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BTC on-Chain Analysis: Short-Term Holders Take Extreme Losses, Will BTC Dive Below $30,000 Again?

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BTC on-Chain Analysis: Short-Term Holders Take Extreme Losses, Will BTC Dive Below $30,000 Again?

The Bitcoin market is a place of constant clash between bulls and bears. Often, these animals take the form of short-term and long-term holders who are constantly trading coins with each other.

When short-term holders are buying, it often signals market tops. Conversely, purchases by the latter usually mark market lows. However, in situations where both types of holders are in profit – we have a bull market situation. In the opposite situation, when everyone records losses – a deepening bear market.

In today’s on-chain analysis, BeInCrypto looks at indicators of the behavior of both types of holders. The goal is to try to determine from their behavior what market stage Bitcoin is at.

Has the bottom already been reached and an uptrend should be expected? Are we in for a long consolidation and a multi-month sideways trend? Or are we standing on the edge of a long-term bear market and the worst is yet to come?

Short-term holders in extreme loss

The STH P/L Ratio measures the supply of short-term holders (STH) in profit versus the supply of short-term holders in loss. If its value is 1, the balance of profit and loss of short-term holders is 0. This means that outputs with a lifespan of less than 155 days globally have no loss or profit (break even).

Like SOPR, it detects local lows in bull markets and local peaks in bear markets. In other words, if it falls to level 1 during a bull market, it is a good buy signal. Conversely, if it rises to level 1 during a bear market, it is a good sell signal.

In addition, it has been helpful in determining absolute lows and peaks in successive market cycles when its readings have deviated extremely from 1. However, here the extremes above 1 were reached months before the historical ATHs. In contrast, extremes below 1 usually required two or three visits to minimum levels before an absolute low was reached.

This latter relationship was well illustrated by on-chain analyst @SwellCycle, who tweeted a chart of the 7-day exponential moving average (EMA) for the STH P/L Ratio just after BTC fell near the $30,000 level. On the chart, he marked with two colors the periods when the indicator reached bottom and linked them to the BTC price (yellow and red area):

Source: Twitter

If his interpretation is accurate, then Bitcoin is in search of an absolute bottom (red area). This bottom could be below the summer lows of 2021 when BTC reached $29,000.

Another dive below $30,000?

A different chart shows the same STH P/L Ratio with local lows marked and the corresponding BTC price (green, vertical lines). It appears that the absolute lows of the BTC price were accompanied by a bullish divergence on our indicator. Despite the lower Bitcoin price, the STH P/L Ratio recorded slightly higher values in 2014-2015 and 2018-2019.

Source: Twitter

If such a situation were to occur again, another deeper dive in the BTC price below $30,000 would be necessary, coupled with a higher low on the short-term holders’ supply ratio indicator.

The related indicator of Total Supply in Profit by STH, provides a similar interpretation. In the course of generating historical lows in the BTC price, this indicator has seen deepening and short-term declines towards the 0 level.

The most dramatic such decline occurred during the crash at the beginning of the COVID-19 pandemic. At that time, the indicator was just over 0.1 BTC. In other words, virtually no Bitcoin in the hands of short-term holders was in profit.

Source: Twitter

Interestingly, the second lowest value in the history of this indicator was only just reached on May 9, 2022. On the day of Bitcoin’s most recent crash and generating a bottom at the $30,000 level, only 10 Bitcoins of the global supply in STH hands were in profit.

Will LTH join the bear market?

Extreme losses and suffering of short-term holders are quite common during downtrends. Those latest to join the market during uptrends are most often quickly underwater.

Historically, however, it has been the position of long-term holders that has determined the start of a long-term bear market or bounce towards new highs. As long as LTH did not sell at a loss, there was no threat of BTC’s ultimate capitulation. However, the moment LTH lost faith in further gains, Bitcoin was inevitably heading towards an absolute bottom.

An indicator that helps estimate this is the Spent Output Profit Ratio (SOPR) of long-term holders. The SOPR itself is calculated by dividing the realized value (in USD) by the value at creation (in USD) of a spent output. In other words: price sold / price paid. In contrast, the SOPR for LTH is calculated identically, but considering only outputs with a lifespan greater than 155 days.

The aforementioned analyst @SwellCycle also subjected the long-term chart of the 7-day EMA of the SOPR indicator for LTH to interpretation. First of all, we see a breakdown into 4 bear market phases. Phases 1 and 2 mark relatively mild declines when LTH’s SOPR is still above 1. Phases 3 and 4, on the other hand, mark dynamic and rapid declines towards the absolute bottom reached in the shortest phase 4.

