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Pioneering on-chain market analysis. Advanced charts/data/insights for investors in Bitcoin and digital assets. https://studio.glassnode.com/
The Week On-Chain 21, 2024
Bitcoin markets have experienced a cool down after several months of intense distribution pressure. Whilst capital inflows remain modest, the lightening of sell-side, and compression of volatility suggest a bigger move could be on the horizon.
Executive Summary
- Following a significant period of distribution into the ATH, a period of cooling down and consolidation has been underway, and sell-side pressure is winding back markedly.
- Alongside lighter sell-side activity, capital inflows remain relatively modest, although remain in a profit dominated regime and have been sufficient to stimulate local price action.
- Various measures of volatility have compressed over the course of this correction, which usually precede a larger scale market move, since equilibrium has been reached on-chain.
Read more in The Week On-Chain newsletter.
This month's Finance Bridge examines Bitcoin's post-halving sell-off and debates around Ethereum's staking policies. The analysis highlights ETF inflows, market momentum indicators, and speculative trends. A must-read read for finance professionals and institutional investors.
Read the full article here: https://glassno.de/4bfxEtT
Amidst the hype and market rally surrounding approval of the spot Bitcoin ETFs, the unrealized profit of Bitcoin holders expanded considerably faster than that of Ethereum investors.
As a result, the Bitcoin NUPL metric crossed 0.5 and entered the euphoria phase three months before the equivalent metric for Ethereum.
Discover more in the latest Week On-Chain below👇
https://glassno.de/3y6TJMT
Measured from the $73k ATH, Bitcoin prices corrected by -20.3%, which is the deepest correction on a closing basis since the FTX lows in Nov-2022.
That said, this macro uptrend still appears to be one of the more resilient in history, with comparatively shallow corrections thus far.
Discover more in the latest Week On-Chain below👇
https://glassno.de/3y6TJMT
Discover how the latest Bitcoin halving influences market trends and mining profits. Learn why this could matter to institutional investors.
Read our full analysis 👉 https://glassno.de/4b5pcxg
Using NUPL, we can identify the classic Euphoria phase of a bull market where unrealized profits surpass more than half the market capitalization size (NUPL > 0.5).
In the 2020-21 cycle, this phase was triggered 8.5 months after the Bitcoin halving, and saw sustained upside for almost 10.5 months afterwards.
However, in this cycle, NUPL breached 0.5 approximately 6.5 months before the halving. This distinct shift highlights the significance of US ETF in shaping and accelerating price action by introducing powerful demand into the market.
Discover more in the latest Week On-Chain below 👇
https://glassno.de/3QrCRXj
The Week On-Chain 18, 2024
As Bitcoin continues consolidating, we investigate which cohort of investors are contributing the most to sell-side activity. We also use our new Breakdown metric suite to build a set of rules for tracking local market lows during corrections.
Executive Summary
- Since the March ATH at $73k, the Bitcoin market has transitioned into widespread net distribution, with coins taking advantage of liquidity and inflowing demand.
- According to the NUPL metric, the Bitcoin cycle remains within the Euphoria phase, however it has cooled off since the correction started.
- We develop an example procedure for identifying potential inflection points and local lows, driven by various sub-sets of the Short-Term Holder cohort.
Read more in The Week On-Chain newsletter.
Currently, the unrealized profit held within the Bitcoin supply is the largest it has ever been moving into a Halving event (as measured by MVRV).
In other words, investors are holding the largest paper gains relative to their cost basis as of a halving date. With the MVRV Ratio is trading at 2.26, this means the average unit of BTC is holding a +126% paper gain.
Discover more in the latest Week On-Chain 👇
https://glassno.de/4b6Lu1h
Glassnodes's lead analyst James Check outlines the key themes shaping the digital asset landscape in 2024, in the latest episode of Coinbase Institutional's Market Call podcast.
Episode Highlights:
- Quarterly Analysis: Key insights from the report, focusing on BTC's role in strategic portfolio diversification.
- Bitcoin Halving Examination: Explore the expected impacts of the Bitcoin Halving on the mining industry and broader market.
- Macro Economic Context: Interest Rate Implications: Discuss how shifts in global interest rates could influence the cryptocurrency markets, with a comprehensive macroeconomic analysis.
We invite you to listen to the full podcast for more detailed discussions and subscribe for future episodes on Apple Podcasts: https://podcasts.apple.com/us/podcast/coinbase-institutional-market-call/id1705007171
Attention institutional investors! Join us today, April 22nd, 2024, at 04:30 PM EST for an insightful webinar with Glassnode's lead analyst, James Check, and Ben Floyd, Head of Execution Services at Coinbase Institutional.
In this session, James and Ben will provide a comprehensive view of the metrics that matter most to institutional traders. They will share actionable insights on key topics, including:
- Correlations to traditional assets and the role of crypto in building diversified portfolios.
