Bitcoin price bottom takes shape as ‘old coins’ hit a record 78% of supply

November 2, 2022 Coin Telegraph

Analysis

Bitcoin’s long-term holders’ NUPL metric has dropped to levels that coincided with market bottoms thrice since November 2011.

Bitcoin (BTC) and the rest of the crypto market have been in a bear market for almost a year. The top cryptocurrency has seen its market valuation plummet by more than $900 billion in the said period, with macro fundamentals suggesting more pain ahead.

Another bear cycle produces more BTC hodlers

But the duration of Bitcoin’s bear market has coincided with a substantial rise in the percentage of BTC’s total supply held by investors for at least six months to one year.

Notably, the percentage of coins held for at least a year has risen from nearly 54% on Oct. 28, 2021, to a record high of 66% on Oct. 28, 2022, data shows.

This evidence suggests that long-term investors are increasingly looking at Bitcoin as a store of value, asserts Charles Edwards, founder of digital asset fund Capriole Investments.

“Despite the worst year in stocks and bonds in centuries, Bitcoiners have never held on to more Bitcoin,” the analyst noted while highlighting how the floor and ceiling in Bitcoin held for the long term have been increasing after each cycle.

*Bitcoin hodl waves featuring long-term BTC holding highs and floors. Source: Glassnode/Capriole Investments*

Hodler data hints at Bitcoin’s price bottom

Additionally, Glassnode’s research shows that the Bitcoin tokens held for at least five to six months are less likely to be sold. The number of these so-called “old coins” typically rises during bear markets, highlighting accumulation by the patient, long-term investors as short-term investors sell.

The behavioral difference is visible in the chart below, where the downtrend in Bitcoin’s price coincides with a persistent decline in the number of “younger coins” and an increase in the number of coins inactive for at least six months, or “old coins.”

*Bitcoin’s percent young (red) vs. old (blue) supply. Source: Glassnode*

As of Oct. 31, the old coins comprise nearly 78% of the Bitcoin supply in circulation versus younger coins’ 22%, thus reducing the likelihood of intense sell-offs while forming a potential market bottom.

Moreover, on-chain data tracking Bitcoin’s price and its long-term holders’ (LTH) net unrealized profits and losses (NUPL) hints at a similar scenario.

*Bitcoin entry-adjusted LTH-NUPL. Source: Glassnode*

Notably, Bitcoin’s entry-adjusted LTH-NUPL has entered the capitulation zone (red) that has coincided with the end of previous bear markets, as shown above. That includes the strong bullish reversals witnessed in November 2011, January 2015 and December 2018.

As Cointelegraph reported, MicroStrategy, the world’s largest corporate holder of Bitcoin, has also reiterated its commitment to continue buying BTC for the long term.

“We have a long-term time horizon, and the core business is not impacted by the near-term Bitcoin price fluctuations,” explained MicroStrategy CEO Phong Le.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum flashes a classic bullish pattern in its Bitcoin pair, hinting at 50% upside

October 31, 2022 Coin Telegraph

Bitcoin

The formation of a bullish trading pattern suggests that the ETH/BTC pair could be on the verge of a trend reversal.

Ethereum’s native token, Ether (ETH), looks poised to log a major price rally versus its top rival, Bitcoin (BTC), in the days leading toward early 2023.

Ether has a 61% chance of breaking out versus Bitcoin

The bullish cues emerge primarily from a classic technical setup dubbed a “cup-and-handle” pattern. It forms when the price undergoes a U-shaped recovery (cup) followed by a slight downward shift (handle) — all while maintaining a common resistance level (neckline).

Traditional analysts perceive the cup and handle as a bullish setup, with veteran Tom Bulkowski noting that the pattern meets its profit target 61% of all time. Theoretically, a cup-and-handle pattern’s profit target is measured by adding the distance between its neckline and lowest point to the neckline level.

