Crypto Market Analysis 25/5

The markets have been manipulated and so much dumb money had capitulated that fears of the end is on everyone’s minds. So I thought I’d do some analysis on the markets to put everyone’s minds at ease.

On-Chain Data Analysis

Stock-To-Flow Model

Here are some observations I’ve made from studying this model

  • The top of the bull run usually happens after the rainbow chart is above the stock to flow line coupled with a parabolic move up
  • After the rainbow chart turns dark green, there would usually be a strong retracement in price before it’s continuation to the blow off top

And so far, none of the above has happened yet, and it looks like we’re currently in the retracement stage

No. Of Bitcoin Address

Retail Dumb Money
Institution Smart Money

From this chart, we can clearly see that as small retail buyers have been purchasing more and more BTC upon it’s run to it’s recent ATH, smart money has been selling off their BTC.

And what’s more would be that smart money have been seen to be accumulating more BTC as there is a surge of BTC addresses >10k BTC.

From this we can see that the dip was clearly orchestrated for institutions to get in lower and the move up to BTC’s recent ATH have not been supported by strong volume.

Net-Unrealised Profit Loss [NUPL]

From this chart, we can see that the NUPL indicator has been reseted greatly going from near “Euphoric” levels to “Optimism-Anxiety” levels, this gives great confluence to the fact that the next leg up would be very strong and most likely surpass the $100,000 target easily.

Looking at past data, we can see that every time NUPL has been reseted, the next move up has been much more parabolic than before.

Technical Analysis

Daily Chart

4H Chart

From the Daily chart, we can see that price closed with a strong wick rejection of the green demand zone as well as a full daily retrace candle.

The 4H chart shows an evening star pattern along with price dropping very correctively. From the volume indicator we can also see that the recent bounce has been supported with an expansion of buy volume.

Coming from a Forex background, all these are confluences pointing to a reversal in trend towards the upside and that this is very likely to be the bottom.

However, I’m aware of 2 possible scenarios which could potentially occur :

  • One could be where price continues moving up closing above the local resistance or gets close to the red zone, from there I do expect a sell off orchestrated by big players to catch people on the wrong side of the market and liquidated traders one last time before resuming the run up. Knowing this, I would be wary of the red zone and be tethering up slightly and buying back upon a confirmed breakout.
  • Another could be where they could push price slightly lower around the wick’s range catching short traders on the wrong side before resuming the move up

Conclusion

Knowing all these information, we can see that the big players in the market are buying at these levels, so instead of being afraid, we should be following them and buy at these levels.

The on-chain data shows that we’re still in a bull market and technical analysis allows us to plan our next steps moving forward. One thing I’ve learnt from trading forex would be to always forecast what’s possible and what’s probable. What I named out above are 2 probable technical outcomes which I’m prepping myself for, tethering up when the situation arises so I won’t be left completely rekted if it plays out.

We’re AGMI, we just have to understand the game which the smart money is playing instead of relying on hopium.

Before ending this off, these are the top 4 coins which I’m confident in which would recover strongly once the market recovers and their catalyst :

$ETH — Major update coming in July

$GLCH — Up to 4 T1 CEX Listings by Testnet by end of June

$KSM — Parachains Auctions

$HTR — Nano Contracts coming out in the following month