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Overview
· Market Insight: The positive side of the selloff
· Major Market News
· Notable Events
· Newbie’s Lesson of the day: Plan B and the Stock to Flow Model
· Coins to watch this week
Market Insight: The positive side of the selloff
It was a very bearish weekend for crypto holders, Bitcoin fell as low as 42k losing 20% in a span of four hours late Friday night. Some traders took the opportunity to get into popular Altcoins such as ETH, MATIC and LUNA. These Altcoins have been some of the best performers of the past couple of Weeks. They carry some of the highest TVL and highest adoption rates. I will favor these coins in the coming months to outperform if the market decides to return to bullish form. More speculative Altcoins, such as Cardano and Polkadot didn’t fare as well.
Gains/Loss (Dec 2 – present vs Bitcoin)
ETH/BTC +7.36%
LUNA/BTC +9.15%
MATIC/BTC +0.04%
SOL/BTC -5.72%
ADA/BTC -20.22%
DOT/BTC -23.62%
A move from Bitcoin to Altcoins during market selloffs is atypical behavior. Bitcoin Dominance (BTC.D) is nearing all-time low of 39.64%, hitting as low as 40.65% on December 5th. It will be interesting to see if Bitcoin breaks this level or if it begins to recover.
The Good
Not all news is bad from the market selloffs. It set the stage for a massive deleveraging where $5.4 billion in futures contracts were closed. This helped lower the leverage ratio that was sitting at highs for the year. December 4th saw $2.5 billion in both long and short liquidations. Shaking out leverage will help the market return to a more natural state of being.
Figure 2 BTC Exchange Leverage Ratio
Crypto Market Update
· Bitcoin (BTC) has been significantly quiet since the major selloff with two days of low-price volatility. BTC currently sits on major resistance that pans at 48k - 50k.
· Bitcoin Dominance (BTC.D) continues its downward trajectory to 40.84%.
· Terra (LUNA) takes a breather after hitting all-times highs despite market turbulence. LUNA is down -5.78%. I will explain why LUNA is doing so well when I cover it later this week. Here is a hint from my past report on LUNA.
· Polygon (MATIC) continues its upward movement up +7.02% for the day and 21% in the past 3 days. Volume has significantly increased in MATIC. It is being aided by new zk-Rollup scaling efforts and new funding efforts.
Bitcoin Fear and Greed Index 16 Extreme Fear
Bitcoin Google Trends 36
Check out why I use Bitcoin Fear and Greed Index in my reports
Major Market News
- · The Bank of International Settlement, owned by worldwide central banks, publish a report naming decentralized finance (DeFi) a “decentralized illusion” and stating that it would “undermine financial stability”. DeFi protocols currently have $246 billion in Total Value Locked (TVL). Banks are beginning to see the real threat in decentralizes finance, expect these articles to appear more over time.
- · Gray Scale has completed a survey in order to help sway their case in convincing the SEC to bring about a Bitcoin spot price ETF. The survey discovers that 25% surveyed investors currently hold Bitcoin.
- · The Biden Administration has released “Strategy on Countering Corruption” report that cited digital assets, real-estate markets and offshore tax havens as areas of focus.
- · The New Yorker published “Half a Billion in Bitcoin, Lost in the Dump”. An article about a Welshman’s attempt to find a hard drive discarded many years ago with billions of dollars-worth of bitcoin in today’s price.
Notable Events
· Nakamoto Games (NAKA) has its mainnet launch
· Syscoin (SYS) has NEVM Mainnet launch
· DefiChain (DFI) begins full DEC liquidity rewards
· Elastos (ELA) Block Rewards Halving tomorrow
· You can now join the CRYPTO VS ZOMBIE IDO
NEWBIE’S lesson of the day
Plan B stock-to-flow model
Bitcoin has broken a major trend with recent selloffs which I will touch upon sometime this week. To set you up, I’ll first explain Plan B’s stock to flow model so you may have an understanding where some Bitcoin price predictions stem from. I’ll also give you some resources if you would like to further investigate Plan B.
Bitcoin has been a historically hard asset to model because nothing like it has existed before. It was created and set free on the world. Bitcoin originally had the concept of being a pure currency and many celebrated when it reached one dollar in value. But price continued to increase due to its scarcity and low supply flow. Bitcoin was then touted as electronic gold until the recent narrative which labels Bitcoin as a financial asset. The evolution in name and purpose is likely not complete. The ever-changing landscape in Bitcoin and Crypto creates difficulty in pricing these assets.
Plan B is an anonymous online persona that began purchasing Bitcoin in 2013. He may be an institutional Dutch Investor that has degrees in quantitative analysis and in banking and financial law. Inspired by the stock to flow models for gold and scarce assets in The Bitcoin Standard, Plan B created a stock-to-flow model for Bitcoin in 2019.
The model takes into consideration the unique supply structure and halvings of bitcoin and has been the most historically accurate model devised. The white line in the model is the supply structure for Bitcoin, where the steep steps represent halving. The dots represent price, with colors representing the proximity to halving. Red is the farthest point from halving and blue is the closest.
The S2F model has garnished worldwide popularity because of its historical accuracy. If you ever wondered where the 100k bitcoin predictions for this cycle came from, it’s from this chart. Though it’s not perfect, the S2F model has been fairly accurate in predicting long term price patterns. You can follow Plan B on Twitter @100trillionusd. To learn more about Plan B and the S2F model visit this site.
Now that you know about the S2F model, stay tuned to the reports this week to see where we currently stand in price and predictions.
Coins to watch this week:
· Ethereum (ETH)
· Polygon (MATIC)
· Terra (LUNA)
· Cardano (ADA)
· Algorand (ALGO)
I plan on diving deep into understanding this large selloff for this week’s reporting in hopes that it gives us insight on how to devise a plan for the short-term future. I will get into technical analysis, on-chain metrics and gather some opinions from other sources. Stay tuned and continue accumulating that crypto!
Thanks for reading fam
TraderGabi
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