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Pioneering on-chain market analysis. Advanced charts/data/insights for investors in Bitcoin and digital assets. https://studio.glassnode.com/
Inscriptions have been a significant buyer of Bitcoin blockspace since their introduction in Feb 2023. In this edition, we explore whether inscriptions are displacing monetary transfers, and how the increase in fees has impacted miner profitability.
Executive Summary
Inscriptions act as a form of buyer of last resort for cheap blockspace, and appear to be sensitive to the absolute fee paid.
Inscriptions are best thought of as a sort of 'packing filler' which is stuffed into any remaining space once the higher value monetary transfers are packed into blocks.
Analysis of fees and volume need to consider that there can be a higher perception of 'value' assigned to the inscriptions beyond the BTC volume being transferred and held.
Despite a meaningful uptick in fee revenue for miners, the halving event is likely to put many of them into extreme income stress unless BTC prices increase meaningfully.
Read more in The Week On-chain Newsletterand our latest Video Report.
In this week's Glassnode Clips, we focus on Stablecoin Dominance:
- Tether (USDT) is regaining its market dominance, closely approaching its previous peak levels. This resurgence indicates its escalating importance, especially in markets outside the United States.
- A noteworthy increase in USD Coin's (USDC) outflows has been observed in 2023, a trend likely driven by U.S. capital migrating toward markets offering higher interest rates.
- Pertinent to the overall stablecoin environment, a net outflow is evident across the board, suggesting a prevailing trend of stablecoin redemptions in the market.
Discover more in the latest Glassnode Clips below 👇
https://www.youtube.com/watch?v=LbjMKR7rzf0
📢 Fresh from Glassnode: This week's Chart of the Week looks for insights in the the Short-Term Holder Supply in Profit metric. Get a grip on the sentiment of recent market entrants and understand the potential market shifts. How can you hedge yourself against potential losses? Equip yourself with knowledge that will help you navigate the Bitcoin market in the days and weeks to come. https://www.youtube.com/watch?v=OZ8CszH7gtA
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For all charts featured in the Mastering the Realized Cap report, please visit the Dashboard below 👇
https://glassno.de/456zfi9
Liquidity across the digital asset market continues to dry up, with both on-chain and off-chain volumes reaching historical lows. Whilst HODLing remains the market preference, a significant proportion of the supply is teetering on the edge of falling into a significant unrealized loss.
Executive Summary
- Liquidity, volatility, and volumes continue to compress across the digital asset market, with many metrics falling back to 2020 pre-bull levels.
- Stablecoins are experiencing a persistent decline in supply as redemptions are made across all major stablecoin assets with the exception of Tether (USDT).
- The Long-Term Holder cohort are steadfast in their holdings, spending remarkably little of it.
- Short-Term holders on the other hand are teetering on the edge of profitability, with a large majority of their supply acquired above the current price range.
Read more in The Week On-chain Newsletter and our latest Video Report.
Chart of the Week is Live! This week, we're focusing on the Spent Output Profit Ratio (SOPR). Grasp the practical implications of SOPR for your trading and investment decisions. Dive deep into this metric and stay ahead in the current uncertain environment.
https://www.youtube.com/watch?v=KEPRMS-ifBY
Capital tends to flow into the digital asset market primarily via three assets; #Bitcoin, #Ethereum, and #Stablecoins. With stablecoins proliferating in recent years, and becoming a dominant quote pair, we can use the relative flow of funds between these assets to gauge aggregate market demand.
In our latest video report, we cover the shifting tides of capital flows:
- Review the Recovering from a Bitcoin Bear dashboard.
- Use aggregate capital flow metrics to assess macro demand.
- Assess the relative balance between stablecoins and the majors.
- Shifting dominance that helps establish a view over the risk curve.
Visit our Capital Rotation dashboard for a full set of charts covered in this weeks video report.
