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Hey onchainers,
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:
The price of Bitcoin dropped by $2,000 following the recent most recent tweet by Elon Musk. Using data on addresses’ profitability we can also determine points of support and resistance for Bitcoin’s trajectory.
Addresses’ profitability directly impacts buy and sell orders set by investors. Using on-chain data, IntoTheBlock’s In/Out of the Money Around Price (IOMAP) groups clusters of addresses depending on whether they are profitable (in the money) or losing money (out of the money), at least on paper.
The largest clusters of addresses represent at which price the most volume of Bitcoin had previously been bought, and directly influences near-term support and resistance levels.
The IOMAP reveals that 1 million addresses had previously bought approximately 570K Bitcoin at a price of around $35,600. Due to the large buying activity around this area, there is expected to be strong support from new buyers and current holders. Were this level to fail, then a drop to $32,000 is likely.
On the other hand, there is strong resistance around $37,000. The high amount of volume that was previously bought there (442k BTC) is expected to create selling pressure as many holders tend to look to sell positions at a break-even level. Moreover, if buyers are able to get Bitcoin beyond this range, a move towards $40,000 seems probable, where's there's the highest level of resistance.
Due to the high concentration of volume currently near price, it is likely that price may continue range-bound, unless there is a major catalyst in either direction. Finally, it is probable that a breakout in either direction for Bitcoin will lead the rest of the crypto markets along.
Is DOGE Frenzy back?
Benefiting from this wave and propelled by its relentless community, DOGE has outperformed broader crypto markets with a 72x return year-to-date. More recently, following its listing on Coinbase Pro and backed by several Musk's tweets, the meme cryptocurrency gained more than 32% in one day. By using IntoTheBlock’s indicators, we’ll dive into data to paint a clearer picture of the recent price action.
The recent Dogecoin momentum brought a high amount of speculation into the market, as the number of addresses holding Dogecoin for under one month — classified by IntoTheBlock as traders — reached record highs in May. This metric points to high amounts of speculation and short-term trading taking place over the past few months based on blockchain data and with the recent Coinbase announcement, the number of traders is almost back to May levels.
The significant amount of short-term trading suggests a large number of traders have been chasing DOGE's price trajectory. Moreover, while the number of addresses is still below the all-time high reached in May, the volume is almost similar, meaning that there was a capital inflow despite the decrease in the number of traders.
Another key metric reflective of the amount of speculative activity taking place is the volume of short liquidations followed by an increase in the perpetual swap volume. Since derivatives traders typically use leverage for their positions, they also face the risk of getting liquidated if the value of their positions drop past the limits on their margin account.
Perhaps unsurprisingly, DOGE's leverage bearish traders encountered over $16 million worth of liquidations in the recent rally. And as Coinbase confirmed in his blog post that they will start to accept inbound transfers of DOGE to Coinbase Pro, the derivatives market immediately reflected the positive news, as the volume of DOGE’s perpetual swaps increased by a staggering 104% in just a few hours.
As is the case with spot markets, derivatives volume can act as a sign of trend strength of the price movement. Following the Coinbase announcement, Dogecoin’s Perpetual Swaps Volume broke the $20 billion barrier again, reaching levels not seen since May 14.
While the market still remains uncertain, trading sideways for the past few weeks, positive news and buying activity are surrounding the leading meme coin. Is still early to determine if the worst is over, but on-chain and derivatives indicators are painting a bullish sign once again.
This week Conference
QuantMinds in Focus.
IntoTheBlock's CEO, Jesus Rodriguez leads a fantastic panel called "Quant in Crypto-Land"
Cryptocurrencies and digital assets have experienced tremendous growth in the last few years. A completely digital asset class, crypto should be the perfect vehicle for a new generation of quant strategies but has proven to be very resilient to most quant strategies. This panel will discuss:
The challenges and opportunities for quantitative models in the crypto space
Different theses and techniques that have proven effective for discovering alpha in crypto markets
How emerging trends such as decentralized finance (DeFi) are challenging some of the preconceptions of traditional quant models in capital markets.
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.
Next Webinar: June 9, 12pm EST
A deep dive into NFT analytics
(Limited to 300 seats)
NFTs took the world by storm in early 2021 following Beeple’s $69 million sale for Everydays: The First 5000 Days. While the hype surrounding NFTs may have slowed down, the potential for the space remains boundless with applications stretching from digital art to real estate to education.
In this webinar, we’ll go over the key metrics you should keep an eye out for whether you are an NFT creator, collector or simply looking to learn more about the space. As well, we’ll cover the growth in NFTs and where they are likely to be heading in the future.
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