On-Chain Report | Wake me up when September ends
Qaptains Log 7/9 - Lifeforms vanishing. Hostile terrain or September 'funnies' on-chain? Read Vu's highlights for BTC, ETH in the long and short terms and more in this post 👇
(This article is written by Vũ Nguyen and edited by John Li)
Wake me up when September ends
Historical trends indicate that September is a bad month for investment. The "Stock Trader's Almanac" suggests that September is typically the worst month for the three leading indices:
Dow Jones Industrial Average
Some have termed this annual drop-off the "September Effect".
The crypto market also follows this fate, with the crypto index making another lower bottom [FTX: ALTPERP 🔻1789]. In addition, on-chain Supply on Exchange (SoE) data also present the signs of an impending bearish momentum that practitioners should be aware of.
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Bitcoin's SoE showed a sign of going up compared with last week's pivot [BTC: SoE ▲9.031]. This increase in metric, which peaked at the 9.1 mark, presents a condition that SoE is approaching closer to the short-term EMA(30,50) resistance.
On the price action front:
Bitcoin has broken down from local support around the $19,500 range
This has led to a ‘total collapse’ of prices down to the $18,600 mark
Experiencing a -26% drop since the local peak at $25,000 is undoubtedly painful for many investors.
Like Bitcoin, Ethereum continues its bearish price action with:
Another drop in celebration of "The Merge", seeing prices down around the $1500 level
Losing the ascending wedge support between the $1426 and $1689 range [Coinbase: ETHUSD 🔻$1501]
SoE remains strongly above its EMA(30,50) [ETH: SoE ▲14.74]. When everyone is talking about something, we should be extra cautious. The chances of being caught holding the bag are extremely high.
While short-term price action is starting to appear more 'interesting', the sea remains calm in the long-term time window. We have not noticed any unusual movement of SoE in higher timeframes, with ∆ (referred to in the previous report) now sitting at 1.33 points, also a decrease compared to last week.
A decline in Bitcoin could also suggest a slowdown in the accumulation of this cryptocurrency, which makes sense given the current pessimistic outlook.
Our view remains unchanged. This situation will be invalidated if SoE crosses above the EMA (50), now at 10.8% (less than the previous week).
From a long-term viewpoint, Ethereum SoE continues its upward trajectory. Ethereum's previous weekly SoE has maintained its position above the EMA(50) at 13.81% and even performed progressive action to the upside. However, Ethereum appears caught in the bears' hunting grounds following this development.
Note we would only consider the current situation invalid if ETH SoE falls below the EMA(30), which currently sits around 13.47%.
ALTPERP has fallen further. All hail the bears!
Following the previous report, the FTX's Altcoin Index basket ALTPERP has pushed further to the downside, with the new bottom pivot set at the $1788 mark. As expected, the market has continued its bearish movement, with downtrend resistances across multiple timeframes starting to expand further.
This view will be validated if ALTPERP breaks the bull trap pivot at the $2012 level, triggering our reconsideration of the market condition again.
We keep our chart setup from the previous week here for easier comparison:
…also with some choice lyrics from Frank Crumit's A Tale Of The Ticker:
“Oh the market's not so good today; your stocks look kind of sick
In fact they all drop down a point, each time the tickers tick
We'll have to have more margin now, there isn't any doubt
So you better dash with a load of cash, or we'll have to sell you out”
Mission Log | On-Chain Summary
While the short-term SoE of Bitcoin has increased, the long-term SoE has remained in downtrend.
The distance between the SoE and its EMA(30,50) at 1.33 points (The SoE is below the EMAs). Price action in the short-term could be perceived as bearish, although we are still waiting for the SoE movement from a long-term perspective.
Ethereum SoE keeps trending above the EMA(30,50) support area from both long-term and short-term perspectives.
We continue to view Ethereum as a poor option to hold or long in both time windows.
The cryptocurrency market continued its decline last week as the ALTPERP downtrend structure continues to expand across multiple timeframes.
Broader pessimism in investor sentiments applies to cryptocurrency markets—until the evidence notes otherwise.
See you again for the next update.
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