🚀 Glassnode's Chart of the Week is here! Dive into the aftermath of the Grayscale legal victory against the SEC and discover the Realized Loss Momentum tool to spot market inflection points. Why has the market given up all its gains? Should investors brace for more downside? Equip yourself with the latest on-chain insights and stay ahead of the curve.
https://www.youtube.com/watch?v=8LiMcMcEMR0
The latest Week On-Chain Video is live! This session focuses on assessing risk in centralized crypto exchanges:
- Exchanges remain the centrepiece of the digital asset industry, where the vast majority of trade takes place.
- Our assessment, based on entity-adjusted data, indicates that 54% of the economical on-chain volume for Bitcoin is related to either exchange deposits or withdrawals.
- Drawing insights from the lessons of the FTX collapse, we introduce three metrics to pinpoint unusual exchange activity: the Reshuffling Ratio, the Reliance Ratio, and the Whale Withdrawal Ratio."
- Using this exchange risk framework, we assess Binance, Coinbase, Huobi and FTX to provide an overview of various exchange on-chain behaviors.
Find out more in the latest Week On-Chain 👇
https://www.youtube.com/watch?v=B2aWvbiwOTo
In this week's Glassnode Clips, we take a closer look at the Bitcoin options market, providing insights into last week's flash crash:
- Implied volatility was historically low before the crash, leaving the market unprepared for sudden price movements.
- Despite the chaos, options open interest remained stable, showing no mass panic and minimal forced deleveraging. This contrasts sharply with the $2.5B mass deleveraging observed in the futures market.
- The options market wasn't the primary catalyst for the sell-off, but it did adjust quickly, with volatility and delta skew rising significantly.
Discover more in the latest Glassnode Clips below 👇
https://www.youtube.com/watch?v=9gqEuv96H2k
The latest edition of The Week On-chain video report is live.
In this edition, we cover:
- Range and expansion and how higher volatility has finally arrived.
- A deleveraging in futures markets appears to be the main catalyst.
- On-chain indicators suggest there is a risk of being ‘top-heavy’.
- Deep dive into Realized Profit/Loss Ratio Momentum.
Full details in our latest video analysis report.
Introducing Glassnode Clips: Digestible, bite-sized answers to your burning crypto questions. This week? A deep dive into Bitcoin's Realized Cap Breakdown:
- Bitcoin's realized cap serves as an essential tool in assessing capital flows; upward trends signal net inflows into the asset, while downtrends point to net outflows.
- Analyzing the 2023 data reveals a clear inverse relationship between short-term and long-term holders, especially evident during the notable February dip at 19.8k.
- Observing the market behavior, after witnessing short-term holders anchoring during lows, it's evident they are now operating speculatively, while long-term holders stand as the market's stable pillars.
Discover more in the latest Glassnode Clips below 👇
https://www.youtube.com/watch?v=ufFTwh6COPA
The latest Week On-Chain is now live! In this report we focus on:
- Bitcoin prices are infamously volatile, however the market is currently experiencing an extreme volatility compression. Fewer than 5% of trading days have a tighter trade range.
- Futures markets are notably flat, with trade volumes for BTC and ETH both probing all-time-lows, and cash-and-carry yields of 5.3% just slightly above the risk free rate.
- Implied volatility in options markets is undergoing a significant volatility crush, with volatility premiums trading at less than half the 2021-22 baseline.
- Both the put/call ratio, and the 25-delta skew metrics are at all-time-lows, suggesting options markets favour calls, and put options have priced in very light volatility ahead.
Find out more in the latest Week On-Chain👇🏼
https://glassno.de/3OmRCsF
The latest Week On-Chain video report is now live! In this session we focus on:
- Analyzing the fund flows attributed to top #Bitcoin exchanges in the US and Asia regions
- Identifying periods of demand expansion (or contraction) using the concept of ‘hot supply’,
- Evaluating the shift in psychology across the Short-Term Holder cohort in 2023
Get the latest insights in this video👇🏼
https://www.youtube.com/watch?v=np4-1gizCG0
Volatility, volumes, and realized values are at multi-year lows, indicating that Bitcoin investor apathy is firmly in play.
However, under the surface, HODLers continue their classic slow and steady accumulation, with the halving now less than 1yr away.
To find out more, please read the latest Week On-Chain.
