Friday 5 November 2021

Market outlook 04-11-2021

 Bitcoin Status

The Bitcoin volume is not here yet, it seems that the retails is not "lured" yet in to the planned big "pump and dump".

Bitcoin Mempool volume annual chart:


Bitcoin Mempool volume 6m chart:


Bitcoin Mempool volume 3m chart:



Note: Whales are becoming nervous, the retail investors are not here yet. What is happening???

Bitcoin Mempool volume 1m chart:
 

 
Bitcoin all time social volume chart (lunarcrush):
 
 
Bitcoin all time social volume chart (google trends):
 

 Note:We are not there yet.
 
 
Bitcoin addresses with equal or more than 10k volume 6m chart:
 
Note: Still wondering what is going to happen next? Whales are pumping BTC and not making profit through micro dump. Looks like a serious accumulation phase.

Bitcoin all time NUPL chart:


Note: We can see that the NUPL is heating up!!!!


Bitcoin all time netflow chart:


Bitcoin netflow 6m chart:
 
Note: Get ready for the launch.

Bitcoin all time aSOPR chart:
 

 Note: We are still safe.



















Friday 13 August 2021

Trading cryptocurrencies for fun and profit

Introduction

This post is going to focus on the Wyckoff accumulation and distribution patterns in relation to Bitcoin. And this is important for Altcoins, Why? Please read this post and this post to understand why. And therefore this information is mostly referring to people that are interested in technical analysis and trading Altcoins in general. Nonetheless this is also going to help people that DO NOT trade to understand when to sell (identify tops) and when to buy (identify bottoms). This information can also be found in payed expansive trading courses, so please appreciate our work (I appreciate your time) and follow us on:

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Note: Currently twitter is shadow banning both the accounts. Please help us grow and we will help you gain financial independence.


Please see our youtube latest episode:


Note: If you are an experienced trader please skip all the paragraphs with basic trading information. The paragraphs with basic info as taged. 

What is Accumulation


In the context of technical analysis, accumulation refer to the increase in the position size of an asset that is built up over multiple transactions. Accumulation can also refer to the overall addition of positions to a portfolio. In layman's terms accumulation points to a general increase in buying activity in an asset. In this case, the asset is said to be "under accumulation" or "being accumulated." [1] In the crypto trading community accumulation is used for crypto currencies the same way.


A more simple explanation would be that wealthy traders (in our situation institutions) buy a crypto currency in such a way so as to not trigger sudden or fast increase of the price. The whales want to slowly buy as much as possible with the lowest price. When wales accumulate, use advanced psychological metrics (e.g. google searches, media outlet views) to identify how other institutions and retail traders are going to behave in the immediate future, and act accordingly.


Note: This means that each accumulation start or end cannot be accurately predicted, but we can pull out of the market very close the end, safely.

[ If you are an experienced trader, skip this section  ]

What is Distribution


Again in the context of technical analysis, distribution refers to large blocks of a security (or a cryptocurrency) that are carefully sold into the market gradually in smaller blocks so as to inundate the market with sell orders for the security (or cryptocurrency) and driving down its price. Traders also refer to the dynamic of cryptocurrency being sold this way as simply "distribution." [2]


A more simple explanation would be that wealthy traders (in our situation institutions) buy a crypto currency in such a way so as to not trigger sudden or fast decrease of the price. The whales want to slowly sell as much as possible with the highest price. When wales distribute, use advanced psychological metrics (e.g. google searches, media outlet views etc.) to identify how other institutions and retail traders are going to behave in the immediate future, and act accordingly.


Note: This means that each distribution start or end cannot be accurately predicted, but we can pull out of the market very close the end, safely.

[ If you are an experienced trader, skip this section  ]

What is Consolidation


Consolidation in technical analysis refers to an cryptocurrency oscillating between a well-defined pattern of trading levels. Consolidation is generally interpreted as market indecisiveness, which ends when the asset's price moves above or below the trading pattern. A consolidation pattern could be broken for several reasons, such as the release of materially important news or the triggering of a succession of limit orders. [3]

[ If you are an experienced trader, skip this section  ]

Putting it all together


All assets, including crypto and stocks, go through the three different phases. A crypto currency is going to:
  1. Consolidate
  2. Accumulation Phase
  3. Distribution Phase 
Note: If you are an investor or a trader you should ONLY buy during the end of distribution or the beginning of accumulation. 

