This week the sentiment towards the cryptocurrency markets improved significantly
compared to last week’s index. The index currently stands at “24”, nearly out of the
“Extreme Fear” zone.
Another data to evaluate the sentiment of the general public would be to look at Spent
Output Profit Ratio (SOPR). What is SOPR? In laymen terms, it indicates if people have
sold at a profit or if they sold at a loss. An SOPR value above 1 indicates that profit
booking dominated loss booking and below 1 indicates that loss booking dominated
profit booking. A value of 1 indicates that the coins were sold at their purchase price.
The Adjusted SOPR filters out transactions that are younger than 1 hour, thus,
clearing out noise from the metric.
The aSOPR for this week stands at 0.98. During bear markets we have previously seen
that the metric oscillates below 1. As the aSOPR reaches a value of 1, investors start
selling their coins and the metric falls below 1. The oscillation continues for an
extended period of time before final capitulation happens and trend reverses
Is there any demand for Crypto?
The balance on exchanges has reduced significantly and is at the same level as it was
in July of 2018. Due to the decrease in prices of cryptocurrencies, exchanges are facing
a liquidity crunch. In the past few weeks, there had been instances of some exchanges
suspending withdrawals. This has created panic among investors and consequently
has led them to transfer coins to their wallets.
Even though the number of addresses with balance more than 10 is not at an all time
high, the upward trend suggests, that the metric is improving.
What could play out?
MVRV ratio is equal to the market capital divided by realized capital of Bitcoin. Realized
capital unlike market capital does not use the current market price, but rather uses the
prices each Bitcoin when they last moved.
So, for example if the price of most of the Bitcoin when they last moved was $10,000
and the current price is $60,000. Then the MVRV ratio would stand at 6. This means
that the market is extremely heated and profit booking is likely. On the other hand, if
the of most of the Bitcoin when they last moved was near the market price, then the
CMP can be considered as the bottom.
MVRV ratio has increased to 0.98 compared to last week’s value at 0.86. The metric is
oscillating below 1 which is the general trend in most of the bear cycles.
Overall Market Performance
Dow Jones Industrial Average jumped up marginally(0.77%) in the last week. The daily
chart for Dow Jones continues to move in a megaphone down pattern. The next
support is expected at 28,900.
Gold Futures dropped drastically last week, 3.3% to be precise and closing in red for
the 4th consecutive week. The weekly trend for Gold broke out below the triangle
pattern. An immediate support is expected at $1,670
Bitcoin gained back all of the 8% last week that it lost in the week before, edging above
$22K. The 4-hourly trend for BTC broke out of the triangle pattern and is retesting the
pattern. The next resistance is expected at $32.3K and key support is expected at $14K.
Ethereum against BTC remained neutral the last week. The weekly trend for ETH-BTC
continues to traverse within an ascending triangle pattern, trading at support levels.
The next resistance is expected at 0.076 and an immediate support is expected at 0.046
Highlights of the week
TikTok’s former executive Jason Fung has ventured into the
blockchain space with a gaming startup called Meta0.
The startup is trying to solve some of the gaps in the
blockchain games space, especially in terms of
Intel has commenced shipping Blockscale ASIC Chips to
selected Bitcoin Mining companies. The technology giant
had earlier announced the launch of its “ultra-low-voltage
energy-efficient” ASIC chip, and it has already arrived.
Vauld, a crypto lender backed by Coinbase, suspends
trading, deposits, and withdrawals, due to current “market
Our Pick of the Week
We expect a gain of 10% from the Buy Price of 0.5437 USDT and
outperform BTC in the coming week.