This week the sentiment towards the cryptocurrency markets has not improved or
deteriorated. The fear and greed index has remained at “13”.
SOPR value had broken the value of 1 and has continued its downward trend. This
indicates that Bitcoin is still being sold at a loss. This is a classic panic selling behavior
and it is being quietly sold to the accumulators. Eventually the panic sellers will run out
of BTC to sell or may calm down.
Demand for Cryptocurrency
The poor price action could be attributed to the balance on exchanges. This onchain
has risen over the past week and is almost close to its local high. This however still
represents a small inflow in the relatively large outflow that has occurred since the
start of the year.
The overall buying behavior however seems to be strong, as the number of addresses
with at least 1 BTC is still on the uptrend and has been hitting new all-time highs.
Although the balance on exchanges has started to rise, the buying power of the
stablecoins in the entire cryptocurrency space is also increasing.
The SSR is currently at an all-time low which in laymen’s terms indicates that
approximately 28% of all Bitcoins can be bought from the markets. We can also infer
that money waiting in the sidelines and ready to be deployed in the markets. Once this
money is deployed the buying pressure is likely to move the price towards the upside.
Is the Smart money buying?
We will consider wallet addresses with more than 1000 Bitcoins. Based on the below
chart we can clearly spot accounts with more than 1000 BTCs are increasing &
decreasing at the same pace. This data point has started to stabilize, however one of
the biggest Bitcoin Spot ETFs has just increased its holdings significantly.
What could play out ?
The 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 it last moved.
The current MVRV ratio has fallen to 1.20 and is trending towards to the downside.
This likely indicates that the Crypto Market is extremely close to the bottom.
Overall Market Performance
Dow Jones Industrial Average surged by 6.3% in the last week. The 4-hourly chart for
Dow Jones has bounced of its support level. The next resistance is expected at 35,500.
Gold Futures gained marginally over the past week. The weekly trend continues to
traverse within the triangle pattern bottom making higher lows. The next resistance
for Gold Futures is expected at $2,000.
Bitcoin closed lower for the 9th week in a row. The daily trend for BTC moving within a
descending triangle pattern. The next resistance for BTC is expected at $40,000 and an
immediate support is expected at $24,000.
Ethereum against BTC fell by nearly 9% over the week. The daily trend for ETH against
BTC has broken below the channel pattern and dropped below its previous support.
An immediate support is expected at 0.055
Highlights of the week
Gafisa, one of Brazil’s major real estate developers, has
announced it will now accept Bitcoin as payment for
apartment purchases, making it yet another publicly traded
firm to adopt the digital asset.
The Central African Republic (CAR), the world’s second country to legalize bitcoin after El Salvador, intends to build a bitcoin tax-free area to attract cryptocurrency firms and fans. There is a possibility that the Central African Republic could be a major cryptocurrency hub.
In an ‘Ask me Anything’ session, there was a question asked
to CZ ” If Binance goes bankrupt, are users’ wallets safe?”
This might be a fear for almost all the users but Binance said
that it would reimburse the users before the shareholders if
the exchange goes bankrupt.
Our Pick of the Week
We expect a gain of 10% from the Buy Price of 0.081 USDT and
outperform BTC in the coming week.