- Written by: Nick
- Thu, 19 May 2022
- Russian Federation
While factors outside of bitcoin have caused a free-fall, on-chain data shows a great buying opportunity. Covered: Out of the Money Shorts Continue to Pile Up Out of the Money On-chain data from Into the Block indicates 48% of Bitcoin addresses are ‘out of the money.’ This metric indicates selling fatigue and, as seen below, […] The post Strong Bitcoin On-Chain Data Provides Needed Hopium appeared first on CryptosRus.
Strong Bitcoin On-Chain Data Provides Needed Hopium
While factors outside of bitcoin have caused a free-fall, on-chain data shows a great buying opportunity.
Covered:
- Out of the Money
- Shorts Continue to Pile Up
Out of the Money
On-chain data from Into the Block indicates 48% of Bitcoin addresses are ‘out of the money.’ This metric indicates selling fatigue and, as seen below, has a historical precedent that marks this as a buying opportunity. In fact, we are not far off from the March Covid crash in 2020. At that time, 50% of addresses were out of the money. Today, a staggering “21.68 million wallets holding Bitcoin are currently down on their investment, forming a slight majority compared with the 46.5% (21.39 million wallets) which are in the green.”
The rest of the wallets are neither up nor down on their investment. It is sporadic that a majority of addresses are out of the money or in the red. It has happened only a handful of times. Famously, in late 2011 when the Mt Gox saga rocked the nascent Bitcoin experiment, Bitcoin sunk to a penny, and plunged addresses to their deepest point of unprofitability. While not as drastic as then, in 2022, we are nearly plunging below the levels of the Covid crash, which many saw as a historic buying opportunity.
Shorts Continue to Pile Up
Catching the falling knife is a dangerous game. Timing top and bottom is a matter of sheer luck. However, another indicator that this is a fantastic buying opportunity is highlighted by a record $4 million in short Bitcoin contracts (a bet that the price will continue to fall) flooding the market over the last week. The fact that the money is still pouring into short positions after the massive collapse makes that short-side bet a more dangerous game for those thinking Bitcoin will continue to plunge.
???Market Report???
24H Liquidations:
Longs – $10.26M
Shorts – $2.3MFunding Rates: -0.0021% (??+0.0047%)
Global Interest: $13.87B (??-1.1%)
Exchanges Balance: 2.29M $BTC (??-3.54K $BTC)
Fear & Greed Index: 12 (??+4)
Bitcoin Dominance: 42.36 (??+0.08%)
— Amna (@CryptoQueen_5) May 18, 2022
However, as seen above, the longs continue to get liquidated at a higher clip. With the stock market continuing to twist in the wind, the macro outlook which directly affects Bitcoin in today’s world, spells more peril. In fact, stocks crashed harder today than they have in almost two years. The good news is, eventually a bottom must be found, and the above metrics point to that being sooner than later. As analysts note, Bitcoin itself seems to have found a bottom, but may be held hostage by equities.
The one caveat is that the Bitcoin sensitive equities need to confirm any recovery for Bitcoin. /9
— Jurrien Timmer (@TimmerFidelity) May 16, 2022
One thing is for sure, the adage of buying the fear and selling the greed certainly applies here. There is no perfect time to buy in an environment like this. However, understanding that Bitcoin is a superior money, makes this a better time to buy than any since March 2020.
Recommended: Bitcoin Below 30k — Three Things You Need To Know Before You Buy The Dip
The post Strong Bitcoin On-Chain Data Provides Needed Hopium appeared first on CryptosRus.