Here, Fishy Fishy Fishy — July 29

Chart of the Day

Small fish in a big pond. Ecoinometrics has conducted an interesting study on the accumulation trends of Bitcoin holders. Active addresses are classified according to their Bitcoin holdings into marine species, with small fishes and whales on the two ends of the spectrum. These categories are then weighted and computed into an index, the participation score, which informs if various network entities are accumulating in a specific time frame. The graph on the current cycle shows that the prolonged period where blue points dominate, i.e. when only small fishes are accumulating, precedes the devastating May crash. Red flags are flying when only the small fish remain bullish — be cautious where the price is heading. However, the color change from blue to warmer colors also coincides with a noticeable change in market sentiment and price action. 

Talk of the Town

Still transitory (don’t be alarmed). During the meeting on Wednesday, U.S. Federal Reserve Chair Jerome Powell confirmed that inflation could turn out to be higher than expected. However, he reiterated that inflation remained the result of transitory factors, and there is still a way to go before thinking about raising interest rates. Gold prices regained previous losses after the Fed’s comment, maintaining its long-established reputation as an inflation hedge, while Bitcoin struggles to transform the $40k resistance into support as the market confirms the recent bullish tendency.