#102 On-chain Insights by IT Tech 💡🧠 - Week 45 Highlights & Analysis
Market Insights: Trump’s Victory, Bitcoin’s Price Discovery, Stablecoin Liquidity Inflows, Ethereum’s Bullish Prospects, and Holder Dynamics.
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Table of Contents
🔸 Partnership with WymienBitcoina.pl
🔸 Current market situation
🔸 Bitcoin price and key levels
🔸 BTC: Price Discovery Phase
🔸 Bitcoin: Cumulative Return Index on Halving Years
🔸 Ethereum: From Bearish to Bullish.
🔸 Bitcoin: Short and Long Term Holders.
🔸 Correlation between USDT and USDC market caps and Bitcoin price
🔸 Paid newsletter subscription - support content development
🔸 Newsletter issue summary
🔸 The exchanges I trade onPartnership with WymienBitcoina.pl
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Current market situation.
Trump's Victory Boosts Crypto Optimism: Donald Trump's election win fuels positive sentiment in the crypto market due to his pro-Bitcoin stance and plans for a U.S. Bitcoin reserve.
Bitcoin Hits New ATHs: Bitcoin reached record highs, signaling a strong bull market.
Launch of Stablecoin USDG: Financial giants introduce USDG, aiming to increase stability and trust in the crypto market.
ETF Inflows Show Institutional Interest: Bitcoin ETFs, especially from BlackRock, see $1.1 billion inflows; Ethereum also shows potential for growth.
Crypto Conferences and New Regulations: Increased activity in global crypto events and potential for new regulations under the Trump administration impact market dynamics.
Following Donald Trump's victory in the US presidential election, there has been a surge of euphoria in the cryptocurrency market. Bitcoin has surpassed its all-time high, Ethereum has emerged from its dormant state, Bitcoin's dominance has decreased by over 2.7 percent, and altcoins have registered gains in the double-digit percentages.
Let's dive into the current market situation from the perspective of on-chain movements.
Bitcoin price and key levels.
Bitcoin's price has surged by over 18% in a week. Meanwhile, ETH has seen a notable increase of more than 15% against Bitcoin. As is common in the cryptocurrency market, altcoins have followed Ethereum's lead with significant gains.
As of November 10, 2024:
🔹 BTC Price (USD): $77,988 — The current price indicates a bullish trend, trading above several key support levels, signaling positive market momentum.
🔹 SMA 365D: $58,195 — This 365-day moving average serves as a strong support level, highlighting a long-term upward trend.
🔹 Realized Price: $33,548 — A significant gap between the current BTC price and the realized price shows that long-term holders are in profit, reinforcing market confidence.
🔹 STH Realized Price 1W-1M: $67,962 — This level acts as a short-term support for recent holders, suggesting that many investors are realizing gains at current prices, yet the market is still sustaining an upward movement.
🔹 STH Realized Price 1M-3M: $61,113 — Another short-term support level, where potential accumulation might occur if the price dips closer to this range.
🔹 STH Realized Price 3M-6M: $63,914 — This level also acts as additional support, as it represents the realized price for holders between 3 to 6 months, creating a strong demand zone in this price range.
Since Bitcoin has surpassed all key resistance levels and is entering a price discovery phase, this represents a highly bullish market sentiment. In this phase, the BTC price moves into uncharted territory, meaning there are no historical resistance levels to indicate where potential selling pressure might occur. Here’s what this could imply:
🔹 Strong Upward Momentum: With no overhead resistance, Bitcoin is free to continue its upward trajectory, driven primarily by demand dynamics and market sentiment.
🔹 Support Zones Remain Key: The support levels identified (such as STH Realized Price and SMA 365D) will be critical if the price experiences a retracement. These zones could attract buyers looking for a re-entry point during any pullback.
🔹 Psychological Levels as New Reference Points: In the absence of technical resistance, psychological price levels (e.g., $80,000, $85,000, and $90,000) could serve as temporary checkpoints where traders assess market strength.
🔹 Increased Volatility Potential: Price discovery phases are often accompanied by higher volatility, as investors gauge the market’s potential to establish new highs. This can lead to rapid price swings.
Conclusion: Bitcoin’s entry into the price discovery phase marks an exciting period for the market, with the potential for significant gains as long as the demand remains strong. Investors and traders should monitor support zones and watch for any reversal signals that could indicate profit-taking or shifts in sentiment.
BTC: Price Discovery Phase.
A great chart was created by Cryptoquant CEO Ki Young Ju - price dscovery phase.
From the provided price discovery phase chart, we can analyze the historical duration and impact of Bitcoin's price discovery phases, as indicated by the green lines. Here are some insights:
Historical Durations of Price Discovery Phases:
Bitcoin has experienced multiple price discovery phases since its inception. Some phases are relatively short, where the price rapidly finds a new high and stabilizes. Others are extended periods, where prices consistently rise over several months, indicating a sustained bullish trend.
