A bearish turn has engulfed the broader digital currency ecosystem, with Bitcoin (BTC) leading the losses among the top digital currencies.
For what was expected to be a very fruitful week, BTC journeyed into the last official trading day for the week with major sell-offs as investors ditched bullish fundamentals for quick gains.
The BTC Price chart, as seen below, spells a bearish turn across the board.
Source: CoinMarketCap
Massive Buyups Failed to Impressive Bulls
Typically, growth in on-chain transactions in the Bitcoin network is expected to ignite a positive move in the Bitcoin ecosystem. This week, a number of significant transactions have been initiated revolving around Bitcoin, including the acquisition of 4,167 units of the premier coin by MicroStrategy incorporated. The buyup is indicative of a relentless acquisition that is currently characterizing the institutional investment scene.
Besides this, another big-ticket transaction was recorded by an address that is notably recognized as the largest non-exchange whale with over 120,000 Bitcoin units. Without singling out an investor, analysts from CryptoQuant shared an observation bordering on the digital currency, which antagonizes its current performance.
“We can see a slight increase in BTC exchange reserve during 7 days, but top 69 large whales buy the dip, even today buy more than 6,000 BTC (Net),” the analysts said.
Despite the ongoing accumulation, bears have continued to gain control of the market, and the coin has slipped by more than 5.36% in the past week to $43,425.51, according to data from CoinMarketCap.
Hopes For Revival
Despite the obvious bearish price action in the face of positive transaction records, Bitcoin has relatively maintained very strong support at the $42,500 support level. Analysts are of the opinion that the current selloff is being perpetrated by retail investors, all of whose actions will still be subsumed by the ongoing whale activities.
While Bitcoin may have a concerning bearish outlook as of the time of writing, the coin has the needed push to regain its lost valuation and retest its monthly high of $48,086.84 in the mid to long term.
Bitcoin (BTC) bulls are still licking their wounds from the bloody Dec. 4 correction which saw the price collapse from $57,000 all the way to $42,000. This 26.5% downside move caused $850 million in long BTC futures contracts to be liquidated, but more importantly, it shifted the “Fear and Greed index” to its lowest level since July 21.
Bitcoin/USD price at FTX. Source: TradingView
It is somehow strange to compare both events, as the July 21 sub $30,000 low would have erased the entire gains in 2021. Meanwhile, the $42,000 low from Dec. 4 is still a 44% gain year-to-date. Compare this against the S&P 500 which is up 21% in 2021 and the WTI oil price which has accrued a 41% gain.
Bulls might be focused on the Bitcoin reserves held at exchanges, which continues to descend and currently sits at the lowest level in 3 years. According to data from CryptoQuant, there are now less than 2.27 million BTC deposited at exchanges and having fewer coins available for trading signals that investors are unwilling to sell in the short term. This is a dynamic that many investors consider to be bullish.
Even with the apparent balance between call (buy) and put (sell) options on Friday’s $1.1 billion expiry, bears are better positioned after Bitcoin stabilized slightly above $50,000.
Bitcoin options aggregate open interest for Oct. 10. Source: CoinGlass
A broader view using the call-to-put ratio shows a modest 7% advantage to Bitcoin bulls because the $555 million call (buy) instruments have a larger open interest versus the $520 million put (sell) options. However, the 1.07 indicator is deceptive because the 11.5% price drop over the past week caused most bullish bets to become worthless.
For example, if Bitcoin’s price remains below $52,000 at 8:00 am UTC on Dec. 10, only $50 million worth of those call (buy) options will be available. That effect happens because there is no value in the right to buy Bitcoin at $55,000 if it is trading below such price.
The numbers suggest that bulls are set for a major loss
Below are the three most likely scenarios based on the current price action. The number of option contracts available on Dec. 10 for bulls (call) and bear (put) instruments vary depending on the expiry BTC price. The imbalance favoring each side constitutes the theoretical profit:
Between $47,000 and $50,000: 400 calls vs. 6,600 puts. The net result is $300 million favoring the put (bear) instruments.
Between $50,000 and $54,000: 1,700 calls vs. 4,700 puts. The net result is $160 million favoring the put (bear) instruments.
Above $54,000: 2,400 calls vs. 2,900 puts. The net result favors the put (bear) options by $30 million.
This crude estimate considers the call options being used in bullish bets and the put options that are exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.
