Letter no. 16: More Accumulation Ahead
Date: 12/1/2022 BTC Price: 43.5k
Hey Subscribers,
Welcome to letter no.16 of Dor’s On-chain analysis newsletter.
In my last letter I’ve analyzed on-chain fundamentals which seemed to stay stable as opposed to the volatile price action we’ve seen. I’ll continue to do so in this current letter, to assess what on-chain data is telling us about the short & long term.
Analysis Breakdown
In the last two weeks, we’ve seen a downtrend from 45k down to 41k and an occurring bounce back to the 43k area.
Price has been affected by macro-economic events that caused several long-liquidations that weakened price even more.
This can be seen in the futures long liquidations.
LTH has been buying continually during the last two weeks, this may indicate that a longer accumulation period is ahead of us. And, as you already know, it means that LTH remains unfazed by the downward price action.
This provides confidence for the long-term.
Moreover, we can see that the 30-day change of LTH position has turned positive after two months of being negative, since the 69k ATH.
This strengthens the idea that LTH are shifting back to accumulation mode. This of course means that we might see some more downside before heading back up and starting the macro uptrend.
I’ll move on to a metric I’ve created which called Realized Price-to-Liveliness ratio that was published in my newsletter and is part of Glassnode’s community charts.
A remainder, the metric is providing support & resistance areas, is used to identify early signs of bear market and confirmation of bull market.
The metric has successfully identified the bottom of July.
Looking at it, we can see that we’re very close to the metric, there are two possible scenarios in my opinion.
Price would go lower and a little below the metric like it did in July bottom.
It will bounce of from here and start a new uptrend.
Most be noted that a break below the metric will provide an indication that a bearish macro trend is starting.
I’ll close this letter, with entity-adjusted Dormancy, which is the average number of days destroyed per coin trasnacted.
A reminder, the more coin days are the destroyed the more old coins which are held by experienced entities are sold. This, if happens is a bearish indication.
We can see clearly that less old coins (lower dormancy) are being sold, this strenghtens the idea that the coins trasnacted are mainly those of short-term holders which tend to be new market participants, traders & speculators.
Conclusions
I know that the price action of the last two months, more specifically of the last two weeks is not keeping you opimstic. But for a protracted period of time, on-chain data is showing positive & bullish signs. It’s just a matter of time until this “behind the scenes” information will be priced in.
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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