Sirwin
Sirwin

Supply and Demand: Bitcoin Metrics during the Dip | Crypto Market Update 1.7


   

Bitcoin Metrics | Market Update | Major News | NEWBIES lesson of the day: Bitcoin Math

Disclaimer: I am not a financial advisor, everything on this report is financial opinion. Please consult your financial advisor before participating in crypto.

Report Overview

  • Bitcoin Metrics
  • Market Update
  • Major News
  • NEWBIES lesson of the day: Bitcoin Math (lesson 4)

  Intro

 

I planned to cover the Electric Capital Developer Report today, but the market doldrums are calling everyone’s attention. So, instead, the report will cover some TA and On-Chain Metrics to explore what pressures are affecting the crypto market. So, I’ll leave the Developer report for Monday.

Insight: Supply and Demand for Bitcoin

 

Another down day.

The market continues its struggles amidst the U.S. Jobless Rate report that saw unemployment fall to 4% and wages jump in what adds pressure on the FED to raise interest rates in March. More workers plus higher wages are not a good combination when fighting inflation. As a result, bonds are beginning to sell off too. In addition, on January 12th, the YoY Inflation Rate report will be released and will likely support the same theses.

Bitcoin is testing the 42k support (yellow) on the daily chart below. My reports have been calling for a test of this price since early December. A fast break of this vital support will have me worried about a continuing bull run. On the other hand, several retests of the support will keep me optimistic, especially if some altcoins continue to run during that period.

 

Long liquidations of leveraged positions remain high (green bars), further adding downward price pressure on Bitcoin. The long liquidations are positive as an increase of leveraged short positions could aid in a possible short squeeze scenario. The market needs to capitulate (increase fear) amongst retail traders before the big players make a run.

 

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The reserve on exchanges continues to fall despite the selloffs. This metric would increase if market participants moved Bitcoin into exchanges to sell, but that is not the case. In addition, the illiquid supply has been growing, signaling that intelligent money is collecting BTC on dips. These metrics are laying out the fact that supply is decreasing in the supply and demand structure.

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Decreasing supply and liquidating long leveraged positions are strong positives if demand decides to re-enter Bitcoin spot markets. Retail participation is at strong lows; “Bitcoin” searches on Google Trends hit a yearly low yesterday to help support this evidence. The Jan 12th inflation report will have a substantial impact, but ultimately, Bitcoin has a lot of positives going for it.

 

  Major Crypto News

 


  Market Update

 

Bitcoin Dominance (BTC.D) sits at 40%. Traders have yet to rush into BTC despite the strong selloffs in the past two weeks.

Ethereum Dominance (ETH.D) is having a solid collapse to 19.30%, a 13% drop from 22.30% highs a month ago. There is an ongoing preference to keep funds in other projects. ATOM and DOT are two notables that are gaining dominance on ETH today.

Harmony One (ONE), the smart contract platform, is holding up well compared to its peer chains. I would attribute this to the popularity of Defi Kingdom (JEWEL), a defi based game built on Harmony with over $1 Billion TVL. ONE is up 32% for the week.

Cosmos (ATOM) and the DEX built upon the Cosmos SDK Osmosis (OSMO) are having a solid week despite the market selloff. ATOM is a strong interoperability play with its cross-chain ecosystem. ATOM is up 36% for the week, and OSMO is up 44%.

TerraUSD (UST) market cap continues in a strong uptrend and sits at $10.4 billion. Therefore, LUNA must be burned to mint UST. Chart below.

Projects showing resilience (24h)

  • QNT $180.80 +3.9%
  • DASH $133.12 +6.7%
  • LINK $26.88 +3.6%
  • YFI $35,945 -0.05%
  • SCRT $6.64 +6.8%
  • ION $12,217 +45%

Bitcoin Fear and Greed Index: 10 Extreme Fear

“Bitcoin” Google Trends: 29 (low for the year)

Bitcoin Options Max Pain: 44K

How to use The Fear and Greed Index for investing

 


  NEWBIES lesson of the day

Bitcoin Math | Lesson 4

Photo by Michal Matlon on Unsplash

I’m sure by this point you keep hearing Bitcoin is an excellent inflation hedge or there is a limited supply of Bitcoin, but you’re not exactly sure how many. This lesson will explore current metrics so you have data to share and aid you in understanding Bitcoin scarcity. Remember from past lessons; the Bitcoin supply structure can never be altered.

There will only ever be 21 million Bitcoin. The last Satoshi (SAT) is scheduled to be mined in 2140.

There is currently 18.92 million Bitcoin in existence. That is 90.1% of all Bitcoin that will ever exist. That leaves 2.07 million to be mined in the next 118 years.

 

There is an estimated 3–4 million bitcoin that are lost forever. The mysterious Satoshi Nakamoto is the founder of Bitcoin, and his wallet contains 900k Bitcoins (There will be a future lesson on Nakamoto).

Bitcoin is inflationary when it comes to supply issuance (mined Bitcoin). The current inflation rate is at 1.78%. In an event named the Bitcoin halving every four years, supply is reduced by 50%. The next halving will occur in 2024.

 

In comparison, gold has a yearly inflation average of 2%. ACCORDING TO THE LATEST REPORT, the USD currently sits at 6.8%, but estimates are as high as 15% for the year.

There are 2.35 million Bitcoin left on exchanges.

There are 39.8 million Bitcoin wallets, and only 938k are active. Meaning the other wallets rarely move bitcoin. Either it is stored or lost.

There are an estimated 7.9 billion people globally, and an estimated .4% of them own Bitcoin.

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The last statistic is just for fun and to help you visualize what would happen if 2% of the world decided to buy bitcoin. I’ll let your imagination run wild with those numbers.

 

 

Stay tuned on Monday when I analyze the yearly Electric Capital Report. The report covers developer actively across crypto. Developers are typically an early indicator of successful projects. The information will help you position yourself for the year; you don’t want to miss the coverage.

Keep stacking those sats while others are fearful!

Thanks for reading fam!

Gabi

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Gabi_
Gabi_

Market Research Analyst . Crypto Enthusiast. Hours of research condensed into a daily five minute report.


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