⛓️Block On Chain 011⛓️

November 15-21. Bear market or Bull market 🤔

Good Evening Investors,

After seven consecutive weeks of bullish momentum the market has fallen to Monthly lows. The price of the overall market was unable to hold its bullish structure breaking down following Bitcoin. Ethereum saw an 18% decrease before quickly reclaiming US$4400 support.

Source: TradingView | ETHUSD Daily

Macro

This weeks downfall in price appears to be a result of stagnant price action from the previous week which furthered a cascade of leveraged liquidations. This stagnation shifted the overall market sentiment from greed to fear within a week despite the on-chain fundamentals signaling for a continuation in upward movement.

Whilst the prices were making continued lows leaving many investors scared/fearful, this was not the case for larger and more longer term market participants whom have taken this as a opportunity to buy.

Source: @woonomic | Blue = Buys, Red = Sells

As pointed out in the green circle (far right) in the most recent range of price action, long term hodlers are buying this dip in price. Looking at the history of this chart we can see long term hodlers are notoriously good at buying dips at the appropriate time and vice versa for selling.

The recent price action definitely struck fear in market and this can be seen via the Fear and Greed sentiment index. In my experience, this proxies to be a great buy signal.

"The time to buy is when there's blood in the streets."

-Baron Rothschild

On-Chain

On-chain told a different story of what was happening behind the scenes during the price downfall of ETH. In continuation of last week we can revisit the metrics to see if there are any behavioral changes of market participants in spite of the fear in the market.

Source: Glassnode

This week it can be observed that not only were larger market participants adding significant buys of Ether to their bags but so were smaller ones. In the most recent weeks price action, there was a spike in addresses accumulating Ether. The largest spike being market participants with > 1 ETH. This is interesting and could be interpreted as smaller cohorts seeing this as an opportunity to become whole coiners¹ and accumulate 1 ETH under $5000 ETH/USD. A spike in demand such as this is bullish.

Source: Glassnode

A continued look at Balance on Exchange shows that amount on exchanges continues to lessen, meaning Ether withdrawals are still taking place. During this week we can see there was again an increase in market participants withdrawing their Ether - in short, this is a sign of accumulation. As discussed before this is a sign of intentional demand for Ether and also creates more scarcity and illiquidity in the asset which can further price appreciation long term - bullish.

We can also notice a clear divergence in price vs the amount of Ether remaining on exchanges. As price increases, the amount of Ether available decreases. This shows the direct relationship of supply and demand when considering the overall trend of the asset.

Conclusion

This week we can observe that price has fallen into a correction. A 10-20% correction in crypto is not unusual and is a noticeable trend in all previous bull markets. This price correction therefore does not have me worried, especially when considering the current macro environment.

During this weeks downturn in price we can still observe a market that is still in accumulation of Ether - the macro bull trend still holds true. Market participants are looking to accumulate more ETH and are actually withdrawing it meaning their intent to sell is quite low. As we can notice in the trend of Balance on Exchange, despite the fluctuations of exchange withdrawals, it trends down meaning there is less ETH on exchanges over time - this is a very bullish trend for long term.

An important note about markets is that they are binary - meaning price can only go up or down. When considering the macro and fundamental factors, price is poised to continue moving up in the future. Positioning oneself accordingly to take action on such opportunities as a market correction is always a wise lesson to learn and relearn.

-Kadeem

1. Someone who holds 1 ETH