Welcome back to IntoTheBlock’s newsletter. We have created a different type of newsletter for crypto fans that is not about news, but about data and analytics. Every week, we deliver valuable data insights about the crypto market.
Bitcoin Price Analysis: $17,775.03 (5:00am EST)
At the moment of writing, Bitcoin price is sitting at $17,775.03 and the In/Out of the Money Around Price (IOMAP) indicator reveals that BTC is facing enormous resistance ahead. In order for Bitcoin to reach $18,400 again, it has go through over 1.1 million addresses that previously bought over 740 thousand BTC.
If Bitcoin breaks the $18,138 barrier, the most crucial resistance level sits at that $19,111. Roughly 938 thousand addresses previously purchased approximately 427 thousand BTC at the range between $19,001.79 and $19,310.77.
Looking at the levels of support, over 217 thousand addresses had previously purchased a total of 220.96 thousand BTC between $17,225 and $17,746.97. On-chain data suggest that Bitcoin is not sitting at a significant level of support while facing strong selling pressure and stiff resistance ahead.
This Week Analysis: A Deep Dive into Bitcoin Ownership
Understanding counterparties is one of the arts of trading in capital markets. The investor composition of a given asset in terms of demographics, trading activity and even sentiment can be important indicators to predict the behavior of a given asset. In traditional capital markets, investors are constrained to analyses based on price, volume and order book datasets.
By leveraging machine learning on top of the blockchains and complementing it with other datasets, we can determine how many investors are in a given asset, when they bought, what is their cost basis and from this data have a complete overview of the token holder’s stack.
In this week session, we will analyze the Bitcoin ownership through 4 fascinating analytics
The metric that most closely resembles the number of Bitcoin holders is the total number of addresses with a balance. Though a Bitcoin user may have more than one address, centralized exchanges also tend to aggregate users’ funds into a few addresses. Therefore, the total number of addresses with a balance acts as a valuable approximation to the number of Bitcoin holders.
As can be seen from the graph above, the number of Bitcoin addresses have been on a consistent uptrend throughout the last year, reaching an all-time high of 33.19 million on December 4. This trend points to an increasing amount of people investing in Bitcoin, accelerating in recent months.
Are Bitcoin Investors Holding for a Long Time or Actively Trading?
IntoTheBlock’s Ownership by Time analysis qualifies addresses based on their activity as long-term holders or Hodlers, medium-frequency investor or Cruisers and high-frequency investors or Traders. This analysis gives you an idea of time positions of individual investors.
Using this indicator, we are able to determine that over 64% of Bitcoin addresses have been holding it for over a year, and it has been growing steadily, increasing by 19.6% from the previous year.
Going deeper into the prevalescence of long-term investing in Bitcoin, using the IntoTheBlock’s Unspent Transaction Outputs Age, which serves as a system to account for ownership of Bitcoin and avoid double spending, we can establish the holding time of Bitcoin addresses.
The percentage of addresses holding for over a year (displayed in colors green to blue) has increased significantly, only diminishing during bubble periods such as 2013 and 2017. Moreover, we can see that the number of Bitcoin’s that hasn’t been moved in over 5 years is up from 3.91m BTC in December of 2019 to 4.06m BTC in December of this year.
At IntoTheBlock, we measure the concentration of an asset and divide it into three categories.
Whales: addresses with more than 1% of the circulating supply
Investors: addresses that hold 0.1% to 1.0% of the circulating supply Retail: all the remaining addresses
When you take a closer look at Bitcoin, you can see that there are no whales, as no address owns 1% of the outstanding tokens, and it only has 38 addresses that hold between 0.1% and 1% (which at IntoTheBlock we call investors). They hold 9.31% of the circulating supply, but one important thing to consider is that of those 42 addresses, only 9 of them are actively trading, which means that a large amount of Bitcoin is not being moved.
But let's dig a little deeper into the Bitcoin concentration. Last week, CoinMarketCap released a new section completely dedicated to the analysis of BTC. As part of that release, CoinMarketCap has partnered with IntoTheBlock to power some of the sections in this new BTC Analysis page. Specifically, IntoTheBlock has provided the data for the Holding Concentration.
The table below shows the breakdown of the number of addresses by the quantity of Bitcoin held in the address.
As can be seen in the graph above, the largest concentration of addresses currently holding Bitcoin (more than 16 million) have a balance of less than 0.001 BTC, aggregating a total of 3,269 tokens.
Moreover, close to 30% of the current circulating supply of Bitcoin is held by wallets holding between 1000-10000 BTC.
Even though there’s a lot to consider and improve yet, counterparty analysis in the blockchain provides a clear advantage against traditional markets. To able to determine how concentrated is an asset, how sensitive it is to price movements by the trading activity of large holders, or to realize how confident are the investors are in a given asset by the amount of time that they are holding it, are key data points to consider when choosing which asset to invest in.
Bitcoin has evolved into a decentralized, long-term investment by most of its holders, highlighting its transition into a store of value asset.
This Week in IntoTheBlock Predictions
ITB Predictions provide indication of where price is likely to go in the next hour: up, stay neutral, or down. Predictions can be thrilling and are one of IntoTheBlock’s core, and with the Pro Subscription, you will have access to browser notifications for your favorite tokens based on their desired outcome (e.g. notify me when Ethereum is predicted to go up).
The current release includes price predictions for Bitcoin, Bitcoin Cash, Ethereum and Litecoin.
IntoTheBlock's Bitcoin 10 basis points prediction model managed to achieve 65.26% accuracy this week. The model gave out a total of 95 predictions as it only provides one when it has a high degree of confidence.
IntoTheBlock & Bitstamp Special Report:
A Comprehensive Overview of DeFi in 2020
All you need to know to understand the DeFi space in one report! Read about the growth and value of DeFi, lending protocols, DEXs and more!
A comprehensive report by IntoTheBlock, powered by Bitstamp
The IntoTheBlock's webinar series is a curated monthly program created to provide a unique view of the crypto analytics space. Each month we choose a different topic and analyze it using ITB data, providing insightful and unique perspectives on the market.
This Week Session:
A Data-First Perspective of Crypto vs. Capital Markets
In this webinar we analyze the data backing the outstanding performance of crypto relative to capital markets in 2020. As well, we dive into emerging patterns between the two, and where the relationship between crypto and traditional markets may head in 2021 and beyond.
Bitcoin Price Predictions and Machine Learning: Some New Ideas and Results
We have continued our work experimenting with cutting edge machine learning models for price predictions in the crypto space and have learned a lot of new things.
Join us in this webinar in which we will share some of the latest ideas and advances in our research.
