Letter no. 14: Accumulation Continues
Date: 15/12/21 BTC’s Price: 47k
Hey Subscribers,
Welcome to letter no. 14 of Dor’s On-Chain Analysis newsletter.
In my last letter I’ve covered several on-chain categories and outlined a quite healthy on-chain fundamentals picture. Since then price has dropped dramatically down to the 45k levels which was triggered by a liquidation cascade, at the time of writing it’s trading at 47k after a week of consolidation.
Analysis Breakdown
I’ll start off by looking at LTH supply, to assess whether the experienced investors are taking actions to leave the market due to the downtrend.
We can see that since the liquidation cascade and the downtrend that followed, LTH are pretty much spending coins in a very gradual and minimal way; not giving any strong signs of looking to exit the market.
This provides a strong HODL indication, the unwillingness of LTH to sell coins with price decrease is a sign of expectations to higher prices.
The long liquidations cascade has caused a decrease in positive funding rates which is indicative of less leveraged market and it’s positive for a spot-drive price increase to take place.
Moreover, OI has decreased significantly, which is complementary to stabilizing normal levels of funding rates. Both indicating that a decent amount of leverage has left the market and spot-driven price increase is likely to happen.
Adjusted SOPR has went below 1, indicating losses realizing by market participants. We’d want to see it make it’s way back above 1 and get supported at the level, this will indicate that market participants aren’t willing to realize losses and are more inclined to HODL.
Market Gradient 140-days has seen a massive decrease in the last period, which means momentum to the upside is decreasing. It has not yet broke down to the negative territory, but it’s getting closer to the 0 level, we’d want to see the metric being supported there. Historically, this indicated that macro uptrend is still intact.
A close look to the current metric’s values.
Looking at Illiquid Supply Shock, which is the ratio between illiquid supply and the sum of liquid & highly liquid supply. We can see a bullish divergence, the metric is continuing to trend higher, means more coins are moving to illiquid entities, entities that are likely to HODL more than 75% of their position.
This along with the minimal spending of LTH is indicative that market participants are taking advantage of the last price draw-down to accumulate coins and strengthen their positions for the upcoming macro uptrend.
Conclusions
We’re at interesting times, we’ve got another accumulation period that was triggered by a liquidation cascade. Leverage has decreased, LTH spending is very gradual & minimal & more coins are moved to entities which tend to HODL most of their coins all these are healthy and suggesting still strong fundamentals.
On the other hand we’d want to see aSOPR breaking above 1 and being supported by the level and Market Gradient 140-days being supported by the 0 level those two occurring will give us two more points to the bullish side.
Links and References
Newsletter Archives: Dor’s On-chain Newsletter
Data Sources: Glassnode (T3 paid subscription)
Disclaimer
Nothing written in this newsletter is to be considered as an investment / trading advice, do your own research.
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