In this week's Glassnode Clips, we focus on RHODL Ratio:
- High RHODL values indicate that a significant proportion of the Bitcoin supply is being held in coins that have recently moved, illustrating a tendency towards short-term holding, whereas low values are indicative of predominant long-term holding.
- The RHODL Ratio is currently near its two-year median, which has traditionally been crucial in indicating market transitions; the lack of a clear break in either direction is emphasizing the current state of high market indecision.
- The RHODL Ratio has consistently served as a reliable indicator in identifying key market trends and shifts, positioning it as an essential tool for comprehensive market analysis.
Discover more in the latest Glassnode Clips below 👇
https://www.youtube.com/watch?v=LUt0XkuHyGs
With almost all Short-Term Holders now underwater on their position, sentiment has shifted towards the negative. In this report, we explore several measures to track investor sentiment. We develop indicators which assess divergences between the market and observed investor behavior.
Executive Summary
We review the market position relative to two on-chain pricing models, both of which are intersected during past cycle lows, and in the March 2020 sell-off.
Patterns of accumulation and distribution tend to align with local highs and lows, and we demonstrate how this plays out in on-chain data.
A super-majority of Short-Term Holders are now underwater on their position, with a new indicator suggesting negative sentiment dominates this cohort at present.
Read more in The Week On-chain Newsletter.
🔍 Finance Bridge by Glassnode is our go-to resource for traditional finance entities looking to integrate on-chain insights into their trading and investments. In the September edition, we delve into Bitcoin's momentum shifts as seen through on-chain profitability metrics, explore how macroeconomic dynamics impact the crypto markets, and explain how to use the Realized Cap to inform you trading and investment strategies. Discover all these insights here: https://insights.glassnode.com/finance-bridge-edition-4/
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The Realized Cap is one of the most important on-chain metrics, and is an essential primitive for analysts to master.
In this report, we document how the Realized Cap, and its derivatives, describe the fear and greed response of investors, which are the primal forces driving Bitcoin market cycles.
Discover more below 👇
https://glassno.de/3PA7kCy
Glassnode Co-Founder Rafael Schultze-Kraft is going to be on a panel at token2049 tomorrow to discuss how to best navigate blockchain and web3 data. If you're attending, make sure to check it out and connect with us at our booth on level 5!
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In this week's Glassnode Clips, we focus on BTC vs ETH Exchange Flow Dominance:
- This metric gauges the proportion of USD funds flowing in and out of exchanges attributed to Bitcoin and Ethereum. A higher value signals Bitcoin dominance, while a lower value suggests Ethereum dominance.
- Throughout 2023, Bitcoin's dominance has noticeably increased, moving from around 50% to between 65-75%. This rise in BTC exchange flow dominance indicates capital moving down the risk curve, suggesting a weakening of risk appetite.
- Despite the increase in Bitcoin's dominance, net capital outflows persist across the digital asset space, highlighting that caution remains the dominant sentiment.
Discover more in the latest Glassnode Clips below 👇
https://www.youtube.com/watch?v=o_Htt6cKYIY
The latest edition of The Week On-chain newsletter is live.
We introduce and establish a set of tools we can use to assess sentiment and market positioning in Uniswap Liquidity Pools.
Executive Summary
- Event driven volatility has re-entered digital assets markets in recent weeks, with notable indicators of aggregate capital outflows flagged leading into it.
- Derivative markets show a continual outflow of liquidity, particularly across ETH futures suggesting capital continues to move higher up the risk curve to relative safety.
- We deep dive into how Uniswap liquidity pools have many similarities to options markets, with Liquidity Providers expressing a view on both volatility, and price levels.
Read more in the latest edition of The Week On-chain newsletter.
In this week's Glassnode Clips, we focus on evaluating risk in centralized cryptocurrency exchanges:
- The Measure of Liquidity Reliance ratio aims to gauge an exchange's level of dependency by looking at 30-day flows to/from another exchange relative to its balance.
- A higher Exchange Reliance Ratio may suggest increased counterparty risk, a consideration that could be especially relevant for smaller exchanges.
