What is the general sentiment for Crypto?
The sentiment towards the cryptocurrency market is in the extreme fear zone. Compared to last week’s, the Fear & Greed Index has not changed and stands at “24”.
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. Adjusted SOPR filters out transactions that are younger than 1 hour, thus, clearing out noise from the metric.
aSOPR for this week stands at 0.98 which means the coins on average are being sold at loss. Generally, we see that the metric value of 1 acts as resistance during bear market. For strong confirmation of trend reversal the metric should stay and oscillate above 1.
Has Bitcoin Reached Its Bottom?
Realized price is defined as the average cost of acquisition based on every coin moved on-chain. In all the previous bear markets we see that the price trades below the realized price which indicates on average the coins held during this period have higher cost of acquisition than the current market price. Realized prices acts as psychological supports areas during bear market.
Currently, the realized price is 21,145 USD and is down by more than 8% since it crossed below the current price in mid June 2022 which indicates coins being exchanged at these levels. Though we have seen the metric rising above the market price for a small period in August, the realized price has spent almost 3 months below the market price.
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 of 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.
Currently, the metric stands at 0.90 which means that market is holding 10% loss. In the current bear cycle, we have seen that the metric made a low of 0.83 in June and since then have been very volatile. We might see trend reversal when the metric starts oscillating above 1.
During 2020 bear market we see drastic recovery in supply in profit with a small upward movement in price. This indicates coins were being accumulated during this period and thus, decrease in cost basis or accumulation cost of all these coins.
In the current market cycle, we see 51.4% of the total supply had been in loss and the metric is showing sideways movement. This is the region of accumulation of coins where investors who have higher cost basis sell their coins leading to the decrease in realised price of overall market leading to the fall in the metric with a small increase in price.
Overall Market Performance
Dow Jones Industrial Average gained by 1% in the previous week. The weekly trend for Dow Jones has been traversing within a descending channel pattern and as expected, bounced off from the lower trendline. We could expect the momentum to continue in the coming days.
Gold Futures dropped by 3.5% in the last week. The daily trend for Gold has formed a descending triangle pattern. The next support is expected at $1,620
Bitcoin remained fairly neutral during the previous week, closing 1% lower. The weekly trend for BTC is on a double bottom formation path. The next resistance is expected at $32.3K and key support is expected at $17.9K
Ethereum also remained fairly flat against Bitcoin, in the week gone by. The monthly trend for ETH-BTC is moving within an ascending triangle pattern, on the verge of a breakout. The next resistance is expected at 0.088 and next support is expected at 0.066.
Highlights of the week
Ether was burned verifying transactions than was created in the same period, which led to a reduction of 0.13% in supply over the last week. The rate of new ether creation has fallen by nearly 90% since the Merge.
Google’s Cloud Next has announced that it will receive crypto payment via an integration with crypto exchange Coinbase and initially it will rollout for few users.
Singapore’s central bank, the Monetary Authority of Singapore (MAS), has granted Coinbase in-principal approval for a DPT license to operate in Singapore.
Our Pick of the Week
We expect a gain of 10% from the Buy Price of 0.735 USDT and outperform BTC in the coming week.