Where the stables go?

On-chain update 2nd April 2021

Go ETH.

That is all.

Only kidding, there’s more - ETH is finally making it above $2000 which makes sense since it’s been exiting exchanges in huge amounts over the past 12 months. (chart below)

If you’re new to the newsletter, we’re just going over the same charts of on-chain data and looking to get a health check on the market.

Ideally we’re looking to get ahead of price and predict what’s going to happen - a difficult feat but we do our best.

Reserves Chart

Today we saw a huge amount of Stablecoins leave exchange reserves.

You can view this chart in your CryptoQuant here.

Stablecoins entering exchanges is typically a bullish sign, since it is only there for one reason, to buy. If we also see Bitcoin leaving exchange reserves then even more bullish because it’s safe to assume people arrive with fiat > convert to stables > buy BTC > transfer BTC off exchange.

This time however, we don’t really see Bitcoin reserves move, so it’s not super clear whether Stablecoins leaving exchanges is bearish.

I have however taken profits on my high time frame Bitcoin leverage play with a Maker Vault.

Institutional Buying Pressure

New readers, the way we assess the effect of institutional buying pressure is using All Tokens Transferred and Fund Flow Ratio.

When Fund Flow Ratio is low, it means exchanges are involved in less transactions on the network - indicating more OTC deals are happening.

When combined with Tokens Transferred, if that is also high it gives us confidence that those OTC deals are going on.

Right now, we sort of neutral on this, I don’t see a lot of institutional buying pressure.

You can view this chart in your CryptoQuant here.

Ethereum Reserves

As notes above, ETH continues to leave exchanges at brake neck speed, this trend started forming in 2020 likely due to the explosion of DeFi:

You can view this chart in your CryptoQuant here.

Intensified by ETH 2.0 staking. But this isn’t the full picture, for the full picture we need to head over to Glassnode and look at Supply in Smart Contracts:

Simply put, no sign of slowing down. This is what is happening with ETH, it’s held in ETH 2.0 staking / smart contracts and used in the decentralized ecosystem and not on exchanges.

I’m surprised price isn’t at $3k already.

Open Interest and Funding Rates

Finally, we have OI and funding. Funding rates keep spiking and currently the market is running kinda hot. Not the hottest we’ve seen but definitely too hot considering we’re pushing up against resistance.

I’ve been tweeting about this all week, whilst we’re up against resistance, high funding means traders are over-leveraged and they’re just asking to get liquidated.

Whales and smart money need liquidity and they will use your stop losses and liquidations for their long positions.

Wait until resistance is cleared, then take up leverage.

You can view this chart in your CryptoQuant here.

Summary

If I had to pick a direction for BTC, I’d say it will dip, but if it does the dip will be short and swift, gobbled up by Institutions from traditional finance who have decades of experience playing derivatives.

Watch yourself, don’t give them your money, be patient and if you feel like it, take some profits.