Introduction
Hello fellow fluffy blockchainers, on March 25 (yesterday), with the record-breaking $6.1 billion options expiring, Biitcoin experienced a sell-off and dropped the price below $50,500. There's a lot of speculation happening around the new contracts set to expire on April 30, with investors placing their bets on a strike price of $80k [1]. With regards to the current Bitcoin cycle, not much has structurally changed since our last update, and the concepts covered still hold true. We’ll send out an update once we think we have reached the next stage.
See below we can see information from Glassnode on Futures Open interest:
Note: The diagram above shows the mean liquidated volume (USD Value) from short positions in futures contracts.
In layman's terms the big nasty whales got f*k up (this is a family blog, and we are not swearing). More specifically, what we see in the diagram above is that the Whales used other people money to short Bitcoin (sell, in order to drop the price, and buy later on cheaper). But the big bad wolf (Elon Musk) and other institutions did their magic and reversed the situation [2].
More specifically Elon twitted the following info and saved us (or at least helped):
Yes Elon you did it again!!
Below we can see from Cryptometer the liquidations that took place the last 24hrs:
Current Landscape
Bitcoin price is currently sitting at $53 plus and investors seem to be certain about its next potential move. By analyzing the profitability of traders near the current price of BTC, we can understand the circumstances and price ranges expected to act as a stronger support and resistance now.
See below we can see information from Glassnode NUPL:
Note: Net Unrealized Profit/Loss is the difference between Relative Unrealized Profit and Relative Unrealized Loss. For more information see this article. It seems we are still safe!
Macro Outlook
But despite the recent downward price action, on-chain indicators are looking as strong as before. As can be seen in the graph below, the number of BTC hodlers has increased by over 2.84 million within the last twelve months.
See below we can see information from Glassnode on Realized HODL Ratio:
Note: The Realized HODL Ratio is a market indicator that uses a ratio of the Realized Cap HODL Waves. In particular, the RHODL Ratio takes the ratio between the 1 week and the 1-2 years RCap HODL bands. In addition, it accounts for increased supply by weighting the ratio by the total market age. A high ratio is an indication of an overheated market and can be used to time cycle tops.
Hodlers indicator has continuously shown an almost linear growth every month, despite Bitcon recent price action, it is now at about 21.55m addresses, an All-Time-High for this metric, and it represents 57.96% of the total BTC holders.
See below we can see information from Glassnode on Realized Cap HODL Waves:
Note: HODL Waves weighted by Realized Price.
Conclusion
Until 2020, Bitcoin’s performance was largely uncoupled from the performance of global financial markets in general. But as institutional money has started to pile into the crypto space, we can no longer disregard the narrative and events driving global financial market’s. An important question to take into consideration when looking at the future performance of the stock market and Bitcoin, is what will happen to inflation [3]. With this excess printing, Bitcoin is already challenging gold as the investor’s choice for an ideal inflation hedge. Net fund flows in the largest gold ETF for example have been negative, with gold outflows totaling -6.8bn USD. Meanwhile in 2020, in Greyscale’s BTC trust alone, inflows outpaced the amount of newly mined Bitcoins in Q4 by 200%.
References:
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