Letter No. 28: Histogram of purchase prices, distribution zones, and official curial prices.

Hello everyone,

The purpose of this letter is to inform you about the current situation of the crypto-asset market as well as recent news in this field. This letter is not investment advice, but merely a sharing of my personal point of view.

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News

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Lido consolidates its leading position with 10,000 new ETH depositors over the month of July. Lido, the largest decentralized finance (DeFi) protocol by TVL, announced that it surpassed $15 billion in total value locked in July, onboarding over 10,000 new unique depositors during that period. This represents a growth of over 50 % compared to the previous month. Will it reach 8 million staked ETH soon?

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PayPal partners with Ledger – What does the payments giant have in store? PayPal's crypto initiatives have multiplied in recent weeks, following the release of its PYUSD stablecoin. This week, a new partnership with the French company Ledger was announced to offer a new way to buy cryptocurrencies. What does this change for users?

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Base exceeds 10 million transactions: Coinbase blockchain analysis. Following its mainnet launch about 2 months ago and its unconditional opening to users a few days ago, Coinbase's Layer 2 Base has surpassed 10 million transactions. A look back at the main statistics of this Ethereum (ETH) scaling solution.

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Ethereum: a new ETH ETF soon on the Nasdaq? Valkyrie files application with the SEC. Following the recent wave of new ETF registration filings with the SEC, Valkyrie has submitted an application for an Ethereum (ETH)-based fund. How would this investment product work if approved?

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Bitcoin: Europe's 1st spot BTC ETF arrives on Euronext. This week, Jacobi Asset Management launched Europe's 1st spot Bitcoin (BTC) ETF on Euronext. Looking back at this firsts that beats the United States to the punch.

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PYUSD: PayPal launches its crypto – The long-awaited bridge between Web3 and fiat currencies? PayPal is once again leading the way. After enabling the buying and selling of cryptocurrencies on its app for US customers, the company has just announced the creation of a dollar-backed stablecoin, PYUSD. The company's goal is clear: to provide new, innovative services for both merchants and consumers. We take a closer look at this new asset.

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Fundamental Analysis

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At the time of writing, the price of Bitcoin is 26,000$ (on 08/20/23).

The segmentation of the bitcoin supply sorted by purchase price:

The indicator for distribution of realized prices allows to understand the value at which each bitcoin was traded. This chart should be considered as a bitcoin supply histogram sorted by the price at which the coins were last traded. It provides a striking snapshot of investor sentiment showing at which price levels most investors moved their coins, potentially indicating strong support or resistance zones.

The chart below adds an entity-adjustment filter to the chart of distribution of realized prices Classic. The Bitcoin network is vast, with countless transactions, but every transfer does not signify a true purchase. By ignoring simple address-to-address movements within the same entity and excluding the massive bundling on exchanges, the metric in the chart below offers a more authentic picture centered on genuine purchasing events.

We can quite easily see the short-term investor buying zone located between 25,000 $ and 32,000 $ per bitcoin. This helps us understand that the recent sharp downward movement in the last few days has pushed prices back into the hands of long-term investors located in the zone below 25,000 $ per bitcoin. This zone should be solid.

The distinct distribution zones of Bitcoin investors:

Thanks to the data provided by «on-chain» analysis and Glassnode's analytical work, we can highlight three distinct investor distribution zones on Bitcoin.

• Below 20,000 $, multi-cycle investors:

This area is home to Bitcoin veterans. Historically, this cohort has held onto its coins through thick and thin, displaying an unwavering belief in Bitcoin's long-term potential. These holders typically begin selling their Bitcoin once the market reaches new all-time highs (ATH). Their activity suggests a seasoned strategy whereby they capitalize from cycle to cycle.

• From 20,000 $ to 32,000 $, the diversified terrain zone of long-term accumulators and short-term investors:

This zone encompasses a great wealth of market participants: on one side, the persistent accumulators, who are savvy investors progressively accumulating Bitcoin tokens. They helped establish the floor of the previous bear market, which ended in late 2022. On the other side are the «merchants»—short-term traders and/or investors. Agile and opportunistic, they capitalized on the 2023 rally, providing liquidity and creating a dynamic short-term market. Their actions are driven by short-term gains rather than long-term convictions.

• Above 32,000 $, the new entrants of the 2021-22 cycle:

In this zone, we find the latest entrants of the cycle; these investors are experiencing unrealized paper losses. As the market struggles to climb, these holders can turn into potential resistance points. Why? Because the pain of unrealized losses can push many investors to dump their holdings as soon as they reach the break-even threshold, creating selling pressure every time the market gets close to their entry points. These investors can also find themselves in the previous bracket presented above, because for some of them (those diving into the ecosystem), they end up building their portfolio and buying today in order to lower their average purchase prices.

We can conclude that two price zones are interesting and crucial:

• The 20,000 $ zone: A significant number of coins are nestled in this range, cementing the «value area.» If market prices were to fall, this region could see a resurgence of interest as investors potentially view it as a value buy, thereby providing solid support.

• The 32,000 $ zone is a vital marker. Below it, we see large clusters of diverse investors. Above it, the landscape is relatively uncharted. As demand wanes, we also encounter «trapped holder resistance»—holders eager to mitigate losses or break even.

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Our service

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Our turnkey management allows you to take advantage of this sector's growth without worrying about choosing the digital assets to put in your portfolio, conducting in-depth token research, dealing with volatility, or handling rebalancing, etc. All you have to do is read your monthly reports and invest regularly with a long-term horizon (4 years and more).

We do not engage in algorithmic trading or day trading; we invest for the long term in projects that we know and understand. We make monthly rebalancing adjustments in the portfolios and conduct in-depth research on the assets (especially their tokenomics) that we include in our portfolios.

Check out our website: https://www.mereau-finance.com/

If you have any questions, comments, or would like to know more about our service, please feel free to contact us at this email address: tristan.g@crypto-assets-management.com or to schedule a phone appointment with us via this link.

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We are saved with the AMF under the registration number for digital asset buy/sell activities against legal tender and digital asset exchange against other digital assets: E2023-084.

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— Warning —

This is not investment advice, no one can predict the future.

You are solely responsible for your investment decisions.

We are not responsible for losses following a decision made on the basis of the information in this letter.