Source: Twitter

A repeat of the COVID-19 crash?

Importantly, we can see that currently, the chart of the 7-day EMA for SOPR LTH is in a critical position exactly at the level of 1. If this area is lost, we should expect the start of phase 3. However, if it were defended, then perhaps Bitcoin would avoid a long-term bear market.

Furthermore, a March 2020 scenario is possible. At that time, the short-term decline of level 1 was quickly rebounded and the BTC price saw a V-shaped recovery and the uptrend continued.

Regardless of the implications of these on-chain indicators for the BTC price, the market has certainly come to a pivotal moment. The coming weeks will determine whether long-term holders have begun to capitulate and we are in for a cryptocurrency winter. Or will the extreme losses of short-term holders be enough to initiate a trend reversal and a resumption of the bull market?

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Korean Police Ask Crypto Exchanges to Freeze Luna Foundation Guard’s Assets

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Korean Police Ask Crypto Exchanges to Freeze Luna Foundation Guard’s Assets

Korean Police Ask Crypto Exchanges to Freeze Luna Foundation Guard's Assets

The South Korean police have reportedly launched an investigation into possible embezzlement involving an employee of Terraform Labs. To prevent fund transfers, the police have requested crypto exchanges to freeze the Luna Foundation Guard’s accounts.

Embezzlement Investigation and Asset Freeze

The Seoul Metropolitan Police Agency’s Cybercrime ​​Investigation Unit announced Monday that it has launched an investigation into possible embezzlement by an employee of Terraform Labs, local media reported.

An official from the Seoul Metropolitan Police Agency was quoted by Chosun as saying:

We have received information that there is a person suspected of embezzling corporate funds who is believed to be an employee of Terraform Labs.

The police received reports of the alleged embezzlement in the middle of this month and have been looking into the case. As part of the investigation, the police plan to check the details of cash and crypto transactions of Terraform Labs and the Luna Foundation Guard (LFG).

The police explained that there is evidence that embezzled funds had flowed into the Luna Foundation Guard’s accounts. The cybercrime unit has therefore requested major domestic cryptocurrency exchanges, such as Upbit and Bithumb, to “urgently” freeze the accounts belonging to the Luna Foundation Guard to prevent withdrawals of funds held at crypto exchanges.

However, the police’s freeze request is not a compulsory matter according to Korean laws and regulations but a matter that needs to be arbitrarily performed by each crypto exchange. Therefore, it has not been confirmed whether the freeze requests have been carried out, the publication conveyed.

Cryptocurrency terra (LUNA) and stablecoin terrausd (UST) collapsed earlier this month after UST lost its peg to the U.S. dollar.

Following the collapse, the Korean government launched an emergency investigation into the two coins and met with representatives of the country’s top crypto exchanges to discuss measures to prevent similar incidents from happening.

Last week, a number of victims filed a lawsuit against Terraform Labs CEO Kwon Do-hyung (aka Do Kwon) with the Seoul Southern District Prosecutors Office on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and the Act on the Regulation of Similar Receipts.

In addition, Do Kwon dissolved Terraform Labs Korea days before the collapse of LUNA and UST. While many suspected foul play, Kwon claimed that the timing was just “coincidental.” He also claims that his company does not owe the Korean government any taxes.

What do you think about this case? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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.

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Registration For The Upcoming VERSE Token By Bitcoin․com Is Now Open

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Registration For The Upcoming VERSE Token By Bitcoin․com Is Now Open

press release

Registrations are now open for the VERSE token sale, which will begin in the later part of June 2022. Interested parties who register can participate in the token sale immediately upon launch.

Miami, Florida – May 23rd, 2022 – VERSE is the rewards and utility token distributed to holders who participate in the Bitcoin.com ecosystem. Bitcoin.com is a global leader in introducing newcomers to cryptocurrency and is the go-to platform for educational resources, news, and more. Bitcoin.com’s ecosystem includes 30 million wallets and more than five million monthly active users across various products and services.

The VERSE token will reward users who engage in buying, selling, spending, swapping, and staying informed about cryptocurrency. Rewards will be allocated by interacting with the Verse DEX, staking VERSE, cashback paid in VERSE, and using VERSE as collateral in various lending pools. Additionally, token holders will receive access to exclusive products and services.

VERSE is a cross-chain token using the ERC-20 token standard on the Ethereum blockchain. The Verse team will actively explore opportunities to expand the token into low-fee Ethereum Virtual Machine-compatible networks to provide an optimal user experience.

