NOTHING HEREIN IS FINANCIAL ADVICE. PLEASE READ THE DISCLAIMER CAREFULLY AT THE BOTTOM OF THIS NEWSLETTER
Bitcoin & the entire crypto markets saw historical deleveraging last week and we continue to reel from that effect. There hasn’t been any on-chain data or off-chain activity (yet) that would indicate that Longs & Whales are back. Cautious optimism is the word. We wouldn’t leverage play here for now till the direction is clear. And that would be clearer when we cross $35K - $42K, either side, and remain above that level for a while.
Ether is largely following BTC price action. No bullish on-chain activity either but the liquidations have subsided. Heartening to see that no significant selling is taking place and some accumulation has just started to seep in. While institutions were gobbling up excess ETH in April, May deleveraging led to overall ETH locked in DeFi, fall to Oct 2020 levels. This, in our opinion is, what exaggerated ETH selling - the liquidations in DeFi (besides all those liquidations in centralised exchanges). TVL (Total Value Locked) in DeFi and ETH locked in DeFi has been rising relentlessly. It comes off the same way. Consequently, alts are bleeding more than just BTC & ETH.
We also saw over $1.5bn Stablecoins withdrawn from derivative exchanges. That is rare and a very high amount. What does that mean? Perhaps, whale traders are betting that markets will stay choppy for a while or we wont see a huge upside very quickly and rather deploy elsewhere or not run the risk of holding on exchanges for now (particularly if you are not going to use it for a while)?
On the macro front, Wall Street is nervous as S&P approaches ATH again. Watch this space because if we see another downturn in tech or generally across broader markets, there would be reeling effects in crypto. That is one reason why whales are watching on the sidelines.
Over the weekend I came across a great thread by John Street Capital analysing latest take by Stanley Druckenmiller on equity markets and more importantly on how 85% of people held to their BTC as it collapsed last year - HODLERS. That number still stands around 75% approximately for long term HODLERS. Thank you very much.
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A Parting Note…….
Have a good day everyone and don’t forget to share :)