[ If you are experienced trader, skip this section  ]

What is On-chain Analysis


Unlike traditional market, in Cryptocurrencies we have weapon in our arsenal called on chain data analysis. Cryptocurrency is the first asset class where investor activity can be extracted from massive data sets through each crypto-asset’s public ledger, which captures every on-chain action in history. Since blockchains are a treasure trove of open, incorruptible financial data, we can pinpoint measures of economic activity in these networks. 

Through the collection and study of this data, we can measure sentiment and investor behavior. On-chain analysis is a fundamentals driven approach rather than based on hype, sentiment or technical analysis. This type of analysis can be focused exclusively on one crypto-asset by looking at historical trends or can be used to compare different crypto-assets to identify undervalued/overvalued coins. [4]

Note: In layman's words big whales cannot hide their activity from us. We know when they are buying and when they are selling. Some crypto start ups , have gone far enough to create AI data analytics and analyse wallet addresses for behavior (aka. wallet reputation analysis). 

[ If you are an experienced trader, skip this section  ]

What are Accumulation/Distribution Indicator (A/D)


The accumulation/distribution indicator (A/D) is a cumulative indicator that uses volume and price to assess whether a stock or crypto is being accumulated or distributed. The A/D measure seeks to identify divergences between the stock or crypto price and the volume flow. This provides insight into how strong a trend is. If the price is rising but the indicator is falling, then it suggests that buying or accumulation volume may not be enough to support the price rise and a price decline could be forthcoming. [5]

[ If you are an experienced trader, skip this section  ]

The On-Balance Volume (OBV) Indicator

On-balance volume (OBV) is a technical trading momentum indicator that uses volume flow to predict changes in stock price. The theory behind OBV is based on the distinction between smart money – namely, institutional investors – and less sophisticated retail investors. As mutual funds and pension funds begin to buy into an issue that retail investors are selling, volume may increase even as the price remains relatively level. Eventually, volume drives the price upward. At that point, larger investors begin to sell, and smaller investors begin buying. [5]

[ If you are an experienced trader, skip this section  ]

The A/D vs. OBV


Both of these technical indicators use price and volume, albeit somewhat differently. On-balance volume (OBV) looks at whether the current closing price is higher or lower than the prior close. If the close is higher, then the period’s volume is added. If the close is lower, then the period’s volume is subtracted. [5]

The A/D indicator doesn’t factor in the prior close and uses a multiplier based on where the price closed within the period’s range. Therefore, the indicators use different calculations and may provide different information. [5]

Below we can see a daily tradingview chart on Bitcoin with the mentioned indicators:


Note: Both indicators suggest that we are in an accumulation phase. 

[ If you are an experienced trader, skip this section  ]

On Chain Data Analysis with A/D, OBV and On Chain Data

A very interesting on chain data metric we can find in glassnode (I suggest you get a paid subscription if you are a serious trader or investor) is the chart that marks the Number of Addresses with Balance ≥ 10k. The mentioned chart, on its own, but also combined with OBV and A/D can 100% show us when the Whales make money at max profit (distribute) and when are buying at minimum cost (accumulate). If you are an investor and not a trader this information will help you identify tops and bottoms.

Below we can see a daily tradingview chart on Bitcoin with the on chain metric discussed:



Below we can see a daily tradingview chart on Bitcoin with the OBV and A/D:


Below we can see a daily tradingview chart on Bitcoin with the on chain metric discussed, but we zoom out to see all the data:

Note: For the investor is interesting to see that even though the whales dump, the bitcoin accumulated by high network individuals, miners, retail and whales since 2010 is increased. This means that even when Bitcoin dumps or is being suppressed, the price from bull cycle to bull cycle is still going to increase. Remember the whales buy using Over The Counter services (OTC), so the price wont be affected. We can also see that when the whales dumped on May the number of addresses with more than 10k was the sames as 2012.

Below we can see a daily tradingview chart on Bitcoin with the on chain metric discussed, but we zoom out to see all the data and draw lines:


Note: Warning whales do not have to dump all their Bitcoin to drop the price. Whales look to achieve max profit aka. higher Bitcoin price to sell and lower price to buy. 

Below we can see a daily tradingview chart on Bitcoin with RSI and MACD:


Note: When trading combine phase (e.g. accumulation/distribution) with minimum two indicators e.g RSI and MACD. In the chart above we can see that the whales already dumped (the addresses with more than 10k dropped dramatically) and the RSI and MACD oscillators show a trend.

The larger the market cap of the asset manipulated, the easier is to identify the phase the asset is in e.g. the bitcoin price action back in 2012 is not easily to see unless we zoom in. Another zoom in back in March 2020 will show us similar patterns.

