Connect with us

Analysis

These indicators show how the equities sell-off is influencing crypto prices to fall down

Published

on

These indicators show how the equities sell-off is influencing crypto prices to fall down

Bitcoin · Ethereum › Analysis

US Equities correlations with cryptocurrencies is at an historic peak while most BTC holders are holding at a loss

3 min read

Advertisement

Updated: May 20, 2022 at 4:05 am

Cover art/illustration via CryptoSlate

Cryptocurrencies experienced on May 10 a large market crash, losing over 10% in a single day of most of the coins. This is the second time in 2022 that most cryptocurrencies have suffered a price loss of over 10%. Over the last month, BTC has accumulated a 23.57% loss while Ethereum has a 26.32%. Meanwhile, US equities suffered slightly more moderated losses: S&P 500 a -11.07% while Nasdaq 100 a -14.93%:

Price performance comparison with US equities according to IntoTheBlock Capital Market Insights.

As seen in the chart above, cryptocurrencies continue experiencing worse sell-offs than capital markets. The actual macro context of rising interest rates leads to most investors becoming averse to risky assets, which cryptocurrencies are due to their nature of highly volatile price performance.

Advertisement

The origins of the May 10 price drop came from US equities markets turning back on their short-lived recovery of last week. As has been seen in the previous months, the 30-day correlation between the cryptocurrencies markets and US equities indexes continues to grow, and this week achieved an all-time high for both BTC and ETH, with around 0.9 points both for S&P 500 or Nasdaq 100:

Correlation Matrix with US equities according to IntoTheBlock Capital Market Insights.

A correlation coefficient close to 1 implies a strong positive correlation between the two prices, meaning that the price of BTC or ETH and these indices have a highly statistically significant relationship, so they will tend to move in the same direction. Understanding how these relationships evolve is essential to understanding how macro markets affect the cryptocurrency market and where to look for leading indicators of crypto price movements.

It is valuable to look internally at how crypto holders are reacting to the recent price moves despite external factors. Bitcoin continues dominating the crypto market, so it is worth looking at what its on-chain data shows us.

As studied before, investors are sensitive to react when their investments turn around and stop being in a profiting position. BTC is recently reaching a critical position, where almost half (47.8%) of the addresses holding BTC would be losing money if they would sell at current prices. This is something not seen since the Covid crash of March 2020:

BTC Historical In/Out of the Money according to IntoTheBlock Bitcoin Indicators.

This indicator that provides the variation of holders’ profits over time also shows the percentage of addresses that would have made money or lost money if they had sold at a particular time. Addresses are classified based on if they are profiting (in the money), breaking even (at the money), or losing money (out of the money). 

Advertisement

Addresses are a good approximation to single investors, although there is always a chance that a small minority of users are using several addresses. If we look at how long the BTC investors have been holding, we can see that the vast majority (26.74M addresses) have been holding BTC for more than a year. A metric with no signs of slowing down so far (blue line): 

BTC Addresses by Time Held according to IntoTheBlock Bitcoin indicators.

This depicts how the amount of BTC holders with a long-term perspective grows despite the recent market turmoil and crypto’s weak price performance. It is quite the opposite for short-term holders (classified as Traders, orange line in the chart): their number increases when significant price movements occur, and speculation fuels the whole ecosystem.

After the worst start of the year for US equities in 83 years, it remains open to question if the current market situation could be presenting an attractive buying opportunity for those looking to the long term. Crypto’s next price moves will undoubtedly be heavily influenced by what US equities do, although so far, at least the majority of BTC holders remain unfazed.

Advertisement

Analysis

Bitcoin, Ethereum Technical Analysis: BTC Edges Closer To $18,800 Support Level On Saturday

Published

on

Bitcoin, Ethereum Technical Analysis: BTC Edges Closer To $18,800 Support Level On Saturday

Bitcoin moved closer to its long-term support level of $18,800 to start the weekend, as prices of cryptocurrencies were once again lower. While bitcoin has now fallen for seven straight sessions, ethereum also saw similar declines, and as of writing is down 2.40% from yesterday’s high.