The Ether-to-Bitcoin ratio (or ETH/BTC), a widely tracked pairing, has halfway painted a similar setup. The pair now awaits a breakout above its neckline resistance level of around 0.079 BTC, as illustrated in the chart below.

*ETH/BTC weekly price chart featuring a cup and handle. Source: TradingView*

As a result, a decisive breakout move above the cup-and-handle neckline of 0.079 BTC could push Ether’s price toward 0.123 BTC, or over 50%, by early 2023.

*ETH/BTC weekly price chart featuring cup-and-handle breakout setup. Source: TradingView*

Time to turn bullish on ETH?

Ether’s strong interim fundamentals compared with Bitcoin further improve its possibility of undergoing a 50% price rally in the future.

For starters, Ether’s annual supply rate fell drastically in October, partly due to a fee-burning mechanism called EIP-1559 that removes a certain amount of ETH from permanent circulation whenever an on-chain transaction occurs.

*Ethereum supply rate post-Merge. Source: Ultra Sound Money*

XEN Crypto, a social mining project, was mainly responsible for raising the number of on-chain Ethereum transactions in October, leading to a higher number of ETH burns, as Cointelegraph previously covered .

Over 2.69 million ETH (approximately $8.65 billion) has gone out of circulation since the EIP-1559 update went live on Ethereum in August 2021, according to data from EthBurned.info.

It shows that the more clogged the Ethereum network becomes, the higher Ether’s probability of entering a “deflationary” mode gets. So, a depleting ETH supply may prove bullish, if the coin’s demand rises simultaneously.

In addition, Ethereum’s transition to a proof-of-stake consensus mechanism via “the Merge” has acted as an Ether-supply sucker, given that each staker — whether an individual or a pool — is required to lock away 32 ETH in a smart contract to earn annual yields.

The total supply held by Ethereum’s PoS smart contract reached an all-time high of 14.61 million ETH on Oct. 31.

*Ethereum 2.0 total value staked. Source: Glassnode*

In contrast, Bitcoin, a proof-of-work (PoW) blockchain that requires miners to solve complex mathematical algorithms to earn rewards, faces persistent selling pressure.

In other words, there is a comparatively higher selling pressure for Bitcoin versus Ether.

ETH/BTC needs to break the range resistance

Ether’s road to a 50% price rally versus Bitcoin has one strong resistance area midway, acting as a potential joy killer for bulls.

In detail, the 0.07 BTC–0.08 BTC range has served as a strong resistance area since May 2021, as shown below. For instance, the December 2021 pullback that started after testing the said range as resistance resulted in a 45% price correction by mid-June 2022.

*ETH/BTC weekly price chart. Source: TradingView*

A similar pullback could have ETH test the 0.057–0.052 range as its primary support target by the end of this year or early 2023.

Ethereum is ahead of Bitcoin this rally — But ETH price still risks 20% crash against BTC

October 26, 2022 Coin Telegraph

Bitcoin

Ether has entered a bearish range that preceded a 35% price crash in the April–May 2022 session.

Ethereum’s native token, Ether (ETH), recorded better gains than Bitcoin (BTC) over the past 24 hours despite the latter finally rising above the key $20,000 level.

Ether beats Bitcoin in risk-on rally

On the daily chart, Ether jumped approximately 14% to reach its weekly high of $1,554 (data from Binance) on Oct. 26. Bitcoin underwent a similar rally, but its week-to-date profits are just 6% by comparison.

The ETH/BTC pair gained around 8%, climbing as high as 0.075 BTC on Oct. 26.

*ETH/BTC daily price chart. Source: TradingView*

The boom across the top crypto assets has been synchronous with the United States stock market’s winning streak since Oct. 24. It also came on the backdrop of a weaker U.S. dollar index, which has been typically trading inversely to the crypto market since March 2020.

Bear fractal alarm

ETH/BTC’s latest price rally has taken it to a range that preceded a 35% correction in the April–May 2022 session (marked as “R1” in the chart below) and was instrumental in limiting its upside prospects in August–September 2022 (marked as “R3” in the chart below).

