photo by @mattj_bowden on Unsplash. Released under Unsplash License
Yesterday, traders have experienced moments of terror with the collapse of the psychological barrier of $ 30,000, then regained this night. Currently BTC is traded between $30,500 and $31,500.
We already told you that this week would be particularly lively and in a way we were already prepared. The data poured out in the previous articles (here and here) had in a sense given us a deeper reading of the momentum of the markets. Anything that moves above that (alleged news etc.), is not of our interest.
One of the news (an old news) that would have created the conditions for the purchases was the one concerning Rothschild Investment Corp. The fund reportedly increased its exposure by 300% since April.
But let's see together what is happening. All the official channels where institutions move, including Purpose Bitcoin, show a clear trend of selling.
To tell the truth, in the unofficial channel where institutions move, i.e. the over the counter (OTC) market, there is a slight increase in capital, after an almost uninterrupted trend of exits. But it is still early to say if this is the first sign of a reversal of the trend of institutional sales.
In this week's Glassnode charts we record the same data we have seen in recent weeks, with some slight variation. For the sake of brevity I omit to include all the charts and make a simple list:
Volumes and active wallets are at all time lows, indicating little investment or trading activity.
The decline in new active wallets and addresses has not reached the highs of 2017 (53% of new traders and investors left the market) and has stabilized at -28% (i.e. almost half the 2017 figure).
In fact there is still 33% of the new generation btc bought at higher than current quotes that have not yet been sold.
This indicates both that the new traders of 2021 are less responsive than those of 2017 and know how to wait for the next bullish cycle, and that there is still "gasoline" for further declines, should these traders decide to sell.
Trading platforms continue to experience a net coin outflow, suggesting that a wave of selling by the 33% I mentioned in the previous point is currently unlikely.
Miners are clearly accumulating, even more so than the previous week, suggesting that miners not affected by the Chinese ban are having a really great time (we explained why in our previous post).
In spite of all the volatility, declines and media fanfare, the number of illiquid coins (i.e. kept in storage off the platforms) is still growing. So much so that the mass of these coins is currently much higher than it was in the bear market of 2018-2019 (the legendary crypto winter). This means that this time there is much, but much more "gasoline" for the resumption of a new distribution phase in the next bull market (this data is very important).
Basically, there is a strong selling trend from mutual funds and other institutional investors, but at the same time there are not all the other conditions that would suggest a real bear market, rather a strong correction.
Regarding the short-term price action, if bitcoin manages to consolidate above $30,800 it will build the basis for an impulse to test local resistance at 32K and above. Conversely, getting back below 30K will put further pressure on support, with the low at $29300 and the 28K area representing the next supports. There are fewer and fewer sellers willing to sell below $30,000 and the accumulation phase by big investors continues unabated.
Analysis of the aggregate leverage ratio on crypto derivatives exchanges also points to the possibility of an imminent reversal. It is likely that in a few months, those selling today at 30K will be forced to buy back at higher price levels.
From a fundamentals perspective, it is worth noting that the European Commission has submitted a proposal to block large anonymous cryptocurrency transfers in order to curb money laundering activities. If the proposal is approved, crypto service providers will have to record the personal data of the sender as well as the name of the recipient.
Also worth mentioning is the statement of JP Morgan's wealth management CEO, who confirmed that most of the investment bank's clients consider Bitcoin an asset class. This reading is also confirmed by a Fidelity Digital Asset Report, which indicates that most institutional investors are willing to purchase digital assets.
Today, "B World", a virtual conference dedicated to the world of cryptocurrencies, will take place. The news and statements that will be reported could influence intraday quotes (as is already happening in reality) and increase trading volumes.
In general, a more positive phase should be built.
The Cryptosniperz Team
We are not giving any financial advice regarding cryptocurrencies, but rather giving applicable advice for new, intermediate and experienced people who are currently into cryptocurrencies or someone who is just now realizing what it is. Before you read this I must say that this blog will be based on the assumption that you have already done some research on cryptocurrencies and the Blockchain ecosystem. We will continue to provide explanations and details to the best of our ability, however we encourage you to do your OWN research because only YOU will know how this second financial revolution will best fit into your life. Thank you for reading our contents.