Below we can see a daily tradingview chart on Bitcoin with against the 10k address drop and rise on March 2020: 


Note: Again see what happened on March 2020. The price dropped and the addresses with more than 10k bought using OTC services. The pattern is repeated again and again and again. It is show obvious.

The Wyckoff Method


The Wyckoff method uncovers intentions of wales on the stock market and crypto space, who he referred to as Composite Operators. Analysis of the trading volume and price on the tape is the basis of this method. We in the crypto space as already mentioned, have in our side also the on chain data. [6]

Wyckoff believed that the behavior observed via volume and price movements held the key to predicting future market movements. These observations made him believe that the stock exchange worked under a set of three laws. See below [6]: 
  1. The law of supply and demand
  2. The law of cause and effect
  3. The law of effort vs results
The law of supply and demand on Bitcoin

If there is a scarce amount of an item (supply), the value of that item is increased to create the supply need to meet that demand. Or, when there is an excess amount of something, then the value of that item will reduce to attract the demand needed to absorb that supply. In both scenarios Bitcoin, has a fixed number of supply and that creates a buy pressure. Another approach about the Bitcoin fixed supply is that because Bitcoin can be bought in fractals the Wycoff law can still be applied to Bitcoin. [6]

The law of cause and effect on Bitcoin 

For the price of a stock to change (effect), there has to be a cause. The effect is in direct proportion to that cause. Best price moves happen when there has been enough time to facilitate a period of distribution or accumulation (or in other words a cause). This law is fully applicable to Bitcoin and we have seen the law in action. [6]

The law of effort vs results on Bitcoin

If there is an effort (volume on a move), the result (price action) must be in proportion to that effort and can’t be separated from it. If it is not, it is an indication of other principles in action. Price action and the volume on a move ought to be in harmony. If you have a lot of volume, you should see a lot of move. If you don’t see the move, you need to find out what is happening. This is where you become the detective and use your tools to evaluate that result (price action) with the corresponding effort (volume). This law is fully applicable to the Bitcoin.

Below we can see a schematic analysis on what we discussed:




References:

























Sunday 25 July 2021

Market Outlook - 25/07/2021

 Introduction

In this blog post we are going to talk again about Bitcoin microscopic and macroscopic charts. As the probability for high Bitcoin market volatility increases, we will analyse the current market situation using on-chain metrics and charts. Things started to look better already, but remember the trend is your friend and trade do not date.

I would also like to inform you that we started our new channel, so please feel free to pay us a visit:



Microscopic Outlook

As we can see in the chart below the Bitcoin dominance is increasing and retesting previous resitance line. The most inetersting patterns can be seen by the RSI trend reversal pattern. It looks like smart money are entering the market.

 
 
Note: Even though the volume remains low, we can clearly see that Bitcoin is slowly reclaiming dominance.
 
Below we can see the 3m Bitcoin mempool chart:
 
 

Note: Volatility is not here there compared to May, but we can see spikes. So Bitcoin constellation is still on the play.
 
On-chain activity remains extremely muted with mempools clearing, and transaction volumes continuing to fall. As the mempool empties, the average block size has fallen by 15% to 20%, down to 1.103M bytes. [1]
 

 
Note:  This indicates that demand for Bitcoin block-space and on-chain settlement is low, mined blocks are not full, and the utilization of the network is relatively low.
 
Below we can see the addresses holding more than 10K of BTC (two week chart):
 
Note: This chart information combined with the low volatility shows that the Bitcoin price is going to consolidate, for at least one more week. This chart also shows us that because most of the smart money buys through OTC, and because the addresses holding more than 10k increases and then drops, market manipulators want to slowly increase the Bitcoin price. This is also called the accumulation phase.

Below we can see the Bitcoin annual exchange reserves:
 

Note: In this chart we can see something very interesting. The Bitcoin exchange reserves is increased.

Below we can see the exchange net flows of BTC (two week chart):

 

Note: This charts confirms previous conclusion, which are a) BTC hit bottom, b) accumulation started. We can see the pattern designates small increments of the smart money in the BTC cap.