For instance, a trader could have sold a call option, effectively gaining a negative exposure to Bitcoin above a specific price. But, unfortunately, there’s no easy way to estimate this effect.
Bears will do their best to hold BTC below $50,000
Bitcoin bears need a gentle push to sub-$50,000 to score a $300 million profit. On the other hand, bulls would need a 7.2% price recovery from the current $50,500 to reduce their loss by half.
Considering the $2 billion liquidation of leverage long positions on Dec. 4, bulls are likely trying to stay afloat and will be unwilling to add more risk right now. It would be unnecessarily ineffective for bullish investors to waste their efforts trying to salvage this short-term loss.
So in this instance, bears look set to maintain the upper hand in this weekly options expiry.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Bitcoin’s (BTC) ongoing price rally above $64,000 has coincided with a substantial drop in its reserves across all exchanges.
According to data provided by CryptoQuant — a South Korea-based blockchain analytics service — the amount of Bitcoin held in exchanges’ wallets dropped to as low as 2.379 million BTC earlier this week, the lowest in more than three years. Currently, the reserves are around 2.38 million BTC.
Bitcoin reserves across all exchanges. Source: CryptoQuant
CryptoQuant noted that the declining Bitcoin reserves showed the availability of fewer BTC tokens “for selling, altcoins purchasing, and margin trading.” Additionally, that also reflected traders’ intention to “hodl” the cryptocurrency.
Demand for Bitcoin grows among whales and fishes
On the other hand, the cryptocurrency’s demand appears to have been increasing across retail and institutional traders, with the number of wallets holding more than $100 and $10 million worth of BTC reaching their record high of 16.67 million and 10,510, respectively.
Bitcoin addresses with balance greater than $100 and $10 million. Source: Messari, Coin Metrics
On-chain analyst Willy Woo published a report in August 2021 that discussed Bitcoin’s “supply shock” against its rising demand, concluding that the cryptocurrency’s per-token worth should be at least $55,000.
The “conservative” target remained lower than pseudonymous analyst PlanB’s $135,000 price projection by the end of 2021, based on his stock-to-flow model.
$63K✅ https://t.co/tj6SSwSzKR
— PlanB (@100trillionUSD) October 19, 2021
Meanwhile, PlanB’s Bitcoin price prediction for November 2021 sits around $98,000, above $70,000, the most preferred strike target for the options expiring on Nov. 26, as shown in the chart below.
BTC options OI by strike price (expiry Nov. 26, 2021). Source: Bybt
BTC price macro fundamentals
Bitcoin’s bullish on-chain fundamentals are likely to see further strength from Wall Street adoption.
On Tuesday, ProShares became the first exchange-traded product firm to launch a Bitcoin futures-based exchange-traded fund (ETF) on the New York Stock Exchange. In a milestone for Bitcoin investing opportunities, the listing opened a new road for institutional investors to gain exposure to BTC.
For instance, Fundstrat Global Advisors co-founder Tom Lee said he anticipated Bitcoin ETFs to attract at least $50 billion in the coming 12 months, reasserting his team’s year-end $100,000 price target for BTC.
Technically, Bitcoin appeared to be heading toward its record high near $65,000, now acting as a resistance level.
On the flip side, Bitcoin’s relative strength index (RSI), a momentum indicator that analyzes an asset’s overbought/oversold signals, reported the cryptocurrency price as excessively high on the daily candle chart, suggesting that a pullback is on the table.
Related: Bitcoin sees its highest ever daily close as BTC/Euro pair hits all-time highs
Should a correction happen, Bitcoin’s next support target could be near $57,500, which serves as the 78.6% Fib level of the Fibonacci retracement graph, drawn between the $65,000 swing high and the $30,000 swing low.
The level also coincides with Bitcoin’s 20-day exponential moving average (the green wave in the chart above). The said level has earlier acted as strong support during Bitcoin’s uptrend.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
A top executive at CryptoQuant says that he’s bullish on Bitcoin (BTC) despite the leading crypto’s rough week.
Chief executive officer Ki Young Ju of the on-chain analysis firm says that a few of Bitcoin’s fundamental metrics are showing signs of rising after a week that saw the king crypto drop nearly 15% from its high of $52,774.
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Ki Young Ju tells his 245,600 Twitter followers that Bitcoin’s supply on exchanges is nearing its 2021 lows, which can be interpreted as a bullish signal as it likely decreases the risk of major sell-offs.
