Bitcoin Price Analysis

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)

The price of Bitcoin has fluctuated sharply in recent weeks, and while rising to $ 52,849, it suddenly fell sharply, falling to around $ 43,000. The main reason for this decline seems to have been the extreme emotional behavior in the leveraged trading market.

But a review of the futures market and intra-chain data shows that the significant trend of long-term accumulation and holdings of coins remains intact. Despite a more than 50 percent drop in the price of Bitcoin after market pressure in May, a price increase from $ 29,000 to $ 52,000, and finally a price correction from $ 52,000 to $ 44,000, the behavior of Hoodlers shows that they Despite these sharp price fluctuations, they continue to invest.

Help this week an article From Glassonood, we will examine the developments in the leveraged trading market that led to a sharp drop in prices, as well as the dynamics in the supply of bitcoin chains.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Bitcoin price chart in the last three months

Derivatives Market; The main reason for the fall in bitcoin prices

In last week’s Anchin report, we saw how the growth in the number of open futures contracts and the positive ratio of overdue contracts affect bitcoin and Ethereum funding rates.

This indicates the risk of futures trading with very high leverage on the price of Bitcoin. Last Tuesday, we saw significant sales pressure in the market and the price of Bitcoin fell by about $ 10,000 in one hour. This led to many long liquidations, but after that the market stabilized relatively well and the week passed quietly.

In the recent drop, out of a total of $ 13.4 billion in overdue futures, about $ 4 billion (30 percent) closed in about an hour. During the week, the amount of open contracts without maturities remained at about $ 9.4 billion.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Open futures without Bitcoin maturity

According to the Long Liquid Ratio (LLD), we see that before the sudden sell-off on Tuesday last week, the futures market witnessed the liquidation of short positions, which caused the price to rise above $ 52,000. At that time, the liquidation of short trades accounted for 80% of the total liquidity of the futures market.

Immediately after this peak, the trend was quickly reversed and the share of long trades in the total liquidated trades reached more than 68%, which led to a fall of $ 10,000 in the price of bitcoin.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
The share of long positions in the total liquidated positions

With the sudden fall in the price of Bitcoin, some traders tried to protect their assets by withdrawing from their positions, which led to sharp fluctuations in the market of options contracts. This has become a common practice this year, and as the market declines, traders in the option market increase.

After a relative interruption in the volume of option trades in the months of May to July, in recent weeks this criterion has been recovering and returning to pre-May levels, so much so that on Tuesday, during the hours when the market was falling sharply, the volume of trades Authority broke the record of the last few months by reaching $ 1.3 billion.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Volume of option transactions

After a short period of time when the financing rate was in a negative position due to sales pressure, the general market conditions are returning to the previous state with the reluctance of traders and their upward view and resuming their positive trend. Note, however, that the amount of capital in this period is much less than the amount in the period before the price fell, which indicates that traders are less risk-averse to use high leverage.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Futures trading rate without maturity

Dominance of older queens

In the following, we review how spot markets and intra-chain data react to market developments this week. Let’s start by looking at the average sleep of the coins, which shows the age of the coins spent on that particular day per unit of bitcoins. Two main factors are considered in this case.

  • In the first case, if the average sleep of the coins did not increase during the sales cycle, we find that the average age of the coins spent at that time was relatively low and the older coins were inactive.
  • The Quinns’ average sleep deprivation continues this week, returning to its lowest level in the run-up to 2020. This reflects the preference of investors for the long-term hold.
Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Quinoa dominance chart

“Re-supply” is a measure that indicates a certain amount of coins that are more than a certain age. This tool can be used to assess the amount of older coins, as well as how many inactive coins have returned to the market cycle or how many old coins are still dormant. High levels of the resale criterion can indicate a change in investor attitudes and a willingness to sell, while low values ​​indicate that belief in holding coins remains intact.