- Insights on where we are in the current market cycle and how it compares to previous cycles.
- Deep dives into what the current ETF flows as well as the Bitcoin halving mean for market participants.
Spaces are limited—secure your spot today: https://glassno.de/3W6aBgr
The Week On-Chain 16, 2024
The Ethereum community is debating a change to the ETH monetary policy, following a proposals aimed at constraining the rapid expansion of the staking pool. This is motivated by a surge in demand for Liquid Staking and Restaking protocols.
Executive Summary
- The Ethereum community is currently engaged in a heated debate regarding the ETH monetary policy following proposals to reduce the ETH issuance rate.
- New innovations such as Liquid Staking, Restaking, and Liquid Restaking have introduced additional yield opportunities, significantly boosting staking demand.
- Concerns are that the increasing prevalence of staking derivatives may dilute Ethereum's function as money, and shift the governance power of the network.
Read more in The Week On-Chain newsletter.
Introducing the Q2 Guide to Crypto Markets by Coinbase Institutional and Glassnode.
This second instalment analyzes price trends and key themes in the digital asset landscape in 2024.
Some highlights from the 59-page guide:
- Data on the bull: The last two bull markets lasted 3.5 years; currently, we're 1.5 years into another. Previously, price increases reached 113x and 19x, with this cycle ‘only’ reaching 4x so far.
- Rising popularity, rising maturity: As the crypto market grows, spot Bitcoin ETFs boost accessibility for institutional investors. Last quarter, they attracted $12B and now hold $60B in BTC, becoming key market influencers and among the fastest-growing ETFs.
- The perfect diversifier? From April 2019 - March 2024, adding a small crypto allocation to a traditional 60/40 portfolio notably boosted returns: a 3% allocation yielded 52.9% returns, & a 5% allocation brought 67.0%, far surpassing the traditional strategy’s 33.3% returns.
Download the guide here: https://glassno.de/3VUhtxx
In this week's Glassnode Clips, we analyze NUPL by Cohort:
- Capitulation signs are revealed by NUPL by Cohort when all market participants face unrealized losses, signaling potential market bottoms and recovery points.
- Rising unrealized profits in any cohort as Bitcoin surpasses previous highs indicate a shift from enthusiasm to euphoria in the market.
- Historical analysis of NUPL shows that breaking all-time highs often leads to significant profit realization among cohorts, marking critical market phases.
Discover more in the latest Glassnode Clips below 👇
https://www.youtube.com/watch?v=BQ6B4xyJ1xo&t=1s
As the market reclaimed the 2021 cycle high, the Bitcoin Relative Realized Profit peaked at 1.8%, suggesting 1.8% of the market cap was locked in as profit over a 7-day period.
This is significant but remains comparatively lower than the profit-taking intensity during the January 2021 rally (3.0%.)
Discover more in the latest Week On-Chain below 👇
https://glassno.de/43OJxEt
The Week On-Chain 15, 2024
In this edition, we analyse the surge in both spot trading, and onchain exchange volumes for Bitcoin underlying the strong YTD performance. The market has also transitioned into a euphoric phase, as profit-taking has climbed accordingly.
Executive Summary
- Bitcoin’s strong performance over the last 12 months is supported by a surge in both spot trade volume but also exchange deposit and withdrawal volumes.
- By inspecting the cumulative volume delta (CVD), we can see that a majority of 2023 saw net selling activity on the taker side, even though corrections have been historically mild and less than 20%.
- Profit taking by long-term holders spiked meaningfully into the $73k ATH and is cooling down in recent weeks. This comes alongside an uptick in new demand brought on by the US spot ETFs.
Read more in The Week On-Chain newsletter.
In the latest Week On-Chain, we defined a framework to detect Seller Exhaustion across multiple timeframes, utilizing a combination of our Breakdown profitability metrics.
Discover more on their use case and construction in the Week On-Chain below 👇
https://glassno.de/3UJpvaa
The Week On-Chain 20, 2024
Using our new Breakdown Metrics, we are now able to discretely isolate points of severe unrealized loss, and investor capitulation. In this article, we introduce a new framework to assess seller exhaustion across multiple timeframes and investor cohorts.
Executive Summary
- During a Bull Market regime, long-term investors are generally highly profitable. Therefore, the dominant source of realized loss originates from the Short-Term Holder cohort, which can provide information on inflection points during sell-off events.
- Given that market inflection points unfold from the inside-out, we produce a framework using our newly released Breakdown by Age metrics to profile seller exhaustion across day trader and weekly-monthly investor cohorts.
- Within this framework, we utilize onchain metrics to assess both the unrealized and realized losses of the targeted investor classes as a gauge for their response to market downturns.