“BTC supply on exchanges is about to break its previous low. Hope to see another sell-side liquidity crisis on Bitcoin.”
Source: CryptoQuant
The CryptoQuant head also says crypto whales moving Bitcoin into derivative exchanges, another potentially bullish indicator.
“Whales are sending BTC to derivative exchanges from other exchanges to punt new positions or fill up margins.
If you look at the historical data, the price goes up in the long term after their accumulation. Their positions seem to be long positions.”
Source: CryptoQuant
Ki Young Ju has previously made a claim that he believes Bitcoin will skyrocket to $100,000 this year.
“No doubt it’ll hit $100,000 this year, but in the short-term, if we wouldn’t see any significant buying pressure from Coinbase Pro, I think BTC would be bearish.”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
As Bitcoin (BTC) continues sideways inside the $30,000-$40,000 range, new data is emerging about the potential for a bullish breakout.
Is Bitcoin silently readying for a breakout like in Q4 2020?
Willy Woo, an on-chain analyst, anticipates a potential supply shock in the Bitcoin market as long-term holders continued raking BTC supply from short-term ones. Woo stated in his July 2 newsletter that the process might push more Bitcoin out of circulation.
The analyst referred to the ratio of Bitcoin held by strong hands versus weak hands — also known as Bitcoin Supply Ratio — noting that the former is actively absorbing selling pressure from whales that have been dumping their crypto holdings since February.
BTC’s availability on exchanges is declining with respect to the supply (blue), leading to a supply shock (green). Source: Woobull
“It reminds me of the supply shock that went by unnoticed by the market in Q4 2020,” wrote Woo. “Pundits were debating whether BTC was an inflation hedge in a post-COVID world when the data was pointing to long term investors stacking BTC at a fast pace.”
The price subsequently went on a tear, very quickly de-coupling from its tight correlation with stocks.
New active users rising
Glassnode, another on-chain data analytics service, also boosted Bitcoin’s booming adoption prospects. The portal revealed that the Bitcoin network has been onboarding an average of 32,000 new users every day, which is a new high of 2021.
The Bitcoin Network User Growth metric last topped in January 2018, hitting approximately 40K before correcting lower alongside the prices. It showed that new users stopped coming to the Bitcoin network as its price crashed from $20,000-top in January 2018 to as low as $3,200 in December 2020.
“This is not the structure we are experiencing right now,” explained Woo. “New users are taking this opportunity to buy the dip; they’re coming in at the highest rate seen in 2021.”
Again, another example of on-chain data showing divergence to the price action.
Bitcoin is currently stuck below $34,000 at publishing time, up 17.52% from its previous bottom level of $28,800 on June 22.
Meanwhile, Petr Kozyakov, co-founder and CEO of crypto-enabled payment network Mercuryo, believes that Ethereum may steal the limelight from Bitcoin in the near term as the London hardfork approaches.
“The proposed launch of the London Hard Fork upgrade and the ultimate migration to Ethereum 2.0 is helping to renew investors’ confidence,” he added. “Once the hype settles, Bitcoin could move up to $50,000 in the short-to-medium term perspective.”
Bitcoin withdrawal transactions hit one-year high
Data analytics firm CryptoQuant reported earlier Tuesday that Bitcoin’s net outflow transaction count from spot exchanges crossed the 60,000-mark for the first time in a year. Meanwhile, the total number of Bitcoin deposits to spot exchanges’ wallets decreased to below 20,000.
Bitcoin spot exchange inflow and outflow transaction count. Source: CryptoQuant
The BTC withdrawal rate jumped in the period that also saw regulators increasing their scrutiny over cryptocurrency trading platforms. For instance, the U.K. Financial Conduct Authority (FCA) banned Binance—the world’s largest cryptocurrency exchange by volumes—from operating regulated activity in the country “without the prior written consent.”
On Monday, Barclays notified its clients that they could no longer transfer funds to Binance, citing the FCA’s order. However, the London-based bank said clients could withdraw funds from Binance to their banking accounts.
Earlier on Tuesday, the People’s Bank of China also took action against a local company for allegedly trading cryptocurrencies on the sideways of their regular business activities. Beijing had effectively prohibited all kinds of cryptocurrency-related activities in May, effectively forcing the world’s largest crypto mining community in its regions to either shut down or move their operations abroad.