*ETH/BTC 3-day price chart. Source: TradingView*

The range coincides with the area defined by ETH/BTC’s 0.236–0.382 Fib lines, or 0.072 BTC–0.077 BTC. Therefore, the pair may stabilize inside the range, followed by a correction toward the 0.068 BTC–0.064 BTC area, its near-term support levels.

Meanwhile, a decisive breakdown below the 0.068 BTC–0.064 BTC area could expose Ether to fall toward its multi-month ascending trendline, which served as a solid rebound point after the April–May 2022 downtrend.

$ETHBTC | Update

The outlook after closing the pair at the top.
You can have a nice projection by analyzing RTed tweets (for education).

With mLTF bearish indications from the red box, the price may visit the lows of the green box.

The red lines are another resistance zone. https://t.co/6zFhLWT1A0 pic.twitter.com/rKnxWsCS3E
— Efloud (@EfloudTheSurfer) October 26, 2022

That puts ETH/BTC’s primary downside target at around 0.059 BTC in Q4 2022, down 20% from current price levels.

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The biggest Bitcoin fund just hit a record -35% discount — A warning for BTC price?

September 24, 2022 Coin Telegraph

Bitcoin

Institutional interest in Grayscale Bitcoin Trust continues to dwindle 10 months into the crypto bear market.

Grayscale Bitcoin Trust (GBTC), a cryptocurrency fund that currently holds 3.12% of the total Bitcoin (BTC) supply, or over 640,000 BTC, is trading at a record discount compared to the value of its underlying assets.

Institutional interest in Grayscale dries up

On Sep. 23, the $12.55 billion closed-end trust was trading at a 35.18% discount, according to the latest data.

*GBTC discount versus spot BTC/USD price. Source: YCharts*

To investors, GBTC has long served as a great alternative to gain exposure in the Bitcoin market despite its 2% annual management fee. This is primarily because GBTC is easier to hold for institutional investors because it can be managed via a brokerage account.

For most of its existence, GBTC traded at a hefty premium to spot Bitcoin prices. But It started trading at a discount after the debut of the first North American Bitcoin exchange-traded fund (ETF) in Canada in February 2021.

Unlike an ETF, the Grayscale Bitcoin Trust does not have a redemption mechanism. In other words, GBTC shares cannot be destroyed or created based on fluctuating demand, which explains its heavily discounted prices compared to spot Bitcoin.

Grayscale's efforts to convert its trust into ETF failed after the Securities and Exchange Commission's (SEC) rejection in June. In theory, SEC's approval could have reset GBTC's discount from current levels to zero, churning out profits for those who purchased the shares at cheaper rates.

Grayscale sued the SEC over its ETF application rejection. But realistically, it could take years for the court to give a verdict, meaning investors would remain stuck with their discounted GBTC shares, whose value have fallen by more than 80% from their November 2021 peak of around $55.

*GBTC daily price chart. Source: TradingView*

Also, GBTC's 12-month adjusted Sharpe Ratio has dropped to -0.78, which shows that the anticipated return from the share is relatively low compared to its significantly high volatility.

*GBTC 12-month adjusted Sharpe Ratio. Source: PortfolioSlab.com*

Simply put, institutional interest in Grayscale Bitcoin Trust is drying up.

A warning for spot Bitcoin price?

Grayscale is the world's largest passive Bitcoin investment vehicle by assets under management. But it doesn't necessarily enjoy a strong influence on the spot BTC market after the emergence of rival ETF vehicles.

For instance, crypto investment funds have attracted a combined total of almost $414 million in 2022, according to the CoinShares' weekly report. In contrast, Grayscale has witnessed outflows of $37 million, which include its Bitcoin, Ethereum, and other tokens' trusts.

*Fund flows by provider. Source: CoinShares*

Instead, day-to-day fluctuations in the spot Bitcoin price are heavily driven by macro factors, at least for the time being.