The VERSE supply is fixed at 210 billion tokens, distributed over seven years through a block-to-block approach. A further breakdown looks as follows:

  • 10% sold during Sale A (completed in May 2022)
  • 6% being sold during Sale B (coming in June 2022)
  • 15% allocated to the team
  • 35% set aside for ecosystem incentives
  • 34% will be used for funding future development of Verse and its ecosystem

The first token sale raised $33.6 million last month from notable market participants such as Blockchain.com, KuCoin, and Digital Strategies along with thought leaders like Roger Ver, Jihan Wu, and David Wachsman.

“We were honored to see such outspoken support during our first token sale round. Furthermore, we could not be more excited about bringing our second token sale to the public and providing more people with access to VERSE. This new utility token marks a crucial milestone for the Bitcoin.com ecosystem. It will enable us to enhance the mainstream appeal of cryptocurrency and blockchain through our buy/sell services, news coverage, and educational tools” said Dennis Jarvis, CEO Bitcoin.com.

To participate in the upcoming VERSE token sale, interested parties need to register on the Verse website. They will be the first to know when the VERSE token sale is live.

Registrants need an Ethereum wallet – such as the Bitcoin.com Wallet – to receive the VERSE tokens. Payment for the token sale is possible with Bitcoin, Bitcoin Cash, Ethereum, USDT, and USDC.

The Verse community already counts over twenty-five thousand participants combined across Telegram and Discord. VERSE tokens will be minted following the conclusion of the Verse public sale in July.

The VERSE token sale is not available to U.S. purchasers.

Bitcoin.com

Bitcoin.com is your premier source for everything Bitcoin-related. We can help you buy bitcoins and choose a bitcoin wallet. You can also read the latest news, or engage with the community on our Bitcoin Forum. Please keep in mind that this is a commercial website that lists wallets, exchanges and other Bitcoin-related companies.

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.

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Popular Radio Presenter Suspended for Alleged Ties to Bitcoin Scam

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Popular Radio Presenter Suspended for Alleged Ties to Bitcoin Scam

South Africa’s national broadcaster has suspended one of its employees that is accused of convincing unsuspecting people, including pensioners, to invest in a cryptocurrency scam. More than 100 people are believed to have fallen victim to promises of very high returns to investors in the bitcoin investment scheme.

300% Return on Investment

The South African state broadcaster recently suspended one of its radio presenters, Sebasa Mogale, after a media exposé suggested he may have been part of a cryptocurrency scam outfit that reportedly promised a 300% return on investment.

The decision to suspend the popular broadcaster, who also plays a role in South Africa’s popular television series Skeem Saam, was made after an investigative report by the media outlet Carte Blanche identified him as one of the masterminds behind the scam that allegedly fleeced more than 100 people.

Reports of Mogale’s suspension were confirmed by Gugu Ntuli, the South African Broadcasting Corporation (SABC) group executive responsible for corporate affairs and marketing. In a statement, the executive said:

Thobela FM has taken a decision to unschedule Sebasa Mogale, (Ntshirogele) Afternoon Drive presenter, following the Carte Blanche exposé. Mr Mogale is being afforded an opportunity to resolve the issues raised in the recent broadcast which pertain to his personal business dealings involving cryptocurrency.

Ntuli added that the SABC will “leave no stone unturned” in its own probe into Mogale’s role in the scam.

A Confidence Trickster

According to an exposé by Carte Blanche, Mogale had used his celebrity status to lure some listeners of his radio show to invest. The media outlet’s report said investors with no training in personal finance management had “cashed in their pensions and savings policies.” However, in the end, Mogale’s promises turned out to be empty.

“But for at least 140 people the man they trusted to guide them through the crypto maze appears to have been little more than a confidence trickster,” reads part of Carte Blanche’s summary of the exposé.

Following news of Mogale’s suspension, some of the victims of the scam have come forward to reveal their losses. Sello Bonoko is quoted in another report explaining he became a victim after he listened to Mogale’s bitcoin investment pitch that “sounded convincing.” He also said he trusted Mogale’s promises primarily because these were made on national radio. Bonoko said he lost more than $14,500 (R230,000).

Meanwhile, a spokesman for the South African police is quoted in the report telling Mogale’s victims to file reports with law enforcement. He said the police can only act after formally receiving the complaints.

What are your thoughts on this story? Tell us what you think in the comments section below.

Terence Zimwara

Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.

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.

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