Cycle Trends:
Historically, price discovery phases often occur in line with Bitcoin's four-year cycle, typically after the halving events. This is when reduced supply and increased demand can lead to rapid price increases.
For instance, notable price discovery phases occurred around 2013, 2017, and 2021, aligning with Bitcoin's halving cycles and initiating major bull runs.
Intensity of Price Discovery:
Each cycle tends to reach a significantly higher peak than the previous one, suggesting a pattern of long-term growth despite periodic bear markets.
The frequency and duration of price discovery phases can provide clues about market sentiment and potential upcoming peaks.
Current Phase Implications:
If Bitcoin is now entering another price discovery phase, as suggested, we might expect a period of rapid price appreciation. This phase could be similar in duration and impact to previous cycles, potentially leading to new all-time highs.
Market Sentiment and Strategy:
Historically, price discovery phases have been favorable for long-term holders but may also signal periods of increased volatility. This phase is often accompanied by speculative trading and heightened market activity.
Understanding these cycles can help traders and investors decide on optimal entry and exit points based on past patterns.
Bitcoin: Cumulative Return Index on Halving Years.
Miles Deutscher shared an interesting chart in a post on the X platform: Bitcoin Cumulative Return Index on Halving Years.
Observations and Insights:
Halving Cycles Comparison: The data provides a comparative perspective on Bitcoin's cumulative returns across four different halving cycles (2012, 2016, 2020, and 2024). Historically, each halving year has shown a unique return pattern with significant price movement, particularly in the latter parts of the year.
Current Position in 2024: The chart indicates "We Are Here," showing that Bitcoin’s price currently aligns closely with past cycles, particularly showing potential for an upward trajectory similar to 2016 or 2020. This position suggests that, if historical trends hold, there could be significant growth in the remaining part of 2024.
Potential Price Discovery Phase: The ongoing performance indicates that Bitcoin might enter a price discovery phase soon, where its value surpasses previous all-time highs and experiences significant volatility.
Long-term Outlook: Historically, Bitcoin has shown a strong tendency to outperform following halving events, especially in the latter quarters. This pattern suggests that, based on previous cycles, the 2024 cycle could see Bitcoin maintaining or accelerating its growth rate as demand potentially increases amid reduced supply.
Market Sentiment: Following this historical pattern can boost market confidence. However, while history often serves as a guide, external macroeconomic factors should also be considered in projecting future movements.
This interpretation offers a cautious optimism based on past trends but also reminds investors to stay informed about broader economic contexts affecting the market.
Ethereum: From Bearish to Bullish.
Why Sentiment on #Ethereum ($ETH) Has Flipped and What's Driving the Optimism.
🔹Price Predictions: Targets for ETH range from $3,000 to $10,000+, with optimism fueled by historical trends and anticipation of a breakout.
🔹Institutional Interest: Inflows into Ethereum ETFs signal growing interest from large investors, especially with favorable macro conditions.
🔹Pectra Upgrade: Set for Q1 2025, this upgrade will introduce key EIPs, potentially boosting ETH’s value.
🔹Market Dynamics: As Bitcoin’s dominance falls, ETH and other altcoins gain traction, indicating a shift toward altcoin investment.
🔹Whale Activity: Significant transactions show confidence, as whales position for future gains.
🔹Community Enthusiasm: Engaged ETH supporters express optimism, with phrases like "send ETH to $4k."
🔹Overall, price forecasts, institutional backing, tech upgrades, market conditions, and community support fuel a strong bullish outlook for Ethereum.
Live data👉 Santiment.com
Bitcoin: Short and Long Term Holders.
Observations from the three charts for Bitcoin's Long-Term, Short-Term Holder Net Position Change and Bitcoin: Exchange Inflow - Spent Output Value Bands.
STH Accumulation with Recent Price Increase:
The recent spike in STH holdings, indicated by green bars, often reflects increased buying activity driven by the fear of missing out on further price gains. This is common when the market perceives a strong bullish trend, prompting newer or short-term investors to jump in, hoping to benefit from continued upward movement.
Contrasting Behavior of LTHs:
Long-term holders (LTHs), on the other hand, are in a more cautious phase, as shown by the recent red bars. This group tends to be less reactive to short-term price fluctuations, so their reduction in holdings could indicate that they are taking profits, possibly anticipating a pullback or correction after the rally. This also implies they’re not experiencing the same FOMO (Fear If Missing Out) as STHs; instead, they’re strategically managing risk.
Exchange Inflow - Spent Output Value Bands:
The chart shows significant spikes in Bitcoin inflows to exchanges in late October and early November, suggesting increased selling pressure or profit-taking. Notably, many of these inflows come from medium-term holders (6-12 months), indicating that investors with moderate holding periods are moving assets to exchanges, likely in response to the recent price surge. This pattern often correlates with market caution and can signal a potential for short-term price correction, as large inflows to exchanges tend to increase selling pressure.