*NDAQ versus BTC/USD daily price chart. Source: TradingView*

A stronger U.S. dollar also hurts Bitcoin's upside prospects, given their consistent negative correlation over the past year in a higher interest rate environment.

For instance, the U.S. dollar index (DXY), which measures the greenback's strength against a basket of top foreign currencies, has climbed over 113, its 20-year high, on Sep. 23. Similarly, yields on 2-year and 10-year U.S. Treasury notes have climbed to 4.21% and 3.69%, respectively.

*U.S. dollar index versus US 10-year and US 2-year Treasury yields. Source: TradingView*

Several on-chain metrics, however, are suggesting that Bitcoin could bottom out soon based on historical data. However, from a technical standpoint, BTC's price still risks a drop toward the $14,000-$16,000 area, according to independent analyst il Capo of Crypto.

*BTC/USD eight-hour price chart. Source: TradingView/Capo of Crypto*

Its more likely that [Bitcoin] will reject at the first resistance of 20300-20600," he said while citing the chart above, adding:

"Wait for the bounce, then exit all the markets."

Other Bitcoin analysts have thrown around even lower targets such as $10,000–$11,000, due to this being a historical high-volume range.

This Bitcoin long-term holder metric is nearing the BTC price ‘bottom zone’

September 22, 2022 Coin Telegraph

Bitcoin

Bitcoin accumulation is in full swing during the downtrend despite BTC price having more room to drop.

A Bitcoin (BTC) on-chain indicator, which tracks the amount of coin supply held by long-term holders (LTHs) in losses, is signaling that a market bottom could be close.

Eerily accurate Bitcoin bottom pundit

As of Sept. 22, approximately 30% of Bitcoin's LTHs were facing losses due to BTC's decline from $69,000 in November 2021 to around $19,000 now. That is about 3%–5% below the level that previously coincided with Bitcoin's market bottoms.

For instance, in March 2020, Bitcoin price declined below $4,000 amid the COVID-19-led market crash, which happened when the amount of BTC supply held by LTH in loss climbed toward 35%, as shown below.

*Bitcoin long-term holder supply in losses. Source: Glassnode*

Similarly, Bitcoin's December 2018 bottom of around $3,200 concurred alongside the LTH loss metric rising above 32%. In both cases, BTC/USD followed up by entering a long bullish cycle.

Hence, the number of LTHs in loss during a typical bear market tends to peak in the 30%–40% range. In other words, Bitcoin's price still has room to drop — likely into the $10,000–$14,000 range —for "LTHs in loss" to reach the historic bottom zone.

Coupled with the LTH supply metric, which tracks the BTC supply held by long-term holders, it appears that these investors accumulate and hold during market downturns and distribute during BTC price uptrends, as illustrated below.

*Bitcoin total supply held by LTH. Source: Glassnode*

Therefore, the next bull market may begin when total supply held by LTHs begins to decline.

Bitcoin accumulation is strong

Meanwhile, the number of accumulation addresses has been increasing consistently during the current bear market, data shows. The metric tracks addresses that have "at least two incoming non-dust transfers and have never spent funds."

*Bitcoin number of accumulation addresses. Source: Glassnode*

Interestingly, this is different from the previous bear cycles that saw the number of accumulation addresses drop or remain flat, as shown in the chart above, suggesting that "hodlers" are unfazed by current price levels.

In addition, the number of addresses with a non-zero balance stands around 42.7 million versus 39.6 million at the beginning of this year, showing consistent user growth in a bear market.

*Bitcoin number of addresses with a non-zero balance. Source: TradingView*

BTC price technicals hint at more downside

Bitcoin is nevertheless struggling to reclaim $20,000 as support in a higher interest rate environment. Its correlation with U.S. equities also hints at more downside in 2022.

From a technical perspective, Bitcoin could drop further toward $14,000 in 2022 if its cup-and-handle breakdown pans out, as shown below.

