Highway to the Danger Zone - OnChain Report 31/08
Join the Qluster team in this week's OC as we sit in the eye of this crypto market hurricane. Read on for more 👇
(This article has been written by Vũ Nguyen and edited by Andy Phung)
Goin' down. Party time!
As expected from the last Onchain report, the crypto market confirmed its bearish condition by bloodshed last week. [FTX: ALTPERP ▼1904].
On-chain Supply on Exchange (SoE) data continues to imply an environment where investors are fleeing out of crypto, especially from ETH data.
Part 1 | Short Term
Bitcoin’s SoE showed a decline compared to last week (23/08) [BTC: SoE ▼9.044].
However, this metric decline went contrary to the market price action of the largest crypto, as Bitcoin observed an 11% crash to the $19,500 mark pivot.
This mixed scenario suggests that a double check on other crypto metrics is necessary.
Ethereum continues its bearish price action with another sudden drop to the local bottom pivot at $1426, down -17%. Now, it is retesting its local resistance at around the $1600 mark [Coinbase: ETHUSD ▼$1574].
A notable piece of information is that SoE maintains above its EMA(30,50) [ETH: SoE ▲14.57].
Although dropped from last week, we want to emphasise that Supply on Exchanges will still imply the prevailing bearish market condition for crypto so long as SoE maintains its bullish position.
And for digital assets like cryptocurrency, we're only just getting started 👇
Part 2 | Long-Term
Similar to last week, long-term SoE is still maintaining the bearish condition, emphasising the view that Bitcoin is still a long-term holding asset.
∆ (referred to the previous reports) is now sitting at 1.385 points.
Compared to the previous week, we observed a decrease in ∆. This decline could also imply that the accumulation of Bitcoin has reluctantly slowed.
This slowing down of BTC accumulation makes sense, given the current pessimistic price action.
Like the previous report, our team believes this situation will be disproven if SoE goes above the EMA(50), decreasing to the 10.88% mark (less than the previous week).
From a long-term perspective, Ethereum SoE continues its macro trend towards the upside.
Ethereum SoE maintained its position above the EMA(50) at the 13.85% mark.
We keep the view that Ethereum is in the bearish territory, similar to what it experienced between July 2018 and September 2020.
In this sense, our team believes the current situation will only shift momentum when Ethereum SoE breaks down below the EMA(30), currently at the 13.42% mark.
ALTPERP continues the dump, bearish structure expanding
As we expected from the previous report, the FTX’s Altcoin Index basket ALTPERP has pushed further to the downside, with the new bottom pivot set at the $1793 mark.
Our team believes the market has continued its bearish movement, with downtrend resistances across multiple timeframes starting to expand further.
This bearish view will be invalidated if ALTPERP breaks the above $2026 mark, which will trigger our reconsideration of the market condition once again and what constitutes as a reversal… BUT let’s cross that bridge when we get to it.
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Part 3 | Conclusion
The short-term SoE of Bitcoin showed a slight decline, while the long-term SoE is still in the downtrend, with ∆ between the SoE and its EMA(30,50) at 1.385 points (SoE below EMAs, lower than last week). Price action in the short-term view is bearish, and we are waiting for the SoE movement from a long-term standpoint. The contrary between data and price action presents that we should shift our focus to other crypto metrics for validation.
Ethereum SoE maintains above the EMA(30,50) area, both from the long-term and short-term perspectives. We retain the view from last week that holding/longing Ethereum is no longer a good option to pick in both time windows.
The cryptocurrency market continues its bearish movement from last week. As the ALTPERP downtrend structure is starting to expand across multiple timeframes, we are of a pessimistic view of the crypto market at the moment.
See you again for the next update.
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