BTCBitcoinBullish(Nuanced)Bitcoin

5/31/2023 on

Analyzing Bitcoin and Ethereum's On-Chain Data Amidst the U.S. Debt Ceiling Discussions

This year, Bitcoin's trading flow on exchanges has seen one of its biggest drops amidst continuing discussions about increasing the U.S. debt limit. This pattern implies that a majority of traders have a positive outlook on Bitcoin. The supply of Bitcoin on these platforms has dipped by about 28.5K Bitcoin. Additionally, the number of Bitcoins being sent to exchanges (which could suggest a desire to sell) has been steadily reducing for the last two months. This is another indication that traders currently don't want to sell their bitcoins. With the market mood improving, Bitcoin's price has bounced back from the average buying price of those who've held the cryptocurrency for 1 to 3 months, keeping up its rising trend over a long-term period. On the flip side, over a short-term period, Bitcoin's price is nearly equal to the average buying price of those who've held it for less than a day. These traders are the most responsive group in the market, as they react fastest to changes in Bitcoin's price. Over the past four days, traders have shown more confidence in cryptocurrencies by opening new futures contracts worth over $640M and $222M in the Bitcoin and Ethereum markets, respectively. This inflow is leaning towards more purchases, as indicated by funding rates. This is why we believe the increase in price was primarily influenced by the derivatives market. During this recent surge, we have seen the forced selling (or 'liquidation') of short positions amount to 550 Bitcoins and 4800 Ethers per hour. To simplify further, all these points suggest that despite some economic uncertainty, traders are optimistic about Bitcoin's value, they're holding onto it, and even buying more. This increased activity and investment have helped push the price up.  

ETHEthereumBullish(Nuanced)Ethereum

5/24/2023 on

Momentum Builds in Ethereum Staking as Bitcoin Holds at Historically Crucial Support Level

The amount of Ethereum staked has been rising rapidly, hitting record levels day by day. As of now, there are 21.93 million ETH staked. The Shapella upgrade led to a swift reduction in Ethereum’s total supply, reinforcing its existing deflationary trend. Since this upgrade, the supply has dropped by 251K ETH. The ability to freely withdraw staked ETH provided investors with more control, encouraging them to stake more. This has led to a notable increase in the total staked value, which now represents 17.41% of Ethereum’s total supply. The rate of Ethereum's deflation has quickened due to an increase in burnt fees, which have spiked significantly over the past year. The Ethereum network also exhibits strong activity, reflected in a high transaction count, the highest it has been in a year. In the meantime, Bitcoin demonstrates resilience as the number of active addresses hit 1 million after a recent upswing. Bitcoin's current value matches the average investment of holders who've been in possession for 1 to 3 months. This specific investment average has traditionally served as a solid support level, around $26.5K. Looking at Bitcoin from a broader viewpoint, and considering the Net Unrealized Profit/Loss (NUPL), we see that investors, on average, have about 25% of profits that are yet to be realized. This is a typical scenario at the start of a Bitcoin bull market, the phase we find ourselves in now.  

BTCBitcoinNeutralBitcoin

5/17/2023 on

Decoding Bitcoin's Recent Correction: How Miners and Whales Cashing Out

The latest Bitcoin price dip followed Long-Term Holders (LTHs) capitalizing on the year's highest profit ratio, over 34%. Furthermore, on a broader scale, all market players managed to realize profits exceeding 7% on average. This downturn is also influenced by whales taking the lead in depositing Bitcoin into exchanges, as evidenced by the early May surge in the Exchange Whale Ratio. Without a doubt, Bitcoin transactions by these whales escalated to fairly high levels, with transfers involving more than 40% of the coins. Simultaneously, daily miner wallet outflows reached near-record highs, contributing to the selling pressure during this adjustment period. While miners' impact on price movements is lessening, understanding their actions remains essential given their considerable Bitcoin holdings. As it stands, miners possess more than 9% of Bitcoin's total supply, inclusive of Satoshi's coins. Investors who have held Bitcoin for 1 to 3 months show a significant support level in their cost basis ($26.5K), indicating that this was a key point during the recent price correction.  

BTCBitcoinNeutralBitcoin

5/10/2023 on

Bitcoin network use surged with BRC-20 tokens, causing transaction fees to soar

Bitcoin activity has hit an unprecedented level, with daily transactions reaching a new record of 682K. This is a significant increase from 250K daily transactions at the start of 2023. The primary reason behind this surge is the growing popularity of ordinal inscriptions, which are predominantly used for creating a type of digital asset known as BRC-20 tokens. These tokens are generated using Taproot addresses, which have seen a substantial rise since mid-April. This high usage of Taproot addresses for creating tokens further demonstrates the increasing interest in Bitcoin and its associated technologies. Alongside this, there's a consistent increase in the number of Unspent Transaction Outputs (UTxOs). UTxOs represent the output of Bitcoin transactions that can be spent as new transactions, and an increase in their number signifies heightened activity on the Bitcoin network. However, this surge in Bitcoin activity and the popularity of BRC-20 tokens have led to a downside: the Bitcoin network has become congested. As a result, users have been forced to pay significantly high transaction fees. The average fee per transaction has skyrocketed to $30.82, the steepest it has been since February 2021. Moreover, these high transaction fees have started to make up a large portion of miners' earnings. Currently, daily fees constitute 42.6% of the rewards miners receive for adding new blocks to the blockchain. This is the highest percentage seen since December 2017, indicating that the current state of the Bitcoin network is impacting all its stakeholders, from everyday users to miners.  

BTCBitcoinBullish(Nuanced)Bitcoin

5/3/2023 on

Understanding the Interplay Between Bitcoin Holders and Market Cycles

From the standpoint of bitcoin holdings, on-chain data indicates that the bitcoin price has effectively hit its lowest point. Specifically, the supply of bitcoins between 18 months and 2 years usually expands as the price forms a base and then surges when the bottom is reached. The supply of 18-month to 2-year-old bitcoins (held by holders) grows when bitcoin is undervalued (with an MVRV ratio mostly below 1 during previous market lows). As the market cycle advances, the price of bitcoin rises, making it more expensive from a valuation perspective; 18-month to 2-year bitcoin holders begin to sell their coins, causing their holdings to decrease. In contrast, the holdings of short-term bitcoin holders (less than six months old) start to grow after prices reach their lowest point and then move upward alongside prices, which is the current situation. Short-term bitcoin holders begin accumulating coins after the lowest price point (as is the case now) and continue to do so at increasing price valuations (with a rising MVRV ratio). Therefore, a market peak will coincide with short-term holdings exceeding 6 million bitcoins. Currently, this figure is at 4.7 million. Simultaneously, the quantity of bitcoins that haven't been moved for a year or more (1-year inactive supply) achieved a record high in late March (13.1 million) and is now at 13.0 million. The 1-year inactive supply typically grows throughout most of the bull cycle and only starts to decrease during the bull market's final stage.