What is the general sentiment for Crypto?
The sentiment towards the cryptocurrency market is in the fear zone and compared to last week’s, the Fear & Greed Index has not changed significantly and currently stands at “27”.
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.
Where Are We In The Bear Market?
The number of active addresses is directly proportional to the number of active users. It is important to note that the number of active addresses doesn’t give the exact number of active users as a user might have more than one address.
During a bull market, the number of active addresses increases tremendously and a sharp fall is experienced as prices begin to fall showing weaker hands leaving the market. Historically, we have seen the metric startes oscillating within a range after the fall in the bear market and increases sharply as the market prepares to move out of the bear phase. Currently, the metric is moving within a range (sideways movement).
Exchange reserve is one of the important metrics to determine the potential number of coins with a high probability of getting spent in the market.
Exchange reserve increases: Liquid supply increases, selling pressure increases
Exchange reserve decreases: Illiquid supply increases, selling pressure decreases
With more than 10% gain in the price of Bitcoin last week, we saw Exchange Reserve also increasing. The metric clearly showed the possibility of profit booking and hence, price drop (as mentioned in last week’s report). This week, after the price drop we see the fall in metric too which indicates decrease in selling pressure.
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 0.94. In the previous bear markets, we have seen that the metric falls below 1 and oscillates below 1 for few days or months which mark the bottom of the bear market. As the metric moves above 1, the trend reverses.
Stablecoin Supply Ratio (SSR) is the ratio of market cap of BTC divided by the market cap of all stablecoins.
Currently, SSR is near its bottom which means potential buying area of Bitcoins.
Overall Market Performance
Dow Jones Industrial Average dropped by over 4% in the last week. The 4-hourly trend for Dow Jones has below the channel pattern. The next immediate support is expected at 29,600 level.
Gold Futures closed in negative in the previous week. The weekly trend for Gold has also broken below the ascending channel pattern. The next support is expected at $1,532
Bitcoin plummeted by over 11% over the past week, dropping below the $20,000 levels. The daily trend for BTC is traversing within a descending channel pattern. The next resistance is expected at $32.3K and key support is expected at $17.9K
Ethereum tanked last week dropping by over 15% against. The weekly trend for ETH-BTC is moving within the descending channel pattern. The next resistance is expected at 0.088 and next support is expected at 0.063.
Highlights of the week
The Ethereum Merger happened on 15th Sept, it is an event
that aims to switch Ethereum’s network from Proof-of-Work
(PoW) to the Proof-of-Stake (PoS) algorithm. It is expected to
provide multiple benefits to developers and end users. It can
notably make it easier for developers to build dapps that are
compatible with one another.
‘Starbucks Rewards’ members will be able to earn and
purchase collectable digital stamps, then buy and sell them
in a marketplace with other members of the loyalty program.
The stamps will be non-fungible tokens (NFTs).
The Merit Circle DAO has partnered with Gameplay Galaxy,
the world’s first web3-powered, decentralized competitive
gaming ecosystem. The Merit Circle has voted on the
investment in Gameplay Galaxy as the highest investment
made by any DAO, that is $5,000,000.
Our Pick of the Week
Santos FC Fan Token (SANTOS)
We expect a gain of 10% from the Buy Price of 12 USDT and
outperform BTC in the coming week.