During this week, the re-supply of quinces with a lifespan of one year or more has dropped significantly, just as it did in the pre-cattle market in 2020. On a 7-day moving average, less than 2,500 bitcoins over the age of one are spent per day. This is 9 times less than the old coins, which occurred compared to the peak of the bull market in January 2021 (December 1399). At that time, more than 22,500 bitcoins were sold per day. This was due to the fact that Bitcoin reached the price peak of $ 42,000 for the first time.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Re-supply of coins that have not been active in the last year

This observation is confirmed by evaluating the supply ratio in the wave diagram of young queens (less than 3 months). Here we see that coins with a lifespan of less than 3 months have reached their lowest level of circulation, ie 15.9%. On the contrary, coins older than 3 months now have the highest supply (84.1%).

By examining the historical trend of the market, experienced investors minimize the number of coins by collecting them with a shorter lifespan, a process that usually occurs at the end of the bear market period (blue in the chart below). This is where the urge to buy coins will be at its lowest, while the demand for accumulation by smart investors will be at its highest.

The opposite is also true, with the end of the bull market (red) and price peaks, skilled traders have cashed in on their profits and new coins have fallen into the hands of novice investors who act in a state of turmoil and fear of falling behind. Have bought.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Hoodle waves

The accumulation of coins continues

Long-term, long-established holders are commonly known as bitcoin buyers who make dream purchases at the lowest prices. These skilled traders have taken advantage of market fluctuations and fears of the majority of inexperienced investors and have valuable coins at their disposal. Due to their positive attitude and extraordinary insight into the market, they have been able to buy and sell their coins at the best possible times. According to in-chain data, the most appropriate recorded threshold between long-term and short-term holders is in the 155-day coin life span.

155 days ago, in mid-April (late April), the price of Bitcoin was trading around the $ 60,000 level and was moving towards the historical price ceiling; Thus, each coin purchased after the historical price ceiling (ATH) is recorded is often categorized as short-term investor-owned (STH) coins.

The chart below shows that over the current week’s price ceiling of $ 52,800, more than 16.8% of the supply has been available to short-term, profitable investors. This indicates a massive accumulation trend that occurred between the recent price floor of $ 29,000 and the lower limit of the ceiling at the end of the first half of the year.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)

Also, the supply to long-term investors (LTH) has reached 79.5% of the total bitcoin supply this week, which is equivalent to the levels of October (October 1399) and before the start of the cattle market. In fact, based on the net and absolute volume of coins, long-term investors (LTH) currently have the largest amount of coins in history, which has reached 12.97 million bitcoins this week.

Maximum values ​​(peaks) in the amount of supply available to long-term investors are usually associated with late market downturn, which is historically associated with a rapid decline in supply and the beginning of market uptrends.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Number of coins maintained by long-term hoodlers

Seeing the volume of bitcoin held by short-term investors (155 days) up to the long-term investment threshold, it has maintained a good growth rate since May; While from a logical point of view, this trend was expected to decrease significantly, as most of the coins that were bought at the end of the first half of 2021 in the range of $ 50,000 to $ 64,000 were sold at a loss in May and June.

However, the high charts and the ratio of long-term investors’ trading positions actually show that a large part of the accumulated supply has not been spent in the high ranges and has been kept strong to this day.

In the current situation, some coins with a high rate of 421 thousand bitcoins per month are entering the age range of long-term investment. Given that more than 16.8 percent of supply has accumulated in the $ 29,000 to $ 40,000 range, this trend is likely to continue through October and December (155 days after the consolidation phase in May and July).

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Changes in the status of long-term hoodlers

Finally, we decided to examine the supply of working capital and Coin liquidity on a large scale, which indicates how unique the current market cycle is. For the vast majority of bitcoins, the volume of coins that circulate freely and are consumed continuously in the chain has increased. After the final sale and the market surrender point in 2018, the supply in circulation had a neutral trend, which has been extended until March 2020.

Following the sale event in March, a structured trend of increasing cash flow has overcome the dynamics of intra-chain supply. The reason for this was the outflow of more coins from the stock exchanges to the wallets of long-term investors.

Following the gradual influx of capital into exchanges in May 2021, the downward trend in working supply and the increase in capital hoodling have continued. It also looks like long-term bitcoin investors will continue to accumulate and hold assets in cold wallets, despite significant fluctuations in 2021.

Weekly Anchor Analysis of Digital Currencies September 15 (September 24)
Supply in and out of the market cycle


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