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Blockchain

The Week On-chain (Week 35, 2021)

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The Bitcoin market entered price consolidation this week, largely hanging onto the impressive gains since the bottom set in late July. Prices traded between a weekly low of $46,465 and a new local high of $50,461.

As the Bitcoin and wider cryptocurrency market rallies higher, a remarkable on-chain divergence continues to form across both Bitcoin and Ethereum. On-chain activity on both chains has remained quiet relative to bull market highs, even as price momentum continues upwards, and bullish trends in supply dynamics remain in play. This week, we explore and compare a number of on-chain metrics between Bitcoin and Ethereum to characterise this divergence.

Setting the Stage

Before starting our comparative analysis, we will take a quick look at the big picture position of the Bitcoin market following a very month of strong price performance. With prices pushing above $50k, and some notable profit taking covered last week, the market currently sits at the top end of a very high on-chain volume node.

The chart below shows the price bands where the current BTC coin supply was last transacted. Since breaching last cycles $20k ATH, three distinct on-chain volume bands have formed:

  • $31k to $40k (Price Floor) where over 2.98M BTC were accumulated, both in Jan 2021, and in the recent 2.5 month long consolidation. This is likely now a very strong underlying support zone.
  • $45k to $50k (Current Range) where 1.65M BTC have a cost basis. With price at the top end of this range, it is likely that this too could act as strong price support.
  • $53.7k to $59k (Trillion Dollar Asset) where 1.336M BTC were accumulated between March and May and are still holding unrealised losses. These coins are those that remain unshaken by a 50%+ correction in May, but could also become overhead resistance if investors seek to exit at their cost basis.

On net, this indicates that a fairly strong set of high conviction investors remain in the market and is a powerful signal for the bulls.

BTC URPD Live Chart

Within this context, profits have continued to be realised throughout August as prices continued to trade higher. This suggests an underlying market strength, capable of absorbing this spent coin supply. The aSOPR metric shows that similar behaviour was observed after the March 2020 sell-off with the following sequence of events:

  • Capitulation where losses were realised by panic sellers for an extended period of time.
  • Profitability Returns as signalled by aSOPR trading and holding above 1.0. This suggests profits are realised but market strength is sufficient to absorb sell pressure.
  • Buyer Conviction Returns as aSOPR resets to 1.0 on a number of occasions, and then bounces higher, suggesting holders of profitable coins prefer to stay dormant, and investors are buying the dip.
aSOPR Live Chart

Week On-chain Dashboard

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On-chain Activity Divergence

Whilst prices rally, an impressive divergence has been maintained in on-chain activity. Demand for blockspace on both Bitcoin and Ethereum remains well below recent peaks despite prices returning to elevated trading ranges.

Active entities on the Bitcoin network is currently around 275k per day, around 35% below the January peak.

Bitcoin Active Entities Live Chart

Active addresses on Ethereum are similarly down 33% from the May peak, currently sitting at around 450k addresses per day. It is notable that current activity on both chains is similar to the stable pre-bull accumulation range established in mid to late 2020.

Ethereum Active Addresses Live Chart

Similar observations can be made regarding transaction counts which provide a proxy for block-space demand. Bitcoin transaction counts are down to around 200k per day, a significant drop of 37.5% below the peak.

Bitcoin Transaction Count Live Chart

Even more dramatic is the USD denominated on-chain transaction volume which is currently down 62.5% to $6B per day relative to the April ATH. Note that the transaction counts above, and volume below, uses our Entity-Adjusted data, which filters out internal transfers and self-spends and thus reflects the magnitude of economically meaningful volume.

Total Transaction Volume by Size Live Chart

As a result of this slim demand for block-space, Bitcoin network transaction fees have declined considerably, returning to levels that have not been seen in the last year. At present, transaction fees average 21 BTC per day, representing only 1 to 2% of the total block reward.

Bitcoin Transaction Fees Live Chart

For Ethereum, transaction counts are also down 33% from the highs, with counts actually declining over the course of this week to around 1100k per day.

Ethereum Transaction Counts Live Chart

Interestingly, within the Ethereum ecosystem, we are seeing a fairly dramatic divergence in on-chain attention. Whilst transaction counts and active addresses are down, the magnitude of fees paid are trading significantly higher. This is most likely attributed, at least in part, to the strong demand for NFT trading and investing.

