Crypto Market On-Chain Analysis To Start The Month

The downtrend that has last for 82-days moved the Bitcoin price to $33,424 on Monday which means more that 55% correction. With an extreme fear, high negativity and elevated leverage, we can see a potential short squeeze in the near-term.

The most important news of the previous week:

* Tesla has published a Q4 report that shows that the company has not bought/sold BTC during the forth quarter of 2021.

* On Wednesday, the Fed pointed to the U.S. economy’s underlying strength and inflation’s stickiness, and reaffirmed plans to end its bond-purchase program in March. It also hinted at a potential interest rate increase in the same month.

* According to Blockchair, the hackers, who have stolen in 2016 from the Bitfinex exchange, have moved more than 94,643 BTC to the new wallet. At the current exchange rate, the value of these assets exceeds $3.6 billion. The Whale Alert service recorded more than 20 transactions.

* The bill, SB 1341, was introduced by state Sen. Wendy Rogers in Arizona. It seeks to amend the list of accepted legal tender to include bitcoin, which means the cryptocurrency would be accepted for the payment of debt, public charges, taxes and other dues.

Exchange Reserve shows the total number of Bitcoins held in the exchange.
Starting from 26 of December the value continue to fall in reserve, it indicates lower selling pressure.

 

This chart indicates the total amount of coins transferred to the exchange. We can see a large amount of inflows that means a higher selling pressure in the spot exchange.

The total amount of coins transferred from the exchange is also high. It means that some traders were buying and sending their Bitcoin into the cold storage. It can lead to decreasing of selling pressure.

Exchange Netflow is the difference between coins flowing into and out of the exchange. Simply speaking Inflow — Outflow = Netflow.
We can observe that many investors have bought and withdraw BTC from exchanges and on Saturday we see a big inflows on the exchanges. Positive value indicates reserve in increasing and high value indicates the opposite.

 

Miners’ Position Index (MPI) is the ratio of total miner outflow (USD) to its one-year moving average of total miner outflow (USD). Value shows that miners were not sending more coins than usual which indicates holding.

Exchange Whale Ratio shows the top 10 inflows to the total inflows of the exchange. Current value indicates that whales were not using the exchanges in large amount.

 

Estimated Leverage Ratio transmits an exchange’s open interest divided by their coins reserve which shows how much leverage is used by users on average.
This Monday we can observe a growth in values which indicates more investors are taking high leverage risk in the derivative trade.

Short Term Output Profit Ratio is a ratio of spent outputs (alive more than 1 hour and less than 155 days) in profit at the time of the window. Values below ‘1’ indicate more short-term investors are selling at a loss.

 

Long Term Output Profit Ratio is a ratio of spent outputs (lived more than 155 days) in profit at the time of the window. Values over ‘1’ indicate more long-term investors are selling at a profit.

Net Unrealized Profit and Loss is the difference between market cap and realized cap divided by market cap. It could be interpreted as the ratio of investors who are in profit. We still have a value over ‘0’ that indicates investors are in profit .

 

More than 66% of BTC are in profit and value is increasing that means more investors are beginning to be in profit resulting increase in sell pressure.

Value under 20 is a zone of extreme Fear. That can be a sign that investors are too worried and a great buying opportunity.

Summary:

The downtrend is continuing, nevertheless retail size wallets, holding less than 1BTC, did not sell Bitcoins, moreover the supply held in these wallets continuing to climb. People are afraid, but still they do not believe that price can move deeper. More than 66% of BTC are in profit so the market manipulator has many players who still did not start a panic sale off. With an extreme fear, high negativity and elevated leverage, we can see a potential short squeeze in the near-term.

Sources: https://insights.glassnode.com/, 

https://studio.glassnode.com/metrics?a=BTC&m=addresses.ActiveCount 

https://alternative.me/crypto/fear-and-greed-index/, 

https://cryptoquant.com/, 

https://www.tradingview.com/