What is the general sentiment for Crypto?
This week the sentiment towards the cryptocurrency markets is still in the “extreme fear” zone. But compared to last week the index has shown significant improvement and currently stands at “14”.
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.
Compared to preious week’s aSOPR, the metric has improved and currently stands at 0.97. Even though the metric has improved, it is still below 1 indicating that Bitcoins are still being sold at loss.
Is there any demand for Crypto?
After slight drop in the number of addresses from the highs in May, the rally has continued and number of addresses with non-zero balance is at all-time high. Even though addresses with balance > 1 are increasing, no significant improvement can be seen for addresses with balance > 100. For trend to reverse, strong hands need to start accumulating more Bitcoin.
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.
The current realized price is below the market price and MVRV ratio has risen to 0.94 compared to last week’s value at 0.84. The improvement in the MVRV ratio can be attributed to slight gain in market price.
Historically during bear markets, we have observed that the market bottom occurs after miners’ capitulation. One of the important metrics to measure this is Puell Multiple. It captures the aggregate profitability of Bitcoin mining industry. Puell Multiple is calculated by dividing miner’s current income (USD) to the annual average income.
- Puell Multiple > 4: Profitability is high which increases miner’s incentive to sell
- Puell Multiple < 0.5: High income stress which can lead to capitulation
The metric has recovered from 0.35 last week’s level to 0.4. In most of the bear market, miner’s capitulation can be identified when the metric falls below 0.4. From the current scenario, we can say that miner’s capitulation has happened last week.
Overall Market Performance
Dow Jones Industrial Average had a positive week, surging over 5% . The hourly chart for Dow Jones has formed a descending channel pattern. The next support is expected at 28,900.
Gold Futures stayed fairly neutral in the past week, closing in red. The 4-hourly trend for Gold is traversing within a triangle pattern. The next resistance for Gold Futures is expected at $2,000 and immediate support is expected at $1,800.
Bitcoin recovered back marginally during the last week, gaining nearly 4% after that the horrid crash in the week prior. The daily trend for BTC is moving within a descending channel pattern. The next support is expected at $14,000.
Ethereum against BTC gained close to 5% during the last week. The monthly trend for ETH-BTC has formed an ascending triangle pattern. The next resistance is expected at 0.076 and an immediate support is expected at 0.046
Highlights of the week
Goldman Sachs is leading Investor group in seeking $2 billion in commitments to buy Celsius assets at steep discounts incase the crypto lender goes bankrupt. The assets having to be sold cheaply, would then likely be managed by participants in the fundraising push.
Cryptocurrency exchange, Binance recently announced the launch of Binance Institutional, an advanced platform for institutional investors to trade Digital assets.
Harmony protocol said that it identified a theft occurring on the Horizon bridge amounting to about $100Mn. They have begun working with national authorities and forensic specialists to identify the culprit and retrieve the stolen funds.
Decentraland (MANA) We expect a gain of 10% from the Buy Price of 1.006 USDT and outperform BTC in the coming week.
Our Pick of the Week
We expect a gain of 10% from the Buy Price of 1.006 USDT and outperform BTC in the coming week.