Whales are selling their Bitcoin
Bitcoin typically creates all-time highs on weekdays; however, this weekend, the crypto king had different plans in which we saw it breach the monstrous level of $60,000 on Saturday 13th March 2021, before moving up to a new high of $61,844. This all-time high was met with a near 12% correction upon Monday's open, pulling back to a price (at time of writing) of c$56,000.
A lot of speculation has been made that this bearish move resulted from India proposing, again, to ban cryptocurrencies. This is a narrative we have seen time and time again. Although this news may spook newer inexperienced investors, anyone who has been in this space before 2017 is used to this sort of announcement resulting in no action.
When we dig into the on-chain metrics, we can get a clearer picture of why this pullback has occurred and where BTC is heading next. When Bitcoin enters price discovery and hits a new record-high, the interest in the market naturally spikes. There is a lot of liquidity in the current hot topic market, making it an ideal period for whales and high-net-worth investors to take partial profits on their positions. What we saw over the weekend was whales' profit-taking. The below chart shows how many addresses hold 1,000 BTC+ (a whale). Over the last month, we can see a decline of these whales of 5%, showing to us that these huge holders are taking some of their profits off the table.
We can already hear you. Is this the end? No. Profit-taking by smart money does not mean the end of the bull run has come. We still firmly believe this bull run will continue, and it's a matter of time before the psychological price of $100k is reached before 'moon and beyond.' To demonstrate that whales taking profits doesn't result in a trend change, we can simply zoom out on this metric and look at the 2017 bull run below. Throughout the 2017 bull run, whales were taking profits, as this is what intelligent investors do, regardless of the asset class. The fact that whales have strongly been accumulating throughout this bull run to date can only confirm a bullish sentiment.
An on-chain metric we've shared before is BTC's net unrealized profit/loss (NUPL). This chart demonstrates that BTC's net unrealized profit/loss remains stable despite the rising price and new all-time high, which is a healthy indicator. We are yet to reach the 0.75 zone, euphoria/greed phase, where all previous bull runs have subsequently followed with a swift blow-off top ending the bull run.
Despite this week starting with a halt in the rally, stablecoin inflows into exchanges are rising once again. In the crypto market, traders often hedge their holdings against stablecoins like Tether (USDT) and USDC, rather than cashing out via withdrawals to bank accounts. Exchanges usually have a three to seven-day processing period for cash deposits. When traders want to re-enter the cryptocurrency market, moving cash from their bank accounts back to exchanges could result in them missing the move. Hence, when stablecoins begin to flow into exchanges again, it suggests that sidelined capital may be looking to get back into Bitcoin.
Throughout the past week, the one missing component during the Bitcoin rally was stablecoin inflows. If the trend of sidelined capital moving back into the crypto market continues, there is a high probability that this will further fuel Bitcoin's bullish momentum on the next leg up, supporting our bullish thesis.
The last metric we wish to share as further strength to our bullish bias is short-term holder supply. Short-term holder supply in all previous bull markets has always increased in the ramp-up (see arrows). This cycle is no different and is a further trend reinforcer that this is not the top.
In danger of over charting everyone, we will stop there. Price appears to be finding support at this level of $55,000, respecting 0.382 fib retracement and 4H 50EMA as dynamic support. If we saw these levels break, a move down to $50,000 would be very likely before the bullish momentum could ramp up again.
AUD & NZD much-awaited pullbacks - Update
In last week's TMC HYPE, 'Business is-a Boomin', we covered the global macro reasoning behind why we expect to see a short term bearish move in both major currency pairs AUD and NZD. The need to give their central banks a breather from an ever-increasing in value currency. This aligned with the overextended bullish run we have on the technicals to form a strong bias. We covered a position that I, Jonny, had running on NZDCAD. We ended up banking a total of 5% profit on this move before the price hit our moved stop loss and realizing this gain.
As covered in last week's edition, we were eagerly watching how price developed on most AUD and NZD pairs, waiting for the daily to pull back to our confluence areas to allow us to play the next daily leg down. Several great opportunities presented themselves. I, Jonny, executed a short on AUDCAD, looking to capture the wave three daily run. This position has broken previous daily lows and, at the time of writing, is running 2.25% profit with all risk removed.
We kick this week off with more opportunities in both of these currency pairs. Our favorite on watch were AUDCHF and AUDJPY, both giving entries several hours ago. I, Jonny, executed a short on AUDJPY that is now running into profit. I am looking to capture the full wave one breakdown, similar to what we banked a 5% gain on last week with NZDCAD. For a complete analysis of this entry, all other watchlist pairs make sure to tune in to tonight's Market Update.
Currencies: Continued strength in the USD, weakness in AUD and NZD. CHF and JPY pairs look set to gain some strength after overextended bearish runs.
Equities: With stimulus checks flying in this week, there is a bullish fundamental outlook on equities with large expected inflows into the markets. Major US equity indexes have continued their bullish narrative and are sat at all-time highs again but show deceleration. The VIX is sitting at a solid one-plus year of support at 19.5. The technicals give us a contrasting view and potentially look to favour another sell-off, but a solid bullish move will eradicate this bias.
TMC CLUB - Funded Trader
OG member Francisco Monteiro recently ticked off a huge achievement which he shared with us all last week. Francisco got funded at the very start of 2021, a goal he had set for himself. This month he celebrated his first pay-check as a funded trader. Huge congratulations to him from us all, and long may it continue. There is nothing more we enjoy seeing than our members smashing their goals and achieving what they set out to. Francisco’s post within our community (see below) gives epic insights into his journey, experiences, and what he has had to develop to reach this day.
What's happening this week?
Monday, March 15th @ 2pm PT (9pm GMT)
Market Update with Jonny Godfrey
Wednesday, March 17th @ 1pm PT (8pm GMT)
Market Update with Irek Piekarski
Friday, March 19th @ 10am PT (5pm GMT)
Insights with Jonny Godfrey
All the best for the week ahead and we'll see you in the club!
Jonny Godfrey & the TMC Team