Total transaction fees on the Ethereum network currently sit around 10k ETH per day which represents a relatively high level, comparable to ‘DeFi summer’, and the 2021 Bull.

Ethereum Transaction Fees Live Chart

However the heightened market attention for NFTs has come at a cost, with DeFi tokens appearing to be the losers in the equation. The chart below presents on-chain transaction data for four blue chip DeFi tokens AAVE, COMP, UNI and YFI. The top row presents active addresses interacting with the tokens, and the bottom row the USD value transferred in the tokens.

Across the board, it paints a somewhat bleak picture, with all four seeing structural declines in investor attention, most breaking to new lows this week in particular.

DeFi Token Performance Live Dashboard

Bullish Supply Dynamics

The question of whether a divergence in on-chain activity is bullish or bearish is a complex one, as more trading volume for digital assets shifts to off-chain exchanges and derivative instruments. Furthermore, technological advances such as transaction batching, SegWit adoption, and usage of Lightning Network and other Layer 2s make it a dynamic problem to solve.

On the other hand, supply dynamics, particularly looking at coin maturity, provides a fairly robust signal in either direction. Whilst observations of accumulation and HODLing is usually a long range indicator (i.e. takes time to play out), the current market trend is historically strong for the bulls.

The following charts present a series of supply dynamics indicators for Bitcoin and Ethereum, and it will become immediately obvious that similarities exist between both chains, and both look very constructive.

Young coins are those younger than 3 months. They are the most likely to be spent during volatility. A decline in the young coin HODL waves indicates the market is preferring to HODL and not to spend. Young BTC now represent only 15%% of the coin supply and a very strong downtrend is in play.

Bitcoin HODL Waves Live Chart

Ethereum HODL waves are almost the same chart, with young coins trending down towards a long term low of 12.5% of the circulating supply.

Ethereum HODL Waves Live Chart

As these young coins mature and age, they transition into Middle Aged (3m to 1y) and old coins (1y+). These mature coins are statistically less likely to be spent, and a climbing proportion of them suggests increasing illiquid supply.

A powerful uptrend in coin maturation is in play for Bitcoin with almost 50% of the coin supply aged between 3m and 3y.

Bitcoin HODL Waves Live Chart

Again, Ethereum supply shows a similar trend with a whopping 70% of the ETH coin supply dormant for at least 3 months. For both assets, these uptrends in older coin supply commenced around March 2021, which therefore reflects a very strong demand to buy and hold throughout this bull market.

Ethereum HODL Waves Live Chart

To highlight this change in market behaviour, and in agreement with a minimal desire for long term investors to spend coins, the Liveliness metric for both chains has entered a very strong downtrend. As a quick refresher on Liveliness:

  • Liveliness maps out whether more coin days are accumulated (HODLing) or destroyed (spending) by the total coin supply.
  • Downtrends suggest accumulation where more dormancy and coin maturity is building up, and less spending is taking place.
  • Uptrends suggest spending where old coins are moved, lifespan is destroyed and distribution takes place.
  • Steeper trends mean stronger fundamental trends of the above are in play.

Bitcoin liveliness has reentered a downtrend which has accelerated during this price rally.

Bitcoin Liveliness Live Chart

Ethereum’s liveliness metric paints much the same picture, trending strongly down since the May sell-off. Given a huge volume of ETH is transacting at the moment in the NFT movement, it does indicate that much of this volume are the same ETH tokens changing hands.

Ethereum Liveliness Live Chart

Finally, a good signal of adoption, interest, accumulation and HODLing is the growth in non-zero balances. Bitcoin non-zero addresses have continued to grind higher, having returned to over 38M addresses, and about to take out the ATH.

BTC Non-zero Addresses Live Chart

Much like its elder, Ethereum non-zero address counts are also in strong ascent, reaching a new ATH of 60.7M addresses.

ETH Non-zero Addresses Live Chart

Whilst the divergence between price and on-chain activity is historically abnormal for a full scale bull market, it is not an uncommon signature for the pre-bull, and pre-supply-squeeze dynamic. These periods often accompany the end of bear market accumulation where the investors who remain, are the strong hands, those with the highest conviction.