Bitcoin

The world’s largest cryptocurrency by market capitalization bitcoin (BTC) was once again in the red on Saturday, as prices edged closer to a key support level.

Following a high of $19,590.12 on Friday, BTC/USD rallied to an intraday low of $19,027.08 to start the weekend.

Advertisement

This move sees bitcoin hover slightly above its recent support point at $18,800, which was hit earlier in the week.

BTC/USD Daily Chart

Despite three recent moves below this level, breakouts have been mainly false, however bears could be set to attempt a more sustained drop in upcoming days.

Should we see a move below this point, the $17,500 mark will likely be the price target for those shorting the token.

In order to get there, relative strength would need to move below its own floor, with the 27.5 level on the RSI indicator acting as point of support.

Ethereum

Ethereum (ETH) bear’s were also pressuring prices to start the weekend, as the token continued to hover slightly above the $1,000 level.

Advertisement

As of writing this, ETH/USD has now fallen to a low of $1,033.96 on Saturday, which is marginally below its $1,050 floor.

Should bearish pressure persist this weekend, then the next target would inevitably be below $1,000.

ETH/USD Daily Chart

In particular, bears will be looking at the $885 support point as a preferred exit point, however, the 14-day RSI would need to break below its current floor of 29.5.

Since the beginning of April, ETH has lost over two-thirds of its value, however, the declines might not have ended yet.

Do you expect any more significant drops in bitcoin’s and ethereum’s price this month? Leave your thoughts in the comments below.

Advertisement

Eliman Dambell

Eliman brings a eclectic point of view to market analysis, having worked as a brokerage director, retail trading educator, and market commentator in Crypto, Stocks and FX.

Advertisement
Advertisement

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Continue Reading

Altcoins

Solana [SOL]: Rebound from median of Pitchfork can open doorways for…

Published

on

Solana [SOL]: Rebound from median of Pitchfork can open doorways for…

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.

Solana’s [SOL] recent drop below its 38.2% Fibonacci support provoked a robust decline toward the 61.8% level. The two-week trendline support (white, dashed) cushioned the recent retracements in the four-hour timeframe.

A rebound from the median (red) of Pitchfork can open doorways for a near-term jump before the sellers step in. At press time, SOL was trading at $32.1975.

SOL 4-hour Chart

Advertisement

Source: TradingView, SOL/USD

SOL’s reversal from the $42-mark has pulled the alt below its 20 EMA (red) and the 50 EMA (cyan). The convincing bearish crossover of these EMAs has also impaired the near-term buying comeback possibility.

The immediate trendline support could aid buyers in preventing further drawdowns. A compelling close above the 61.8% level could help the buyers gain thrust to test the $34-$35 range.

However, an immediate close below the $31-level could aggravate the current selling spree toward the $30-zone before a likely pullback.

Advertisement

Source: TradingView, SOL/USD

The Relative Strength Index (RSI) failed to find a spot beyond the 40-mark resistance in the last few days. Given its south-looking tendencies, buyers still have a long way to alter the broader outlook in their favor.

Nevertheless, the On Balance Volume (OBV)’s lower troughs over the last day have created the possibility of a bullish divergence with price. Also, traders/investors must watch for a strong crossover on the MACD to determine the near-term comeback possibility.

SOL Daily Chart

On a relatively longer timeframe, SOL saw a breakdown from its up-channel (white). This fall led to a decline below the basis line (green) of the Bollinger Bands (BB) and reaffirmed the strong bearish outlook.

A sustained close below the 61.8% level could propel a downfall toward the $28-$31 range in the coming days. An inability of the buyers to test the $34-zone would fuel the ongoing bearish tendencies.