Potential Market Impact:
If STHs are buying primarily due to FOMO, it could make the price more vulnerable to volatility. FOMO-driven buying can be less stable, as these holders might quickly sell if prices dip, leading to a short-term correction.
However, the current accumulation by STHs also suggests that there’s strong interest in the market, potentially providing a floor of support that could stabilize prices in the near term.
Summary:
This FOMO-driven behavior by STHs, combined with cautious profit-taking by LTHs, could indicate a phase where Bitcoin’s price may continue its upward trend but with increased sensitivity to sudden changes. If the FOMO among STHs persists and is reinforced by continued positive sentiment, it could drive prices even higher. However, if a correction occurs, STHs might be more likely to exit, adding to the downward pressure.
In essence, the contrasting behavior reflects a market where optimism and caution are balancing each other, with FOMO among STHs playing a significant role in sustaining interest at current price levels.
💡Do not fall into FOMO—stick to your plan and stay focused on your goals. A price correction will come sooner or later.Correlation between USDT and USDC market caps and Bitcoin price.
In the dashboard I use to prepare the weekly analysis for you, there's also a very interesting chart by Julio Moreno.
An increase in the market capitalization of stablecoins (USDT and USDC) is often correlated with a rise in Bitcoin prices, suggesting greater liquidity and demand in the market.
A decrease in stablecoin market capitalization may indicate increased cryptocurrency selling and reduced liquidity, which could lead to a drop in Bitcoin prices.USDT Daily Market Cap Change (in million USD)
2024-11-04: +56.05M USD
2024-11-05: -63.97M USD
2024-11-06: +73.90M USD
2024-11-07: +845.98M USD
2024-11-08: +669.68M USD
2024-11-09: +866.95M USD
Net USDT Market Cap Change: +2.44 bilion USD
USDC Daily Market Cap Change (in million USD)
2024-11-04: +226.27M USD
2024-11-05: +415.70M USD
2024-11-06: +868.18M USD
2024-11-07: +435.47M USD
2024-11-08: +380.11M USD
2024-11-09: -163.78M USD
Net USDC Market Cap Change: +2.16 bilion USD
Combined Net Market Cap Change for USDT and USDC (04.11 to 09.11)
Total: +4.61 billion USD
Conclusion:
The combined positive net market cap change of +4.61 billion USD for both USDT and USDC from November 4th to November 9th reflects a substantial inflow of stablecoins into the cryptocurrency market. This increase suggests a rise in liquidity and investor interest, potentially supporting upward price momentum for Bitcoin and other cryptocurrencies in the near term. The steady rise in stablecoin market cap may serve as an indicator of growing confidence and readiness for further investment in digital assets.
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Newsletter Issue Summary
TL;DR Summary:
🔷 Trump’s Election Victory Impact: A boost in market sentiment due to Trump’s pro-Bitcoin stance and plans for a U.S. Bitcoin reserve.
🔷 Bitcoin’s Price Discovery Phase: Bitcoin’s new ATHs suggest a potential for more gains as BTC moves into uncharted territory, with no overhead resistance.
🔷 Stablecoin Inflows (USDT & USDC): The combined +$4.61 billion increase in USDT and USDC market caps reflects strong liquidity inflows, supporting BTC’s price momentum.
🔷 Ethereum’s Bullish Shift: ETH shows strength with increased inflows into Ethereum ETFs and upcoming Pectra upgrade, signaling positive long-term prospects.
🔷 Short-Term vs. Long-Term Holders: STHs exhibit FOMO, while LTHs take profits. This dynamic highlights both support and potential caution in BTC’s current upward trend.
Forecast for the Upcoming Week:
Watch Support Levels: With BTC in a price discovery phase, key support levels could become critical during any retracements.
Stablecoin Trends: Continued inflows could reinforce BTC and altcoin gains.
FOMO and Volatility: Expect high volatility as STH activity increases; a short-term correction may arise if LTHs accelerate profit-taking.
This week’s trends indicate a bullish market supported by liquidity, growing ETH potential, and increasing market interest. However, a price correction remains possible amid increased exchange inflows and profit-taking by long-term holders.
Stay alert and monitor these key indicators for better market insights.
You can track important upcoming market events in the US and the EU using the Economic Calendar, which offers free access.
Patience in investing pays off by understanding the market's cyclical nature and recognizing the recurring patterns and behaviors of investors.💡Take a look at the indicators used in the dashboard. For current updates from the market, of course, drop by me on X/Twitter and the free Telegram channel.
Remember to realise profits regularly.💡
This concludes this issue. I hope you have a pleasant end to your weekend and a great week ahead. 🤝
The exchanges I trade on.
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Best regards
IT Tech