Supply dynamics seem to suggest an extremely robust underlying demand is present, and this should continue to be quite constructive for prices if the trend continues. Aggressive spending of older coins would be a key invalidation signal to watch out for.


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Source: https://insights.glassnode.com/the-week-on-chain-week-35-2021/

Blockchain

What does swapping crypto mean?

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Has the number of cryptocurrencies ever piqued your interest? Are we talking about a couple of hundred here? Maybe a zillion people? According to CoinMarketCap, that number is now well over 7,000. With so many options, you may want to test a new cryptocurrency at some time. However, how do you go about doing it?

Good news, then! Making a switch will allow you to test out a different cryptocurrency with ease. Swapping is the process of swapping one coin for another. In other words, how does it all work?

Let’s assume you have some

Ethereum, but you’d like to have Bitcoin. Certain services are available to assist you with this. Swap service providers allow you to trade your Ethereum for Bitcoin, with a value close to the actual exchange rate. To put it simply:

Why would I want to swap?

Now you know what it means to exchange cryptocurrency. On the other hand, why on earth would you want to? Anyone’s motives for wanting to swap their crypto assets for anything else are wide open. So, without further ado, here we go.

Profiting

Making money, that’s right. It’s a hit with everyone. Trading cryptocurrencies have the potential to bring you a sizable return because of how rapidly their prices can shift. You might make a lot of money by trading your crypto at the appropriate time if you are timing the market perfectly and are a little bit lucky.

Increasing your investment options by utilizing diversification

Those sudden price adjustments, on the other hand, are not to everyone’s taste. In general, diversification is seen as a valuable tool for reducing the impact of risk. Having a diverse portfolio of cryptocurrencies may help mitigate the effects of price fluctuations.

A source of ongoing revenue

Wouldn’t it be great if you could receive money for doing nothing? Staking is a method of earning additional crypto without having to do any work on your part. You might try this out by exchanging some of your bitcoin for fiat currency.

But be on the lookout!

Trading cryptocurrency is inherently hazardous, even if you don’t consider security issues. Remember how we said that by timing the market right, you might make a significant profit? If you’re not careful, you might suffer losses of all sizes. Don’t invest or trade money you can’t afford to lose, and do your homework before you get involved.

Additionally, there is generally a charge associated with trading bitcoins. You should expect a somewhat lesser return on your investment.

What is 123swap?

123swap offers an ecosystem of products and services that enables consumers to swap, keep, send, receive, earn, and invest tokens across various chains in a single place of business. To remove difficulties such as complex interface, hidden fees, and a time-consuming registration procedure, the platform has designed its conversion method to simplify the process for the end-user.

Why 123swap?

Users can pick from among more than 500 cross-chain liquidity pools (Ethereum, Binance, Polkadot, and many more). In addition to supporting the most popular protocols, the platform also offers the lowest costs and the highest annual percentage yield (APY) (Annual Percentage Yield).

123swap will differentiate apart from other DeFi platforms thanks to the following features:

In the Smart Economy, 123swap is a prominent crypto swap protocol that enables users to – Swap favoured assets in several chains; hold them; send them; receive them; earn from them; and invest in them. In this approach, crypto assets may be exchanged between peers without the need to put their faith in a third-party custodian or counterparty. The platform offers non-custodial services and aims to provide optimum safety, ease, and comfort for its users. Customers may browse all of the swaps offers gathered from the most important crypto exchanges in one location.

The platform’s goal is to develop a stronghold community. Members of the community will be able to make essential choices on things like team tokens vs. advisory tokens, lock length, and so on through a fair voting mechanism.

Problems solved by 123swap

Exchanges performed by hand are old-fashioned and time-consuming. By utilizing smart contracts, the platform will streamline and automate the swapping process. Smart and autonomous financial management will be available in one location thanks to the cross-chain smart contracts. The platform would promote decentralized financial management via smart contracts. As a result of its technological innovations, 123swap is poised to surpass the competition, improve speed, and establish itself as the world’s leading exchange.

Final Thoughts

Swapping is the process of swapping one coin for another. Certain services are available to assist you with this. You might make a lot of money by trading your crypto at the appropriate time. If you’re not careful, however, you might suffer losses of all sizes. 123swap is poised to surpass the competition, improve speed, and establish itself as the world’s leading exchange.