*BTC/USD three-day price chart featuring cup-and-handle pattern. Source: TradingView*

Such a move should push the aforementioned "LTH in loss" metric toward the 32%–35% capitulation region, which could ultimately coincide with the bottom in the current bear market.

Bitcoin, Ethereum and altcoins hold intraday gains after Fed hikes interest rates by 0.75%

September 21, 2022 Coin Telegraph

Bitcoin

In addition to a 0.75% basis point hike, the Federal Reserve also set its 2022 target interest rate at 4.4%, leading Bitcoin analysts to forecast further downside for BTC.

Bitcoin (BTC) retreated and reversed its intraday gains after the Federal Reserve announced its third consecutive 75 basis point (bps) interest rate rise on Sept. 21.

Traders sold the news

BTC's price dropped circa 6.5% from its intraday high of $19,950, hitting $18,660 minutes after the Federal Open Market Committee's statement. Its decline mirrored a similar sudden correction in the U.S. stock market, with the benchmark S&P 500 dropping 0.5% minutes after the Fed update.

*BTC/USD daily price chart. Source: TradingView*

On the other hand, the 10-year U.S. Treasury note yield surged to 3.6% after the Fed's announcement versus 3.56% five minutes before it. Similarly, the yield on the 2-year Treasury note climbed from 3.98% to 4% in the same timeframe.

The U.S. dollar index (DXY), which measures the greenback's strength against a basket of top foreign currencies, surged to 111.57 for the first time in 20 years.

The Fed also published an updated "dot plot," which complied with its officials' individual interest rate projections by the end of 2025. These forecasts signaled additional rate hikes in the future, with the 2022 target sitting at 4.4% and 2023 targeting 4.6%.

The central bank officials also predicted that the policy rate would peak at 4.6% in 2023. Thereafter, it would decline to 3.9% in 2024, followed by another drop to 2.9% in 2025.

All the metrics point to more pain for Bitcoin

The dollar's rise and Bitcoin's fall after the Fed update reflected investors' growing appetite for cash and cash-based instruments compared to riskier assets. Meanwhile, the central bank's dot plot hinted that investor sentiment would remain unchanged until the end of 2023.

Bitcoin price could continue to suffer due to the Fed's hawkish stance and its attempts to bring inflation down from its current 8.3% level. After the central bank update, many analysts noted that BTC's price could break below its current technical support range of $18,000–$20,000, given that the Fed could raise rates by another 75 bps before the close of the year.

I really don't know how much longer this $BTC support can hold pic.twitter.com/YAdkkB9Zww
— CRG (@MacroCRG) September 20, 2022

Bitcoin's technical outlook appeared similarly bearish. Notably, the cryptocurrency has been forming a bearish reversal pattern dubbed the "head-and-shoulders ," whose profit target sits around $14,000, as illustrated below.

Conversely, a rebound from the head-and-shoulders support level of $18,800 could have Bitcoin eye $22,500 as its interim upside target.

Bitcoin ‘nuke’ warning as Fed rate hike decision looms — dollar index hits 20-year high

September 21, 2022 Coin Telegraph

Bitcoin

Polls suggest that the Fed is likely to raise rates by 75 basis points as Bitcoin price clings to $19,000.

Bitcoin (BTC) underwent a weak rebound on Sep. 21, and the U.S. dollar jumped to a new yearly high as investors await today's Federal Open Market Committee's interest rate decision.

BTC price hold $19K ahead of Fed decision

BTC's price has managed to cling on to $19,000 with a modest daily gain of 1.33% . Meanwhile, the U.S. dollar index (DXY), which measures the greenback's strength versus a pool of top foreign currencies, rose to 110.86, the highest level in twenty years.

*BTC/USD vs. DXY daily price chart. Source: TradingView*

FOMC rate hike scenarios

The Federal Reserve is poised to discuss how far it could raise its benchmark lending rates to curb record inflation. Interestingly, the market expects the U.S. central bank to hike rates by 75 or 100 basis points (bps).