Generally, a run-up in Bitcoin withdrawal rates is seen as traders’ intention to hold the cryptocurrency instead of trading it for other assets, including rival cryptos and fiat money. Therefore, with overall BTC withdrawals hitting a one-year high, expectations remain higher than Bitcoin is preparing for another upside run on the so-called “hodling” sentiment.
Nope. Looks like retail is back and #HODLing!
— Johan Kirsten (@JohanKirsten1) July 6, 2021
But the total Bitcoin reserves held by exchanges have remained relatively stable since May, indicating that the latest spike in withdrawals has had little impact on the overall exchange balance as of July 7.
BTC balance on exchanges. Source: Bybt.com
It’s worth noting that exchanges’ BTC balances can differ greatly based on their geographical dominance.
For instance, trading platforms having association with China and Chinese traders reported declines in their Bitcoin balances. They include Binance, whose BTC reserves dropped by 7,214.97 units in the last week, and Huobi, which processed withdrawals of 4,398.63 BTC in the same timeframe. OKEx BTC balances dropped by a mere 1,357.53 BTC.
However, US-based Kraken added 6,751.98 BTC to its vaults, the highest among the non-Chinese exchanges, in the previous seven days while Coinbase reserves increased by 168.88 BTC.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
On March 29, 2021, cryptocurrency statistics tracker CryptoQuant,.comtweetedthat the total number of stablecoins held by exchanges’ wallets has reached the 10 billion mark.
Planning For the Future
According to CryptoQuant, the new All-Time High record comes a few weeks after it had hit 8B, stating a significant rise at the start of the financial year 2021. At press time, the price of BTC/USD is lingering in between the $55K mark and $58K mark as we head into the 13th week of 2021.
The data provided by CryptoQuantshowssigns that the market could be bearish as stablecoin investors continue to buy in on the fiat-backed cryptocurrencies. Over the weekend, there was a 500M $USDC deposit to Coinbase, which is one of the most significant inflows into an exchange this year. It could signify that institutions invest in stablecoins and encourage many other merchants to jump into the crypto-investment bandwagon.
According to one crypto enthusiast, the value of cryptocurrencies like BTC will be accelerating downwards as the year goes by. Due to theincreasein the number of stablecoins held within exchanges, it seems traders are running towards fiat-backed cryptocurrencies to save themselves for the allegedly‘incoming’crypto winter.
Safety or Paranoia
Bullish investors are hopeful that BTC will hit 100K this year, while bearish backers advise crypto holders to strike when the iron is still hot and sell. DJ and cryptocurrency lover Scott Melker has been urging his Twitter followers to scour the market and add BTC to their portfolio. Melker tweeted that retail investors have the opportunity to earn big with the world’s most famous crypto.
Unchained podcast Laura Shin said that she is notexperiencingFOMO after being severely criticized for not being a BTC holder. She added that she considers herself rich in many things that people do not have, but those exclude bitcoin, disputing the words ‘have fun staying poor.’
Crypto analysts arehopefulthat the effects of the global pandemic COVID-19 and cryptocurrencies’ high demand will make the crypto’s valuations go high as the year continues. COVID-19 has forced the hand of many governments to print more money, encouraging inflation. As such, many traders are likely to invest in cryptocurrency to earn money during these challenging times.
Market Probabilities
According to market analyst John Dough, buying BTC is not spending money, but instead, it saves it. The analyst shared information on how to go about the cryptocurrency market in atweet,specifying the period to be bullish. He believes the BTC price trend will continue rising and may as well have influenced a couple of people to buy the crypto.
Crypto fanatics such as Elon Musk have been continuously urging people to dig deep into their pockets to buy cryptocurrencies. The influence has spread to payment services, too, as Visa plans to start accepting payments in $USDC on their network this week.
Despite surging prices, Bitcoin investors are rapidly locking up their BTC for the long-term, with 270,000 BTC being taken out of liquid supply in the last 30 days.
According to data published by crypto market data aggregator Glassnode, “liquid” Bitcoin wallets have shed 270,000 BTC over the past month, up from 175,000 Bitcoin at the start of January.
The data shows that Bitcoin’s (BTC) liquid supply has consistently fallen over the last nine months, with liquid supply currently sitting at 21.3% and showing no signs of reversing.
