The Weekly Recap: Light at the End of the Tunnel, at Last

KEY TAKEAWAYS 

  • BTC broke above the $11k resistance and continues to trend upwards. Market sentiment is also turning positive
  • DeFi recovered from recent downturns but remains below the trending lines

Bitcoin

BTC saw substantial price gains of around 6.8% over the last week, starting the week at $10,650 and ending the week at $11,360. The price broke through the $11k resistance on Thursday, Oct. 8, and has established stable support above that level for the first time since August. 

Source: Bybit Insight

On-Chain Activities 

The number of addresses holding more than 1 BTC continues to climb following the dip between Sept. 19 and 21, which is in most part attributed to the sudden market sell-off. The gradual increase shows a renewed confidence in the Bitcoin market, as more retail investors continue to hold bitcoins with the expectation of another bull run.  

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Source: Glassnode

On the other hand, the number of BTC whales (those who hold at least 1,000 BTC) is on the decline for the first time since 2019. This decline in BTC whale accounts could exert immense selling pressure and drive the price down further. In line with our earlier hypothesis, when we look back through historical data, the start of several slumps in the number of BTC whales often coincides with major strong bull momentums. 

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Source: Glassnode

The Fear & Greed Index has also seen a slight increase. There is a step-up from the “moderate fear” last month to “slight greed”, signifying that the market recovered from the shock of a series of recent events, and is poised for a promising prospect. The resilience of market infrastructure and fundamental demand has outweighed any disruptions and has supported the market during these turbulent times. 

Source: Chainalysis

The number of bitcoins held on exchanges has dropped significantly since last Thursday, falling below the seven-day average. Spot traders, in particular, are responding to macro market indicators and continue to sell fiat in order to buy BTC. Bitcoin’s demand among fiat investors has been on the rise since the March liquidity crunch. As of last Friday, crypto-to-fiat exchanges have received a net influx of 206k bitcoins from crypto-to-crypto and derivatives exchanges, as shown below. 

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Source: Chainalysis

Altcoins & DeFi

In the altcoin space, LINK emerged as the champion last week. Its performance against USD saw a 13.6% increase. ETH, which came in a distant third, is up by 6.5%, while EOS by 5.6%. 

DeFi activities, which have been the primary market driver for the past few months, have remained in the negative territory. During the first half of the week, DeFi tokens, alongside U.S. equities, demonstrated strong correlation to the stock markets.  However, that correlation diminished when DeFi tokens remain weak even after U.S. equities rose upon a reignited hope of a sweeping Democratic victory, which could probably inundate global markets with a total fiscal deficit of more than $2 trillion in the next four years. It was widely hypothesized that the resumed stimulus talks would have boosted all markets, including DeFi. However, it collapsed due to the Mt. Gox false alarm, as we explained in our post last Saturday.  

DeFi tokens are currently being traded below trending lines following a limp start last week. Overall, the DeFi index did not see much change, despite its initial wide fluctuations — a speedy recovery from the 17% sharp plunge at the beginning of the week. 

Some of DeFi’s brightest stars, such as DOT and KSM, weren’t able to reach their former glory, recovering to approx. 80%. This could be, in part, due to Gavin Wood’s latest clarification on the first para-chains being systemic instead of coming through auctions, even though they’re due to go live by the end of the year or early next. This implies that short-term staking demands for DOT and KSM will remain low as the short-term upside catalysts disappear. While we are still optimistic towards the long-term rise of Polkadot, which seems the only worthy competitor for ETH, its price will likely stagnate in the short run. 

News Roundup and What to Expect

A few hours following the false alarm, Square announced an unprecedented purchase of around 4,700 BTC, amounting to 1% of the company’s total assets. The announcement immediately boosted market confidence. The unchecked claim of the Mt. Gox trustee postponing the submission of the rehabilitation plan to next March put crypto investors’ minds at ease. 

While there is no official announcement from the Mt. Gox trustee yet, we believe that the delay is conceivable, owing to the massive non-exchange related claims that we’ve discussed at great lengths in our previous analysis. 

Source: @cat_on_prague

The sign of a new bull run hinges on whether BTC can break above its key resistance at the $12k mark. In light of recent events, and the prospect of a Democratic victory, it’s a strong possibility.

Overall, it seems that the market has gotten over the worst and could see significant rebound in the coming months.