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Bitcoin: USD/BTC (BTC=X) whales get ever bigger, threatening increased volatility

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Bitcoin: USD/BTC (BTC=X) whales get ever bigger, threatening increased volatility

A closer look at bitcoin holdings data shows a potentially troubling trend among the anonymous accounts — increased consolidation among large owners.

Investors with 1,000 to 1 million bitcoins, often referred to as whales, hold 42.1% of all bitcoin supply, up from 37.9% during the height of the speculative bubble two years ago, according data from researcher Coin Metrics.

While small retail holders, investing a few hundred or thousand dollars, trickled in during and after the 2017 boom, the rising ownership concentration means that the sway big holders have over prices is likely increasing. Only about 3.5% of all addresses are actively trading on any given week, according to Flipside Crypto, another researcher.

“The problem with a few large players holding crypto is that when they sell they can easily push the price down, which makes the market susceptible to rapid swings,” said John Griffin, a finance professor at the University of Texas at Austin, who has published research on market manipulation in cryptocurrencies.

Overall, the top 1,000 addresses control 34.8% of all available bitcoin, up slightly from 34.4% at the end of 2017, according to Flipside. Meanwhile, more than 27 million wallets held a balance of fewer than 10 bitcoins as of September, per researcher TokenAnalyst.

Much of the recent accumulation likely happened among investors who are not wedded to the bitcoin dream, warned Aaron Brown, an investor and writer. The top 10,000 to 100,000 addresses are likely held by family offices and high-net worth individuals who may not stick around if the coin doesn’t perform, he said. Such addresses now account for 15% of bitcoin supply, Brown said, up from 10% just 18 months ago.

“I doubt they have infinite patience, and without significant growth in actual use, I would expect them to quietly withdraw to chase other promising technologies,” Brown said. “They have no great financial or ideological commitment to either crypto or the ideals and technologies behind it.” Bitcoin’s wild price swings prevent the coin’s wide adoption in commerce.

Bitcoin is still one of the highest returning speculative assets this year, almost doubling to around $7,180 despite dramatic pricefluctuations. That is on the back of last year’s 74% slump and 2017’s 1,400% surge.

There is speculation that some of the whale accounts are in fact exchanges and custodians, holding coins for many clients. A unit of Fidelity Investments began offering crypto custody services this year, for example. But because bitcoin addresses are anonymous, the exact impact is hard to gauge; Flipside believes exchanges hold about 5% of available coin supply, while Coin Metrics pegs the number at 20%.

“Bitcoin will remain volatile,” said Eric Stone, head of data science at Boston-based Flipside. “A few really big wallets own a lot of the currency. Exchange marketplaces are unregulated and not audited. So there’s just a lot of potential for someone who wants to manipulate the market to do so.”

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 7,999.23.

The projected lower bound is: 6,466.30.

The projected closing price is: 7,232.77.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 19 white candles and 31 black candles for a net of 12 black candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 29.8561. This is not an overbought or oversold reading. The last signal was a sell 11 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 38.44. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 15 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -115.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 16 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 13 period(s) ago.

Rex Takasugi – TD Profile

FOREX BTC= closed up 43.810 at 7,237.810. Volume was 2% below average (neutral) and Bollinger Bands were 65% narrower than normal.

Open     High      Low     Close     Volume___
7,223.8007,325.0006,989.2607,237.810 80,211
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 7,335.23 8,210.02 9,371.70
Volatility: 26 60 75
Volume: 91,007 82,502 85,770

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX BTC= is currently 22.8% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of BTC= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BTC= and have had this outlook for the last 28 periods.

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