There has been silence on my part for some time. Simply because there was really nothing to report, no fundamental changes or major shifts took pace in my opinion. Of course, crypto still remains the hottest topic out there and I continue to keep my money in this market. Well, I trade some Ethereum (ETH / BTC) and make some insignificant trades with Altcoins from time to time but overall, I stick to Bitcoin.
So, in October, BTC reached new price peak: 67k and almost immediately experienced a sharp drop by nearly 15% to settling at 56.4k mark where it sits at this price range for already some time. I think that the market background for BTC is favorable, despite the hectic news from China, occasional statements from regulators among many other speculations. And it’s good! It means that fundamentally, BTC is staying strong, facing so many turbulences at the same time: uncertainty in the markets, Covid situation, Inflation risks, rising commodity prices, weak supply chains, the real estate bubble in China to name a few.
Why is that? BTC is an alternative, some sort of haven in a sense.
Let’s have a look at BTC technically.
#1. Let’s start with the TOP-DOWN. So far the well-known “stock to flow” model described in my previous blogs applies nicely here. It’s working like a clock. The same model predicts the November price will reach $ 98k and will top $100k in December price. Will see. Personally, I think that sooner or later this model will be broken, and the price will no longer follow these models, but time will tell.
#2. The total market capitalization has grown by almost 70% since my last entry in June reaching $ 2,8 trillion!!
Excluding BTC, the market capitalization to date is $ 1,595 trillion.
The capitalization of Altcoins, excluding ETH, because I don't put him on the same shelf as Altcoins, has reached significant mark of $ 1,037 trillion as well.
#3. The BTC price increase, followed by previous Halving Dates as described in my 2 June blog post also temporarily runs its cycle. There is no broken parabola, correction has been made and BTC seems to be heading for new heights.
As for the price correction that took place in May/June/July – please note that after similar adjustment that followed similar correction that took shape from 2016 to 2018, the BTC value increased by 1000% as described in my blog on 2 June.
Will it happen again this time ? time will tell. However, if we look at the STOCK-TO-FLOW model, it doesn’t look so unrealistic anymore. Especially when the Model predicts the price increase in this cycle up to $ 288k, which is also about a 1000% increase from the last adjustment when the price was $ 28,755. I would no longer be surprised, even if such a price increase would take place now. As always with crypto – be prepared for everything, including 90% adjustments.
#4. The Mempool report. Simply put, it is a "waiting area" for transactions. Mempools show how many transactions are waiting for approval. As you can see, Mempool is relatively "calm" compared to the beginning of the year. And until the price dropped in May, the mempools were full. What's interesting – mempool's last rise was in July when BTC price stabilized at $ 30k and then rose. Although the mempool size does not directly correlate with the BTC price, I still watch this indicator.
#5. Bitcoin whales, or BTC addresses that hold 1000 or more BTCs.
As you can see, the number of whales really do not grow anymore. What I have realized that this indicator is no longer so relevant and significant as it used to be since less number of whales cab hold onto larger amount of BTC.
#6. The “Supply held by Entities with balance” indicator. Look at how BTC are distributed by wallets. Wallets that hold 1k-10k BTC; 100-1k BTC; 10-100BTC; 1-10BTC.
As you can see, the total amount held by each of these groups is growing only in the long run. Yes, with some adjustments, but in the long run they continue to increase the size of their wallets. Which means that many of the players in this market are long-term "players".
#7. The overall number of active addresses. The unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted in this case.
As you can see: since the last drop, when addresses fell sharply, the number of addresses has recovered, but still has not reached its previous peaks.
#8. Stablecoins. Although this group will be affected by regulators in the near future (check my 19 June post about statistics) stablecoins have grown by more than 30% and reaching a market capitalization of $ 142 billion. The USDT is still the leader, followed by the USDC, which is growing very fast. The confidence in cryptocurrencies is growing and this will continue if the regulators won’t interfere.
#9. Net transfer volume from/to exchange – all exchanges. A very important indicator for me: the influx of BTC on the stock exchanges indicates "sell" pressure and vice versa – the outflow of BTC to cold purses is a "buy" signal. The current picture as I see it: starting from 2020, BTC increasingly went to cold wallets rather than to stock market accounts, which again shows a stable trend here.
As highlighted by several cryptocurrency market analysts, including @WClementeIII for example.
In summary – crypto market is rather stable, without significant changes. A volatile, aggressive, very rapidly growing market that seams just getting steam and ready to grow even more. Hence my advice: “Keep holding BTC”.
As for my trading results: they continue to grow along with the rise of Bitcoin.
It is worth to note that I trade BTC without leverage!
This is very important. And as you can see – my results have greatly improved since I started trading Crypto. it has been very difficult with trading for me since COVID. Simply because the macroeconomic data is relatively poor, yet markets continue to reach new highs. It was very difficult for me to trade in such circumstances: macro data shows one picture, but markets act differently.
In any case, the results are good, and I only deal with BTC and ETH, making very few transactions a month. I find a promising place to buy at the adjustments, move Stop to zero relatively quickly and then only monitor how the transaction is developing. The last few months show a relatively large number of transactions, but this is more due to the fact that I am testing trading possibilities with the Altcoins. However, it didn’t make any significant impact, though.
Overall this COVID period has given me a great lesson. You can't just sit back and wait for a correction, the next opportunity, or just wait for the market to get better. You may not expect all of this. So, you are forced to analyze the market more in detail. What I came to realize at some point that the most active market with the greatest potential is the Crypto.
Thus I decided that I need to focus on it and trade wisely since I don't see any other sector with as much potential as Crypto. And there is no point to discuss that this is a too volatile, unknown, and unregulated market. Yes, and I can agree that it's a bubble, but it is a bubble everywhere. The S&P500 has reached new historical highs, as have the Dow Jones, NASDAQ, Russel, real estate markets, oil, copper, timber. So, there’s a feeling that everything is a bubble.
And in conclusion, the infamous quote of George Soros who once said: "When I see a bubble forming, I rush to buy, adding fuel to the fire."
Stay tuned!
Agris
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