The platform would promote decentralized financial management via smart contracts. Users can choose from among more than 500 cross-chain liquidity pools (Ethereum, Binance, Polkadot, and many more).

Source: Plato Data Intelligence

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Blockchain

How to Find Crypto Exchanges for Safe Transactions

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As a result of the Covid-19 epidemic, global markets have begun to appreciate the potential of cryptocurrency. Yet, it was previously seen as too volatile and fringe to embrace any sizeable corporate body or company. 

You can buy, sell, and trade cryptocurrencies on top crypto exchanges. You can’t get or sell digital assets unless you have access to a cryptocurrency exchange online. 

Where to find the best crypto exchanges with a fair conversion rate? Look at the list of crypto exchanges at https://coincub.com/. You can see a calculator where you can find out which converter you need to choose depending on how much you need to swap for 1 coin and your location. This way, you can see a chart with many converters that may suit your needs for safe transferring.

Choosing the proper crypto exchange for both novice and experienced advanced crypto traders has been difficult. When you find that one, you can be sure you are safe! 

What to Look for to Find the Best Cryptocurrency Exchanges

Most exchanges primarily allow you to convert Bitcoin, into other digital currencies, such as Ethereum or Litecoin. Your scope may vary when selecting an exchange to convert money for crypto. You may prefer an exchange that supports particular cryptocurrencies, trading pairings, and extra features like margin trading or over-the-counter (OTC) transactions.

How to find an exchange that satisfies your fundamental needs? Consider the following aspects to take into account:

  • Security. By far, one of the essential elements of a transaction is safety. If an exchange is not secure, your cash might be stolen, rendering any other benefits it provides useless. No one likes to lose money; therefore, consider the following factors in this regard;
  • Technology. The web URL of the top crypto exchanges should begin with HTTPS. Two-factor authentication should be used for login security. Customer deposits should be kept offline in what is known as “cold storage.” Auditing tools that monitor exchange activities 24/7 and send SMS with email notifications provide exchange clients additional security guarantees. For optimum protection, allow your IP address or withdrawal wallet addresses;
  • Legal considerations. Choose an exchange from the same nation since this can help you comply with regulatory changes. It should be noted that certain exchanges only support a restricted number of countries;
  • Transparency. The most trusted crypto exchanges reveal addresses, teams, cold storage addresses or assist in the verification of their reserves in other ways, such as audit information;
  • Liquidity. The more liquid a specific exchange is, the larger the trade volume. Liquidity allows transactions to be completed more quickly, simply, and without coping with price fluctuation. Check to determine whether an exchange offers “locked-in” pricing, which assures you the price at the time of your transfer sessions even if it does not settle right away;
  • Costs. Examine all of the fees that an exchange charges. They’re typically less than 1% of each transaction and may drop as your trading volume grows. Examine the withdrawal costs. Some exchanges are known to charge exorbitant withdrawal fees for specific cryptocurrencies. Check the deposit fees as well.

Ultimately, keep in mind that crypto and its infrastructure are still in the early stages of development so that things might change fast. Numerous decentralized exchanges are already in the works, and many experts believe they’ll permanently alter existing exchanges.

Furthermore, laws may be imposed, and new technology or issues may emerge. So keep up with the news and stay informed. The best cryptocurrency exchange is unique to each individual, so conduct your research and be cautious while doing so.

Source: Plato Data Intelligence

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Blockchain

Pound pauses after strong week

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The British pound is slightly lower in the Monday session. GBP/USD is currently trading at 1.3724, down 0.15% on the day. The currency rose 0.98% last week, its best weekly performance since late August.

BoE’s Bailey hints at rate hike

The BoE continues to signal that it is preparing to raise interest rates shortly. The Bank has been sending a stream of hawkish messages to the markets, with Governor Bailey and other policymakers hinting that a rate hike is on its way shortly. On Sunday, Bailey said that inflation would rise higher and last longer due to the surge in energy prices, and that the central bank “will have to act” via monetary policy in order to deal with the risk of high inflation. The BoE has projected that inflation will climb over 4%, which is more than twice its target. In order to curb inflation, the BoE may respond with a series of rate hikes, which could kick off as early as November.

