Supply adds fuel to the fire as the crypto market loses the line | On-Chain Outlook, Edition #47 (27/07/2022)
Supply causing a firestorm? Join the Qluster Team as we dig deeper into this inferno. Read on for more 👇
(This article has been written by Vũ Nguyen and edited by Andy Phung)
Part 1 | Short Term
US stock indices have paused the rally since 25th July 2022. Signs of peak inflation, relief from rising bond yields and corporate earnings have contributed to the pivotal Monday top.
As a result, the crypto market continues to correlate with equities momentum with a dive down below the EMA support area: [FTX: ALTPERP ⇩ $1776].
Onchain data also shows some movement that sparks concerns about the market conditions of Bitcoin and Ethereum.
We have observed an approach in EMA(30,50) area for Supply on Exchange (SoE) since 25th July [BTC: SoE ⇧ 9.382], driving the Bitcoin price down from $22,100 to the lower pivot at $20,700.
Notably, the short-term resistance limit for SoE is located above EMA(50), approximately at 9.52 (and it is getting lower).
The table has been turned on the second biggest crypto. SoE broke up the resistance EMA(30,50), resulting in a -17% drop [COINBASE:ETH $1431].
This uprising presents a condition in which investors deposit more ETH into public exchanges, threatening an impending market selloff.
Unless SoE reaches below 13% again, this surge in supply could not seem to slow down.
And for digital assets like cryptocurrency, we're only just getting started 👇
Part 2 | Long-Term
There is nothing new about Bitcoin from a long-term perspective.
Long-term investors continue to hold the line as SoE keeps maintaining below the EMA area. However, one should note that the gap between Long-term SoE and its EMA(30,50) is getting closer.
Eventually, the metric has to move substantially towards a direction, so take care not to get caught off guard.
Following the previous report, Ethereum SoE failed to bounce down from the average area EMA(30,50).
Therefore, the risk of a surge in Long-term supply similar to July 2018 still exists.
Talk about bad omens for the Permabulls!
ALTPERP fails the support! Bears out of the woods
The Altcoin Index basket ALTPERP provided by FTX has lost its short-term 4H support at $1783 after three failed break-out attempts from the Daily resistance at the $1990-$2000 range.
Unless SoEs and the break-out above the resistance line experience change, our team believes that the bearish momentum is building up again.
Well done! You’ve almost made it to the conclusion. Help us share this research before reading on 👇
Part 3 | Conclusion
To conclude readers, we are left with the following observations:
⦁ Both short-term SoE of Bitcoin and Ethereum observed a surge, with ETH SoE following a break-out on the upside.
⦁ The long-term SoE of Bitcoin is still in the downtrend, but the closing gap between SoE and EMA(30,50) indicates that macro-structural movement will happen soon.
⦁ The long-term SoE of Ethereum is still within the Long-term EMA(30,50); if it fails to bounce below 13%, then the bearish cycle is still intact.
⦁ The cryptocurrency market fails to hold ground again, with the ALTPERP index losing its 4H short-term support at 1780.
See you again for the next update.
Did you learn something new in tonight’s research feature? Let us know in the comments to help us deliver more quality crypto and blockchain research 🤗
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