Macroscopic Outlook

 

We do not have nuch to say about the Bitcoin macros. The most important news about Bitcoin is that high net-worth individuals are buying in:
 
Cathy Woods bought Bitcoin recently (this verifies accumulation started):
 

Rothchilds bought Bitcoin recently (this verifies accumulation started):
 
Bitcoin ETF recently came up (this verifies accumulation started):


Conclusion

 

The following conclusions are confirmed:
  • Net Entity growth remains positive
  • Exchanges have seen net outflows after an extended period of inflows since mid-May.
  • Smart Money started pouring in
  • It looks like accumulation started.
References:
 































Thursday 15 July 2021

Market Outlook - 15/07/2021

 Introduction

It has been a really non impressive quiet week in the Bitcoin market as volatility continues to seep out, and prices squeeze into a tight consolidation ranges with low volume. It is starting to feel like the calm before the storm as muted and quiet activity appears across both spot, derivative, and on-chain metrics. This week we will explore a broad range of metrics and indicators across the entire Bitcoin market to establish overall sentiment, volatility triggers, and models for investor behavior.

Below we can see a summary of the BTC on chain  data:
  • BTC Active Address: 819,200, up 0.34%
  • BTC On-Chain TX Vol: 375,200 BTC, down 9.19%
  • On-Chain Transactions: 231,800, up 5.84%
Note: The situation on BTC seems to slightly improve. 

Macro Outlook

It looks like there is an on going hash-rate recovery, that may suggest that offline miners have successfully relocated or re-established their hardware, recovering costs and likely reducing the risk of treasury liquidation sell-pressure. Also slow hash-rate recovery may suggest the converse, where costs and outage continues to take a financial toll, and thus increases the risk of treasury sales [1]. 

This week, the hash-rate has recovered from the peak-trough decline of 55%, to around a 39% decline. Should this level hold and be representative, it would indicate that hash-power equivalent to around ~29% of the affected hash-power has come back online [1].

Below we can see the hash-rate charts (all time chart):


Note: Near the end of the chart we can see the BTC all time slow recovery. 


Below we can see the hash-rate charts (monthly chart):


Note: Near the end of the chart we can see the BTC monthly recovery. 

Below we can see the addresses holding more than 10K of BTC (two week chart):


Note: This chart movement indicates nothing more then consolidation for BTC. 

Below we can see the annual NUPL chart of BTC (annual chart):


Note: This annual NUPL chart shows that BTC is still healthy and looks good.  Net Unrealized Profit/Loss (NUPL) is the difference between Relative Unrealized Profit and Relative Unrealized Loss. This metric can also be calculated by subtracting realized cap from market cap, and dividing the result by the market cap.

Below we can see the annual aSOPR chart of BTC (annual chart):


Note: The Spent Output Profit Ratio (SOPR) is computed by dividing the realized value (in USD) divided by the value at creation (USD) of a spent output. Or simply: price sold / price paid. This metric was created by Renato Shirakashi. The adjusted SOPR is SOPR ignoring all outputs with a lifespan of less than 1 hour. aSOPR is used to identify the local and global tops and bottoms (e.g. weekly and annual tops and bottoms etc.). The chart shows BTC got "reset", and that potentially indicates the Bull trend violently interrupted, in one small Bear trend and potentially a second Bull trend (aka. the Bull run was split on to two Bull trends).

Below we can see the annual aSOPR chart against the BTC price:


Note: In this chart we can see how aSOPR maps tops and bottoms.

Below we can see the addresses holding more than 10K against the BTC price (daily chart):


Note: This chart is showing the addresses holding more than 10K against the BTC price and I am also marking the entry of Elon Musk. We can clearly see the Elon Musk bought at 32-33k, and that is the end point of the accumulation phase and the start of the distribution phase (also known to Wycoff distribution). For more information see this post and this post. I made a mistake in the second post about the entry of Elon Musk. Elon Musk entered at 32-33k as already stated, not 35k.

Micro Outlook

Key theme throughout, the whole, 2020 and Q1 2021 was the relentless depletion of exchange coin reserves, with many of them en route to the Grayscale GBTC Trust, or accumulated by institutions. Now we see the outflow again increasing (an Bullish indicator).

Below we can see the exchange net-flow charts (six month chart):

Note: The inflow movement decreased, with max inflow during May 2021.


Below we can see the exchange net-flow charts (two week chart):


Note: The inflow movement decreased, even more the last two. This potentially indicate a BTC upward movement.

Below we can see the BTC mempool charts (one month chart):


Note: The mempool chart , verifies the low BTC volume for the last month. Again this chart movement  too indicates nothing more then consolidation for BTC. 

Conclusion


Technically speaking I see more consolidation on the BTC price. Nothing much has changed since the last post. It looks like there is going to be some big move.

Below we can see the USDT distribution in top 1% addresses chart against the BTC price (daily chart):



Note: The reason I am showing that is because, it means that someone is deploying USDT for future purchases. It does look reasonable since the Wycoff distribution is finished and we are now in a face of a Wycoff re-accumulation phase. It seems someone is on vacation.  