Bitcoin’s increasingly illiquid supply could be bullish for its price, with new retail and institutional traders vying for an increasingly diminishing supply. Glassnode estimates that nearly 80% of the 18.6 million circulating Bitcoin are currently stored in “illiquid” wallets.
According to Glassnode, a Bitcoin wallet is considered illiquid if less than 25% of the Bitcoin received has been transferred out across the entity’s life. In contrast, to be deemed highly liquid, the majority of Bitcoin must be transferred back into circulation, with less than 25% of the inflows held onto.
Bitcoin liquidity supply. Source:Glassnode
Of the 3.9 million BTC Glassnode describes as being highly liquid, 61% or 2.38 million is held by centralized exchanges. Their balances have also been dropping, with data from analytics firm CryptoQuant indicating exchanges’ reserves have shrunk by 13.8% since July.
Increasing institutional investment may be a significant force driving the depletion of Bitcoin’s liquid supply, with wallet tracking service Bitcoin Treasuries currently estimates that 33 institutional entities have accumulated more than 1.2 million BTC or 6.5% of Bitcoin’s circulating supply.
In the last few days, Grayscale has increased its holdings by approximately 25,000 BTC with a portfolio of 641,523.7 BTC as of January 20, 2021. To put this in perspective, approximately 900 Bitcoin are minted each day. According to Glassnode, however, on average only one-third of those are actually being sent to exchanges since July 2020.
Data from Investment firm SwissBorg shows that in the second half of 2020, institutional investors purchased on average more than 230% of the newly minted BTC. Adding in the purchases from PayPal and Square (along with the estimated amount of Bitcoin lost each day) demand could be running as high as 500% of the new supply.
Earlier today, the world’s largest asset manager BlackRock filed with the SEC, listing Bitcoin Derivatives as a possible investment. The firm entered 2021 with $7.81 trillion in assets under management, more than seven times crypto’s entire market cap.
Amid the panic and the subsequent sell-off of Jan 11, data from CryptoQuant shows that the steep draw-down of Jan 11 may not last as traders didn’t move their Bitcoin and ETH to exchanges.
On Jan 11, the crypto market lost a colossal $160 billion as Bitcoin prices plunged by over $10k, the worst since the flash crash of mid-March 2020. At the same time, ETH retraced from 2021 highs, sinking below $1k.
Bitcoin and Ethereum Reserves at Record Lows Despite Sell-off
ETH and BTC reserves, CryptoQuant shows, remain at record lows indicating that traders, instead of FUDing, are adamant, holding on to their gains irrespective of free-falling digital asset prices.
Ordinarily, the higher the number of coins flowing to centralized crypto exchanges could suggest pessimism in price and possible degradation in days ahead, especially when technical charts show prices are at an inflection point.
This lack of confidence often causes holders to move their coins to custodial exchanges, from their wallets, where they can swap their holdings for stablecoins or cash.
On the flip side, outflows from exchanges could suggest holders changing assessment of exchanges’ infrastructure, especially on matters security as it has been happening in the last few months coinciding with the rise of DeFi, or the confidence in digital asset prices.
Looking at the latest Coinbase outflow, possibly OTC deals, I think we can estimate their PNL. $BTC surged 24% since Jan 2.
If you were institutional investors, would you be satisfied with 24% PNL for Bitcoin?#Bullish pic.twitter.com/WfLIDEfsbJ
— Ki Young Ju 주기영 (@ki_young_ju) January 8, 2021
Cushioning themselves against the risk of hacks, investors often move their stash to non—custodial multi-currency cold or secure hot wallets where they have full control of their private keys.
Institutional Support Soaking Miner Liquidation
Therefore, the BTC and ETH plunge without noticeable outflow to centralized exchanges points to confidence in short-term digital asset prices and the respective platform’s prospects.
This, interestingly, comes when CryptoQuant data points to miner liquidation. In the past 12 weeks, miners have been incessant, selling their coins to cover operational expenses.
Earlier, especially in the first half of 2020, their impact was massive on the thin BTC markets.
However, with demand stemming from Grayscale, CashApp, PayPal, and family offices, all of whom are facilitators allowing high net-worth investors to get crypto exposure, their impact has been low, allowing BTC and ETH prices to trend higher with added tailwinds from project-specific developments.
As per a BTCManager report, Kain Warwick, the CEO of Synthetix, speculates that Jan 11 crash maybe because of the liquidation of over-leveraged longs.