The ramification of higher interest rates will likely result in lower appetite for riskier assets like stocks and cryptocurrencies. Conversely, the U.S. dollar will serve as the go-to safe haven for investors escaping risk-on assets.

"There seems no reason for the Fed to soften the hawkishness shown at the recent Jackson Hole symposium, and a [0.75 percentage point] 'hawkish hike' should keep the dollar near its highs of the year," analysts at ING told the Financial Times.

Independent market analyst PostyXBT argues that a 100 bps rate can "nuke" Bitcoin below its current technical support of $18,800. He also suggests that BTC has a good chance of recovery if the rate hike turns out to be lower than expected, or 50 bps.

$BTC 1D

As us FOMC experts would know, today is a big day!

100bps likely nukes support for good?
50bps likely pumps and gives bulls some breathing room?

Going to be a very interesting daily close https://t.co/C5ClM436N6 pic.twitter.com/mJP7qpGEv1
— Posty (@PostyXBT) September 21, 2022

These speculations echo general rate hike expectations. John Kicklighter, the chief strategist at DailyFX, notes that a 50 bps rate hike would be bullish for the U.S. benchmark stock market index.

Nonetheless, a 100 bps rate hike would be extremely bearish for the S&P 500. This could be equally problematic for Bitcoin, whose correlation with stocks has been consistently positive since December 2021.

*FOMC policy decision scenarios for DXY and SPX. Source: John Kicklighter/DailyFX*

Polls expect a 75 bps rate hike

The U.S. economy suffered two back-to-back quarters of negative growth. Moreover, its manufacturing PMI pointed to the slowest growth in factory activity since July 2020. Meanwhile, the 2-year U.S.Treasury returns have crossed above the 10-year U.S. Treasury returns, plotting a yield curve.

These metrics raise the alarm about an impending recession. But offsetting those are unemployment data at its record low and housing starter rates still above their danger zone of $1.35 million, according to data presented by Charles Edwards, founder of Capriole Investments.

*Total new privately-owned housing units started. Source: FRED*

Normally, recession warnings prompt the Fed to pivot. In other words, to scale back or pause hiking rates. But Edwards notes that the central bank will not pivot since the U.S. economy is technically not in recession.

"Until major concerns of recession show up, until it hurts where it counts — employment — there is no reason to expect an urgent change in Fed policy here," he wrote, adding:

"So it is business as usual until we have evidence that inflation is under control."

Most economists, or 44 of the 72 polled by Reuters, also predict that Fed would raise rates by 75 bps in their September meeting. Therefore, Bitcoin could avoid a deeper correction if it maintains its correlation with the S&P 500, based on Kicklighter's outlook.

Bitcoin to $14K next?

From a technical perspective, Bitcoin could drop to $14,000 in 2022 if a drop below its current support level of around $18,800 triggers a "head-and-shoulders" breakdown.

*BTC/USD daily price chart featuring head-and-shoulder breakdown setup. Source: TradingView*

Conversely, a rebound from the $18,800-support could have BTC's price eye $22,500 as its interim upside target, or a 16.5% rise from today's price

BTC/USD

Another bear cycle produces more BTC hodlers

Hodler data hints at Bitcoin’s price bottom

Ether has a 61% chance of breaking out versus Bitcoin

Time to turn bullish on ETH?

ETH/BTC needs to break the range resistance

Ether beats Bitcoin in risk-on rally

Bear fractal alarm

Institutional interest in Grayscale dries up

A warning for spot Bitcoin price?

Eerily accurate Bitcoin bottom pundit

Bitcoin accumulation is strong

BTC price technicals hint at more downside

Traders sold the news

All the metrics point to more pain for Bitcoin

BTC price hold $19K ahead of Fed decision

FOMC rate hike scenarios

Polls expect a 75 bps rate hike

Bitcoin to $14K next?

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