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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.
Markets remain indecisive while key indicators remain strong
For the most part of last week, crypto markets endured a significant correction. In a week loaded by a confluence of bearish news, prices in Bitcoin and Ether dropped double digits, and while the market seems indecisive at the moment, several on-chain indicators are painting a bullish scenario.
One key indicator that shows the strength of the Bitcoin Holders is IntoTheBlock’s Hodlers indicator, which measures the number of addresses holding Bitcoin for a period of more than 1 year. Despite the recent massive sell-off, the Hodlers indicator is at its highest level ever, meaning that most of these holders didn’t sell during the recent crash.
For a crypto-asset to accrue value it is important to have long-term supporters that are not looking to sell when markets are in turmoil, so it is believed that what we recently experienced were short-term holders selling at a loss by panic-selling. All of this while long-term holders looked to increase their position by buying the dip.
What’s more impressive is that over the past 12-months, we have experienced an almost linear growth in the number of Hodlers, despite Bitcoin’s recent price action, it is now at about 22.01 million addresses, an All-Time-High for this metric, representing 57.43% of the total BTC holders.
Along with the number of long-term investors, the total number of Bitcoin holders has also been increasing.
The total number of addresses with a balance (holders) reached a new high of 38.92 million on April 29. But one interesting fact is, since the crash of May 18, the number of addresses with a balance increased from 38.08m to 38.37m yesterday. This suggests growing adoption in Bitcoin in spite of short-term price corrections.
While the long-term holders remained strong during the recent crash and short-term holders sold at a loss, IntoTheBlock's Net Flows indicators spotted massive amounts of USDT and USDC being sent to centralized exchanges, while large amounts of ETH and BTC being withdrawal during the same period, which could be translated as long term holders moving their positions to DeFi protocols to increase their yields or just putting them in cold storage.
In the case of Ether, on May 24 we spotted the second-largest withdrawal from exchanges in over 15 months, as a total of 667,020 ETH were removed. As the highly-awaited EIP-1559 upgrade launch date is getting closer, more investors are accumulating ETH at these prices.
Now, as new money flows into the market and the Hodler trend continues, we can analyze where Bitcoin is heading next. By analyzing the profitability of traders near the current price of BTC, we can understand the circumstances and price ranges expected to act as support and resistance now.
The IOMAP is useful for traders to understand the next price levels where addresses are expected to buy and sell based on users’ on-chain positions and unrealized profits or losses. As you can see in the chart below, the size of each cluster represents the volume of BTC previously bought at a specified price range.
Through the In/Out of The Money Around Price, we observe an immense amount of support that could prevent Bitcoin from falling below $33,700 in the short term. The IOMAP indicates that a large cluster of addresses (293k) and volume (152k BTC) had been bought slightly below $35,5k. This price range, which already saw high levels of trading activity, points to the likelihood of investors looking to buy back near this range and create support before the price lowers further. If this range is broken, there’s a similar area with a concentration of buyers between $33,751 and $34,823. Here, approximately 348.03k addresses had previously purchased roughly 133.88k BTC.
On the other hand, Bitcoin is facing stiff resistance ahead that could prevent Bitcoin from reaching the $40,000 level in the short term. The next range with significant resistance for Bitcoin is around $37,300K, where roughly 645.5 thousand addresses previously acquired 265 thousand BTC. If Bitcoin breaks that threshold, there’s an even bigger level of on-chain resistance between $38,104 and $39,104. Breaking that level would lead BTC to the highly contested $40,000 mark.
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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