GM Seedphrasers 👋 The markets are sending us more mixed signals than a broken traffic light. Lucky for you, we’re mixed signals experts. Let’s ride.

📓 Today’s Agenda:

• 🌡️ Your Temperature, Checked.

• 📊 BTC Bulls vs Bears

• 🪙 ETH: On-Chain Analysis

🌡️ Your Temperature, Checked

Last Tuesday, we asked you if you think BTC was going to $25K.
Here’s what you said:

• 50% believe BTC is going to $25K. Markets are looking bullish to them.

• 50% believe BTC is not going to $25K. This is just a 30-day bear market rally.

Looks like the Bulls and the Bears are at a standoff.

Seedphrase member Traderdxb said, “Bulls are being trapped.” And he just might be right.

But a lot can change in a week.

So let’s take the temperature again, anon. Tell us whether your conviction is the same as last week or has changed.

🔍️ Now let’s see what the data tells us.

📊 Data and On-Chain Analysis

Markets are making some expected corrections following a 30-day pump in all directions. In one week: BTC has just barely recovered from hitting a 7-day low hours ago, while ETH is up 4.84%.

Despite small corrections, everything has managed to stay green-ish. Which means the bulls are still leading the market, 5-weeks strong.

🐂 The Bullish Case for Bitcoin

• Moving Averages

The gold standard: 200 Week Moving Average.

In 10 years, BTC has spent very little time below the 200 WMA (purple line).

• Right now is the longest dip below the 200 WMA to date.

• If history repeats itself, its extremely likely BTC won’t be spending much more time down here at these prices.

• Bullish.

➡️ 50 & 200 Day Moving Average

The 50-day moving average (yellow line) is beginning to cross the 200-day moving average (purple line).

In Simple English: This is bullish for the mid-term. When moving averages converge, that means support is strong at this level.

• On Exchanges

The graph below shows us the supply of BTC on exchange wallets. When in the green, it indicates BTC is being moved on to exchange wallets.

Green means a dump is incoming. More BTC on exchanges = a bearish sign.

The good news: Right now, the movement of BTC is going off exchanges, a bullish sign. BTC has never been more in the red than it is today. Usually, red is a bad thing. But this time, it means investors are hodling their BTC and not planning to sell on exchanges.

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🐻 The Bearish Case for Bitcoin

Despite overall sentiment being bullish, some are confident a short-term pullback is due before a real rally.

• Bitcoin Funding Rates (Open Interest)

This chart measures market sentiment based on perpetual futures.

In simple English: we are looking at how much BTC is being traded with leverage.

Values > 0: bullish
Values < 0: bearish

Right now: we’ve just started to break into positive territory.

The bearish theory: some argue that if we remain in the positive for too long, it creates sell pressure. Sell pressure then creates a decline in price.

🔑  This is key: the bears argue that a drop in price will cause another long liquidation (people pulling their money out). This will then cause a further short-term price plunge.

• Elliott Wave Theory

The Elliot Wave Theory is used for technical analysis to predict market movements. It’s basically a psychological theory, and its accuracy is debated. Here’s the best explanation of it.

What you need to know: it essentially states that markets move in 5 waves.

• Wave 4: Currently, many argue that the current upside is a Wave 4 for Bitcoin — a bear market relief move.

• “We are sticking with our view that this bounce since November 2022 lows, is just a Wave 4 correction and we have a final Wave 5 sell-off to go.”

🔥 Hot Headlines

📈 Crypto & The Markets

• SuperBowl LVII won’t have any crypto ads following FTX collapse -See why

• Crypto Exchange Binance will suspend U.S. dollar transfers  - Read more

🖼️ NFTs

•  Zombie Cryptopunks sold for 857 ETH on Monday afternoon. ($1.4 million in value transferred)

• Roofstock sells its second house on the blockchain

• Memeland giant 9Gag spends 1.3m buying Bored Apes this special trait

🐂 The Bullish Case for Ethereum

Like Bitcoin, Ethereum has seen a correctional dip but has stayed above $1,600. Right now, Ethereum is at a critical point of resistance, and the bulls are focused on beating it.

• Moving Averages

50 (yellow) & 200 (purple) day moving averages for ETH are near convergence, showing strong support. ETH is showing similar behavior to BTC.

• On Exchanges

In the graph below, you’ll notice ETH has been in the red since October 1.

Translation: Since October 1st, more ETH has been taken off exchanges than put on exchanges. No dumpage in sight- yet.

Smells like HODL spirit.

Why the HODL? BTC & ETH investors are not interested in taking profits at these levels. Instead, they are accumulating and playing it safe.

• Open Interest

Since November, ETH has seen a sharp drop off in open interest.

This means traders are taking a back seat and resisting trades with leverage.

As Open Interest (OI) increases = indicates more liquidity, volatility, and attention

👉️ Right now: The increasing trend in OI could support the current ongoing price trend.

The Bearish Case for Ethereum

• Sell Pressure

While the last month has generated 30% gains for ETH holders, they kept HODLING.

What could persuade a sell off?

Visa. They’ve started testing for large transaction settlements on the ETH blockchain. Watch for sell pressure to bubble if ETH continues to pump due to recent news.

• Local Top Formation

The whales are whaling. Large transactions ($100K or more) have spiked from 2,020 to 4,070- a 100% increase in whale interactions.

👉️ Why you should care: A sharp increase in large transactions after a rally shows whales could be moving holdings for profits. So while retail is HODLing, the whales may be starting to take profits, forming a local top.

📝 THE TLDR:

The crypto market is showing mixed signals, with both bullish and bearish forces at play. Bitcoin faces bearish sentiment and a possible short-term pullback. Ethereum is facing crucial resistance but bulls are optimistic about a possible breakout.

Our hypothesis: a pull-back is likely, but we see the next month moving sideways.

We keep our eyes peeled for daily market movements. Follow our Twitter to stay on top of it.

😂 Meme of the day:

See You tomorrow!