References: 

Tuesday 6 July 2021

Market Outlook - 06/07/2021

 Introduction 

This blog post is going to focus on facts and charts as usual and will describe the current situation. Are we in a bull market? Are we in a bear market? What is going on? The answer is simple for the long run the entry point for Bitcoin and Ethereum does not real matter. 

It is a fact now, that  the lesser the use cases of an established crypto currency such as Bitcoin the better.  Bitcoin is an asset that has minimal use cases (e.g. Storage of Value , transportation properties etc.) , excellent network effect and it is being adopted by institutions and backed by math and cryptography. Should you be concerned by the drop prices? Not if you are an investor. Now if you trade Bitcoin , then yes, you have to be aware of the current situation and the FUD generated by the media.

The Macro outlook (On Chain Data and Fundamentals)

In this section we will check the macros and for once more see where we are seating. The most important facts to focus on are demand and scarcity. Scarcity can easily be seen from the glassnode charts below.

Below we can see the two week balance on exchanges:


Note: As we can see Bitcoin scarcity is on the rise for the last two weeks.

Below we can see the five year balance on exchanges:

Note: As we can see Bitcoin exchange balances , picked and then started to decline after 15th of March 2020. And since then it is still dropping.

Another interesting chart we can see (from again from on chain data analysis) is the NUPL chart. From the chart below we can see that the NUPL chart was reset for good. This is for me a strong sign of temporary Bull disruption, rather than a pure long Bear market.
 
Below we can see the five year NUPL chart for Bitcoin:


Note:
 As we can see Bitcoin NUPL chart is reset for good, so we are good for now. Net Unrealized Profit/Loss is the difference between Relative Unrealized Profit and Relative Unrealized Loss. This  metric can also be calculated by subtracting realized cap from market cap, and dividing the result by 
the market cap as described in this article.

Below we can see the two week NUPL chart for Bitcoin:


Note: As we can see Bitcoin NUPL chart, again is reset.

Below we can see the five year aSOPR chart for Bitcoin:


Note: As we can see Bitcoin aSOPR chart is again reset for good. Adjusted SOPR (aSOPR) is SOPR ignoring all outputs with a lifespan of less than 1 hour. The Spent Output Profit Ratio (SOPR) is computed by dividing the realized value (in USD) divided by the value at creation (USD) of a spent output. Or simply: price sold / price paid. This metric was created by Renato Shirakashi. SOPR and aSOPR is used to demonstrated local (monthly) and global (annual) bottoms and tops.


Below we can see the two week aSOPR chart for Bitcoin:


Note: As we can see Bitcoin that the two week aSOPR chart shows a reset. This is a good indicator we hit a global bottom.

We covered the scarcity, facts , now lets cover the demand facts. Is there a demand for bitcoin??? Hell yea man. Bitcoin is being accumulated and there is a great demand about it. We can see that from the fundamentals aka. the news released about Bitcoin.

Below we can see certain news about the demand being increased:
  • Adaptation from El Salvador
  • Adaptation from Paraguay (expressed interest)
  • Adaptation from Panama (expressed interest)
Note: For more information see thestreet.com

The Micro outlook (On Chain Data and Charts)

Below we are again going to focus on charts and facts to describe the current situation on Bitcoin. What we would be looking on would be the support and resistance line, along with the Bitcoin address utilization.

Below we can see the two week number of Addresses with Balance ≥ 10k (aka. Whales):


Note: This demonstrates that there is going to be slight Bitcoin drop and consolidation.

Below we can see the five year number of Addresses with Balance ≥ 10k (aka. Whales): 


Note: This chart can help us understand when accumulation and redistribution takes place for Bitcoin.


Below we can see the day chart price of Bitcoin  against the number of Addresses with Balance ≥ 10k (aka. Whales): 



Note: We can see here how profitable are the whales and now that the price, has dropped dramatically, we are in an accumulation phase. The whales are not making profit, they are accumulating to pump the price.

Below we can see the day chart price of Bitcoin  against the number of Addresses with Balance ≥ 10k (aka. Whales) with RSI and MACD indicators: 





Note: We can see here how the price of Bitcoin is affected against the RSI and MACD indecators.


Conclusion

IMO we hit rock bottom, I am certain that we can have only consolidation and upward movement now.


 

Market outlook 04-11-2021

 Bitcoin Status The Bitcoin volume is not here yet, it seems that the retails is not "lured" yet in to the planned big "pump ...