This would be a highly significant move, as the BoE would become the first major central bank to raise rates since the start of the Covid pandemic in early 2020. With the Bank holding its next policy meeting on November 4th, any additional hawkish comments from BoE policymakers will raise expectations that the November meeting will be a live one.

Rate fever is also rising across the pond. Last week, the FOMC minutes indicated that the Fed expects to taper its bond purchases in November or December. The minutes noted that the Fed would reduce the USD 120 billion/ month gradually, until the programme was completely terminated by July 2022. The markets have brought forward the pricing of a rate hike from December 2022 to September 2022, projecting a rate hike shortly after the tapering is complete.

.

GBP/USD Technical Analysis

  • 1.3822 is the next resistance line, followed by the round number of 1.3900
  • There is support at 1.3618. Below, there is support at 1.3492

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.

Kenny Fisher

Kenny Fisher

Latest posts by Kenny Fisher (see all)

Source: https://www.marketpulse.com/20211018/pound-pauses-after-strong-week/

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Blockchain

Oil rises on coal, gold under pressure

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Coal lifts oil in Asia

Hong Kong coal futures have leapt 9.0% higher this morning, meaning that the China energy crunch has made its way back to the front of investors minds. That has lifted oil prices in Asia as well, with Brent crude surging 0.80% higher, and WTI leaping by 1.0%.

On Friday, oil prices continued to grind higher, with no sign of any inclination to open the pumps by OPEC+ or announcements by the US government on SPR releases. Brent crude finished 0.90% higher at USD 84.90, and WTI finished 1.25% higher at USD 82.50 a barrel. In Asia, Brent crude has risen to USD 85.65, and WTI has risen to USD 83.40 a barrel as coal futures rocket into space.

With no signs of the China energy crunch alleviating soon, and with the rest of northern Asia and Europe competing for scarce energy supplies, particularly gas, the price environment for oil remains constructive. Even a US or China SPR release is only likely to provide temporary relief. A rapidly reopening aviation sector, with a slew of reopening announcements from ASEAN last week, will be another price pressure point.

Brent crude should now target the October 2019 high at USD 86.80 and onto USD 90.00 barrel, with support at USD 84.25 and USD 82.00 a barrel. WTI now has meaningful resistance until the USD 89.00 regions although I expect some sellers to appear above USD 86.00 a barrel initially. Only a fall through USD 82.00 a barrel changes the bullish outlook.

If Brent crude moves to USD 90.00 a barrel, I expect the pressure on OPEC+ to step up quite a few notches from the US White House. The huge weight of speculative long positioning in oil futures means a sudden USD 5-8 a barrel drop could still occur on a headline shock. However, with the underlying fundamentals for oil so strong, any large dip will reverse just as quickly.

Nervous specs cut long gold positions

Although the US dollar finished roughly neutral on Friday, higher yields across the US curve were enough to spook speculative longs in gold. That saw the predicted rush for the exit door, and gold fell rapidly by 1.60% to close at USD 1767.50 an ounce.  In early Asia, gold has recouped some losses, rising 0.25% to USD 1771.50 an ounce.

The price action on Friday speaks volumes about the gold market now. US dollar weakness earlier last week soured gold buying and drew in fast-money speculative longs. The equally rapid unwinding of most of those gains on Friday reinforces that much of gold’s rally was built on speculative hot air and that those longs have little to no appetite to wear any pain on those long positions. In the bigger picture, the lack of staying power from gold longs suggests that it will struggle to maintain any upward momentum, even if gold reaches USD 1800.00 an ounce. Up via the stairs, down via the sixth-floor window.

Firmer US yields, should they endure this week, will be a headwind for gold rallies, especially if it leads to US dollar strength. Gold has nearby support at USD 1765.00 followed by USD 1745.00 an ounce with failure reopening a test of USD 1720.00. Gold failed for the third day in a row at the 100 and 200-day moving averages (DMAs), today at USD 1795.40 and USD 1796.60 an ounce, formidable resistance.

In the bigger picture, only a rise through USD 1835.00 an ounce would trigger a multi-month inverse head-and-shoulders technical pattern and swing gold’s outlook back to positive. The risks remain firmly to the downside.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.

Jeffrey Halley

Jeffrey Halley

Latest posts by Jeffrey Halley (see all)

Source: https://www.marketpulse.com/20211018/oil-rises-coal-gold-pressure/

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