Advertisement

Conclusion

In view of the confluence of support in the $31-zone, SOL could propel a test of the $34-$35 range in the near term. But from a longer perspective, the bears would aim to push toward the $30-zone unless the buyers amplify the buying pressure. The targets would remain the same as mentioned above.

Finally, investors/traders must keep a close eye on Bitcoin’s [BTC] movement to determine its effects on the broader sentiment.

Advertisement

With a background in financial analysis and reporting, Yash is a full-time journalist at AMBCrypto. He has a keen interest in blockchain technology, with a primary focus on technical analysis of cryptocurrencies.

Advertisement

Continue Reading

Analysis

Top 10 VC firms have ownership in 38% of all unicorns

Published

on

Top 10 VC firms have ownership in 38% of all unicorns

Top 10 VC firms have ownership in 38% of all unicorns Andjela Radmilac · 2 hours ago · 3 min read

Venture capital firms that have ownership in a large number of unicorns are pouring money into two sectors — internet services and fintech.

3 min read

Advertisement

Updated: July 1, 2022 at 11:31 pm

Cover art/illustration via CryptoSlate

In a bid to answer the question of where does big venture capital money go to, a new analysis looked at the most recent data on unicorns.

The overall number of companies that exceed $1 billion in valuation has doubled in the past year alone, with venture capital money responsible for most of that growth.

Advertisement

The fundamental changes in societal models, workflows, and industries the market has seen led many of the largest VC firms to invest in the same set of unicorns, most of which are either fintech or internet service companies.

Big VC firms all invest in the same unicorns

To find out more about what most venture capital firms invest in, BestBrokers analyzed the recently published research from CB Insights. CB Insights provided a list of all of the world’s unicorns and matched it with data on their investors and industries.

BestBroker’s report identified the top 10 entities that have invested in the largest number of unicorns. According to the data, just ten firms own 38% of all 1143 unicorns currently on the market. Accel leads the way with ownership in a staggering 67 companies valued at over $1 billion, while Tiger Global Management and Insight Partners both invested in 61 unicorns.

Andreessen Horowitz, one of the most well-known names in the VC world, has ownership in 57 unicorns.

The top 10 entities with ownership in most unicorns (Source: BestBrokers)

Grouping these unicorns by industry shows an undeniable trend — the majority of VC money seems to be going to software and fintech companies.

Advertisement
The top 10 venture capital firms’ unicorns distributed by industry (Source: BestBrokers)

Internet software and services, fintech, and e-commerce account for over half of the total number of unicorns. The next four industries — AI, cybersecurity, health, and data management — amount to just over a quarter of the unicorns.

“Since the beginning of 2021 fintech unicorns grew by a staggering 330%, followed by internet software and services with 274% and cybersecurity with 267%. Next in the list are health, data analytics, logistics, and AI. We can clearly see how the trending industries are influenced strongly by the pandemic and the changes it brought about,” said Alan Goldberg, an analyst at BestBrokers.

The changes brought on by the pandemic are most evident in the growth we’ve seen in e-commerce. E-commerce and direct-to-consumer companies are strongly represented in the portfolios of all Asian entities on the list, with the industry taking first place in all three Asian firms.

The top 10 venture capital firms’ ownership in unicorns by industry (Source: BestBrokers)

Goldberg said that this comes as no surprise, given that e-commerce revenues in Asia are expected to reach $2 trillion by 2024.

However, the two leading industries VC firms invested in are software and fintech. And while CB Insight’s report groups crypto companies with legacy fintech firms, it’s safe to assume that crypto and blockchain companies also make up a notable portion of these VCs’ portfolios.

As reported by CryptoSlate, a significant number of new unicorns that were added throughout last year came from the crypto market. These companies include FTX, Ripple, OpenSea, Bitmain, Alchemy, Chainlysis, and others.

Advertisement

Continue Reading

Trending

Get our daily News updatesSignup to get instant updates straight to your email