- Sudden shifts in the ratio might act as early warning signs, as likely indicated by Alameda's influence on FTX's outflows in June 2022.
Discover more in the latest Glassnode Clips below 👇
https://youtu.be/Z62l6dtB5rQ
With hindsight and lessons learned from FTX, the monitoring of exchange related risks is a critical component of digital asset risk management.
In our latest report, we develop three indicators which help highlight periods of heightened counter party risk. We analyse the top four assets BTC, ETH, USDC and USDT, across four case study exchanges; Binance, Coinbase, Huobi and FTX.
Read more in The Week On-chain
We are proud to Introduce Cointime Economics, a new framework to analyse the #Bitcoin economy, developed in collaboration with ARKInvest. This novel framework establishes a new suite of analysis tools, 30+ new metrics, and improved valuation and pricing models.
We build upon the pioneering work by Tamás Blummer, who discovered the Liveliness and HODLed and Lost coins metrics in 2018. We progress these concepts, exploring how units of coin-time can provide an elegant and detailed perspective into the dynamics of the #Bitcoin economy.
Cointime Economics opens the door on several groundbreaking innovations:
- Efficient tools to discount lost and long-dormant supply.
- Improved economic calculations which isolate active investors.
- Superior estimates of the market cost basis and mean reversion models.
- Cointime derived valuation and pricing models applicable to all digital assets.
Cointime Economics comes in two parts and a live charting suite:
- Part I by ARK-Invest which is an overview whitepaper for investors
- Part II by Glassnode which is a deep breakdown of the framework from first principles for analysts
- Live chart suite available within Glassnode Studio
We have also prepared a video overview and blog post, both covering the key innovations as a primer.
#Bitcoin bulls were caught off guard last week with the largest sell-off in 2023 sending $BTC below $25k. A deleveraging in futures markets is the likely catalyst, however a bigger concern may be the 88.3% of Short-Term Holder supply now held in an unrealized loss.
In this edition, we analyse the #Bitcoin sell-off across four key areas of interest:
- Key pricing models lost as support
- Options markets repricing volatility
- Futures market deleveraging
- Spot markets being top-heavy
To close, we introduce a new on-chain #Bitcoin indicator designed to monitor inflection points in investor sentiment, positioning and trends. This tool is experimental, however is very responsive when the market is top-heavy and price sensitive.
Read more in the latest edition of The Week On-chain
The Bitcoin market has reached a stage of extreme apathy and exhaustion, with volatility measures and several key on-chain indicators reaching all-time-low readings. With the market being somewhat top-heavy, we assess how investors are responding to the boredom.
In the latest Week On-chain edition, we assess:
- The digital asset market which continues trading within a historically low volatility regime, with several metrics indicating extreme apathy and exhaustion has been reached in the $29k to $30k range.
- There are some indicators that the market is slightly ‘top-heavy’ as indicated by the concentration of Short-Term Holder supply and cost basis around the current spot price.
- We explore several new iterations of SOPR by age band as a tool to monitor profit taking behavior by various cross sections of the market.
In our video WoC report, we also deep dive into how we can use the concept of Hot Supply and Single Cycle HODLers to track profit taking behavior during uptrends and rallies.
The latest Glassnode report is now live; Mastering the Realized Cap Part 1. In this session we focus on:
- The fundamentals and construction of the Realized Cap.
- Understanding the power of Realized Profit and Loss metrics.
- Analysing derivative metrics from the Realized Cap.
- Building market cycle tooling using the priciples covered.
Watch more in our latest Week On-chain video report
With a gold rush of applications for a #Bitcoin ETF filed this week, a key question is how many Bitcoin are active and available for sale?
In this report, we try to measure the available supply and assess how demand impacted valuations in past cycles.
Discover more in the latest Week On-Chain.
The US regulatory environment continues hostilities this week, with the SEC charging #Binance and #Coinbase for securities violations.
In this edition, we assess the investor response from the lens of exchange inflows, and which investor cohorts panicked, and which stayed calm.
Discover more in the latest Week On-Chain.