Very often, we will see the mainstream crowd play a major role in small to mid-sized price fluctuations. And by major role, we mean wherever the mass majority thinks Bitcoin or Ethereum is heading next, the opposite outcome comes to fruition more often than not.
Let's look at the BitMEX perpectual contract funding rates during the first week of April. This metric helps gauge where leveraged traders are placing their bets.
When bars are high, greed is taking place (a good time to sell). When low, shorts are paying long, indicating fear is kicking in (a good time to buy).
The two largest bars of the week were right near local tops, and both led to major price downswings.
The same outcome is true. ETH dropped both times this metric rose higher.
And with social mentions, we recently dropped to "fear" range when we dropped to $56k.
Not surprisingly, we're now back to $58.4k.
- PayPal, crypto - https://www.coindesk.com/paypal-to-start-letting-us-customers-to-use-their-crypto-at-checkout-report
- Miami - https://blockdownconf.com/speakers-blockdown-4/
- Quantum, Bitcoin - https://decrypt.co/28560/quantum-computers-could-crack-bitcoins-encryption-by-2022
- Rare - https://twitter.com/danheld/status/1376882031985094656
- XRP - https://www.coindesk.com/judge-in-sec-case-drops-bombshells-that-are-positive-for-ripple-xrp-says-lawyer
- Powell, Bitcoin - https://cointelegraph.com/news/bitcoin-is-more-a-substitute-for-gold-than-the-dollar-fed-chair-powell
- Turkey - https://www.financemagnates.com/cryptocurrency/news/bitcoin-queries-are-surging-in-turkey-amid-liras-crash/
Bitcoin, Ethereum, Binance Coin, and Chainlink have all seen their share of expected growth of addresses interacting on their respective networks. But some have been much more active in contrast to others these past six months.
Below is a chart showing which projects are still showing solid activity through this extended bull run, while others are revealing signs of tapering off in regards to this impactful and predictive metric:
Clearly, Ethereum (in blue) has been showing the most long-term growth among these four juggernaut assets, combined with the least amount of fading.
Bitcoin had its peak right at the beginning of 2021, It hasn't shown a serious decline, but the gradual dropoff back to around 1.10M addresses a day is a concern.
Both Chainlink and Binance Coin have had isolated spikes, with LINK particularly throwing up a caution flag, reverting back to about a 2-month low.
Here's a more zoomed in perspective, for reference:
Network Realized Profit or Loss (NPL) calculates the overall ROI across all daily transactions for a crypto asset. Generally, spikes are what we look to avoid, as it implies increased chances of local tops and short-term price normalization.
So are we seeing major spikes to be worried about? Here's how NPL currently looks for some of crypto's biggest names:
Bitcoin hit its lowest NPL of the month yesterday, and is well below its 30d and 200d trendlines. A great sign that an imminent local top isn't approaching.
ETH is more neutral than BTC, sitting right between its 30d and 200d trendlines.
Chainlink is at a low for the month in NPL, and this coincides with a major address activity spike. Could be good here.
LTC's NPL is below the 30d and 200d trendlines and has been sitting encouragingly low for about 2 straight weeks now.
Bitcoin shot up to a record-setting ~$58.3k on Sunday. And if you were watching, you would have seen a massive exchange inflow spike:
There were 59,915 BTC in a single hour, just as prices jumped over $58,300. This was the largest spike in 16 weeks. And for context, the 200-hour resting average was sitting at 5,032 BTC moved to exchanges per hour. This means this spike was 1,091% higher than the recent mean.
We can also look at how this spike looked from an Exchange Flow Balance (Inflow minus Outflow) perspective:
Generally, when not preceded by a big outflow, inflow spikes lead to price corrections.
This exchange inflow was assisted by the 2nd largest BTC transaction of 2021 to a large whale address, which instantly disposed of the funds.
The address history shows similar patterns, going all the way back to a contributive quick sell-off on Black Thursday.
Bitcoin has soared to an all-time high of $56,287 just a few hours ago. In the past three months, the price has jumped +219%, meaning you would have more than tripled your investment if you opened a BTC position on November 19th and held. So where do our metrics indicate we go from here?
Mean Dollar Age
Dormant coins continue moving, as age of invested dollars gets younger.
Realized profit isn't at the same peak level it was a week ago.
Bitcoin's supply continues encouragingly moving off exchanges.
Bitmex Funding Rate
Bitcoin's ratio of longs vs. shorts on BitMEX is indicating a very high percentage of longs, meaning long traders are paying a premium to short traders.
Whale Holder Addresses
The amount of whale addresses continues to decline after $45,000 on February 7th.
Based on the green-yellow bars on the right side of this chart, NVT is showing a semi-bullish divergence.