical sign of a reversal. As you know, weekly candles take a long time to play out, so this is hard to trade on, but could mean that we will see some alt relief across the board in the coming weeks, even if only on similar large caps.
I will be watching ETH closely.
Coinbase Sued For Selling Unregulated Securities
Coinbase is facing a class action lawsuit from 3 disgruntled customers who claim that Coinbase is selling unregulated securities. Their position is that buyers were not being warned of the risks involved in purchasing these coins - 79 of them to be exact.
The lawsuit further alleges that Coinbase is the "actual seller" of the coins and not simply the means of exchange.
This, frankly, is stupid. Three random people have decided to white knight against Coinbase in an effort to gain attention and "protect" random people who were largely unharmed. Further, they are clearly attempting to place responsibility for their own financial decisions on Coinbase, when it is obvious to anyone purchasing any asset on any exchange that there are risks involved.
This is a civil suit, so I am not sure how much of an effect the result will have, but it will still be interesting to watch.
Argentina Approves IMF Deal That Discourages Crypto
The citizens of Argentina have rapidly adopted cryptocurrencies over the past few years as a hedge against rampant inflation - 52.3% year-on-year as of February. This is largely dominated by the purchase of stablecoins, a phenomenon that I have discussed many times in the past. As much as we assume that people will buy Bitcoin to hedge against inflation, people in most parts of the world simply want access to dollars when their home currency is inflating. Stablecoins fix this. They eliminate the black market for cash and offer easy access to those in need.
This entire story reeks. The IMF is a predatory lender, structuring loans and debt deals to keep desperate nations indebted to them into perpetuity. They have pushed back aggressively against El Salvador, threatening to pull funds and future loans because of their Bitcoin adoption.
Many have posited that Argentina could be the next country to move towards crypto, so it is no surprise that the IMF has found away to stifle that progress.
"The provision, entitled “Strengthening financial resilience,” says: “To further safeguard financial stability, we are taking important steps to discourage the use of cryptocurrencies with a view to preventing money laundering, informality and disintermediation.”"
Complete BS.
Pixellated Beer For Your Avatar
Finally, the moment that we have all been waiting for... there's beer in the metaverse.
Ok, nobody has been waiting for this moment and it's beyond silly, but this is yet another example of a major brand taking advantage of metaverse hype to market their products. The good news is that Heineken is not taking themselves too seriously - they are having fun with their fans. The bad news is that the beer won't get you drunk IRL so that you can cope with the current market.
Whether you like it or not, the metaverse will be a major part of our future.
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.