CNA Weekly Roundup 08.03.24

Ethereum enters it’s Blob era – New opportunities arise

Bitcoin has sponged up all the recent attention but an Ethereum eco storm has been brewing, which could see it have an explosive year. The catalysts for the laggard do not only include being able to boost institutional demand through an ETH ETF approval but also major performance upgrades through Ethereum’s upcoming Dencun hard fork, scheduled for March 13.

Dencun is poised to introduce ‘blobs’ to the blockchain that will, in simple terms, allow faster transactions and reduce gas fee costs to ‘near zero’ on layer 2 networks.

Related: Fed Chair Rejects US CBDC, Says It’s “Nowhere Near”

Ultimately this will encourage amplified activity and potentially draw in mainstream, mass consumer interest from everything in between Ethereum, layer-2’s like Optimism, Arbitrum and no doubt many meme coins. Crypto just can’t help itself at the moment!

While anticipation for the upgrade has seen Ethereum soar 16.2% over the last week to $3,870 US at the time of writing, the real growth in sentiment may not be visible until weeks down the track. But these factors present and brewing open some attractive entry points for enthusiasts looking to capitalise on the story unfolding with Ethereum! If you’re looking for opportunities over the coming weeks and months this is a fantastic place to start.

Bitcoin HODLers are cashing in on the gains

Let’s look at the reasons behind the selling behaviour of long-term Bitcoin HODLers (not me, I ain’t selling!) by examining the On-chain Cost Basis chart.

The below chart provides insights into the average purchase prices of Bitcoin, differentiated by the time the coins have been held:

The Realised Price signifies the average purchase price across the total Bitcoin supply (currently US $25,255)
The Short-Term Holder Realised Price reflects the average purchase price for coins that have been transacted within the past 155 days (currently US $20,846)
The Long-Term Holder Realised Price represents the average purchase price for coins that have remained stationary for more than 155 days (currently around US $67,000)

When the current price falls below these three benchmarks, it indicates a potential bear market low.

This scenario indicates that, on average, all Bitcoin investors are seeing profits, booyah!

Specifically focusing on long-term holders, the current price of around US $67,000 results in an average unrealised profit of about 221%. This substantial profit margin might tempt some long-term holders to sell their assets. Although it’s a significant profit, it’s essential to note that only a minority of long-term holders are currently opting to sell. It would likely require a much higher price to persuade a considerable number of these long-term investors to sell their Bitcoin holdings.

Related: Bitcoin’s Ride as Wild as a Rollercoaster, Gary Gensler Silent on Ethereum ETF

What Are The Charts Telling Us?!

The recent breakout in Bitcoin to new all-time highs has undoubtedly generated excitement among traders and investors, but it’s essential to approach the market with caution. While new highs may seem like a bullish signal, it’s crucial to recognize that market manipulation can play a significant role in driving these moves. In some cases, these breakouts may be orchestrated to lure in selling out the long positions, only to reverse course suddenly and trap traders who have set their take profits too high or their stop losses too tight.

One of the tactics used by institutional traders, known as “hunting stop losses,” has been prevalent for decades on Wall Street and extends to various asset classes, including cryptocurrencies. This strategy involves deliberately triggering stop loss orders placed by retail traders to create volatility and potentially profit from price swings. By drawing two lines on a chart to identify key support and resistance levels, traders can strategically execute trades to exploit these price movements.

Source: https://forextraininggroup.com/stop-loss-hunting-by-forex-brokers-and-professionals/

Bitcoin is currently trading at $66,945 USD at the time of writing and will attempt to target another breakout past all time highs. Will it break out though?

$69,306 will now act as another new ATH resistance level, however once we hit blue skies past those levels, we should see new ATHs into the 70s shortly after just in time for the halving period which is only a month away.

Zooming out to a broader time frame reveals a potential cup and handle pattern taking shape, a reliable formation that historically boasts a success rate of 70-80% when analysed against the appropriate chart data. However, for this pattern to fully materialise, a retracement to the $50,000 range for Bitcoin appears to be a necessary step.