Read more in The Week On-Chain newsletter.
Ethereum staking grew by 9% in Q1 following the Dencun upgrade and a rise in ETH prices. Innovations like Liquid Staking and the Eigenlayer Airdrop are influencing participation. As new staking technologies reshape the Ethereum ecosystem, what impact will these developments have on Ethereum’s market?
Discover more in our latest 'Spotlights' series: 👇
https://glassno.de/3QFNJki
The Week On-Chain 19, 2024
There has been a growing divergence in performance between Bitcoin and Ethereum during the 2023-23 cycle thus far. This has manifested as weaker price performance for ETH, and can be explained by an overall weaker capital rotation trend, especially relative to past cycles and ATH breaks.
Executive Summary
- The Fourth Bitcoin Halving initially led to a sell-off, with BTC prices falling to $57k before recovering swiftly. This is now the deepest pullback since the FTX lows.
- Ethereum exhibited similar price performance, experiencing its maximum drawdown of this cycle which was twice as severe as Bitcoin's.
- Ethereum's under-performance this cycle relative to Bitcoin is reflected in a measurable lag in speculative interest from the Short-Term Holder cohort.
- Both assets still have a relatively low Realized Cap associated with Long-Term Holders, suggesting the market is likely within the early stages of a macro uptrend.
Read more in The Week On-Chain newsletter.
We can use the ratio between the spot price and each cohort cost-basis via the Bitcoin MVRV ratio to gauge the typical deviations during corrections.
The following chart shows that the MVRV (1w-1m) ratio usually drops into the 0.9-1 range during the bull market pullbacks. This means the market typically falls 0% to -10% below the 1w-1m investors' average cost basis.
Discover more in the latest Week On-Chain below👇
https://glassno.de/3QrCRXj
Inspecting the Bitcoin Accumulation Trend Score by Wallet Cohort, we see a distinct uptick in net outflows across all cohorts throughout April, suggesting a consistent sell-side pressure across the board.
Discover more in the latest Week On-Chain below 👇
https://glassno.de/3QrCRXj
Assessing the Realized Losses across the Bitcoin Short-Term Holder constituent cohorts [1d-1w, 1w-1m, 1m-3m and 3m-6m], we note a large spike in losses around market correction events.
This highlights the capitulation of recent investors who have bought the local top, and subsequently sold at the bottom.
Find out more in our insights article below 👇
https://glassno.de/4dhudEL
Introducing: Glassnode's new suite of 28 cutting-edge on-chain metrics for Bitcoin and Ethereum. This suite provides a more granular, cohort-based view of some of the most important metrics in on-chain analysis, such as SOPR, MVRV and Realized Cap. Specifically, you can use this suite to gain detailed insights into how different coin age and wallet size cohorts are behaving, providing a deeper understanding of capital flows and market sentiment.
Key Features:
- Market Trend Identification: Analyze asset holding ages to detect early market movements.
- Volume Analysis: Optimize trading by evaluating volumes in profit or loss across different cohorts.
- Risk Assessment: Assess wealth distribution by holder age and wallet size for informed strategic decisions.
- Profit and Loss Signals: Our metrics enable detailed tracking of realized profit and loss by age and wallet size, providing clear signals for portfolio adjustments.
Discover more in our latest insights article below 👇
https://glassno.de/4dhudEL
The Week On-Chain 17, 2024
The fourth Bitcoin Halving has occurred, leading to a 50% reduction in supply inflation and an inherent increase in issuance scarcity. In this edition, we explore the evolution of the Bitcoin network across Epochs with respect to price performance, and fundamental network metrics.
Executive Summary
- The Fourth Bitcoin Halving has occurred, reducing the annualized inflation rate of the Bitcoin Supply by 50%, and decisively surpassing Gold in terms of issuance scarcity.
- When measuring across Halving Epochs, diminishing growth rates are noted across multiple network statistics, whilst the absolute value of these measures continues to climb to new ATHs.
- Investor profitability has been bolstered by a rising spot price and a decisive ATH break, which has dampened the 50% reduction in revenue for miners relative to the start of the year.
Read more in The Week On-Chain newsletter.
Bitcoin ETFs now hold 851k BTC, about 4.3% of all circulating Bitcoin. After starting with weekly inflows from $1.2 billion to $2.5 billion, there's been a slowdown since late March. As Bitcoin consolidates around $60k following its recent drop, could this signal further corrections ahead?
Explore the trends in our 'Spotlights' series: 👇
https://glassno.de/444veM8
In just two days, the Bitcoin halving will reduce the block reward from 6.25 BTC to 3.125 BTC.
As detailed in our Q2 Guide to Crypto Markets, Bitcoin's price increased by 1,000%, 200%, and more than 600% in the 12 months following each of the previous halvings.
Will the upcoming halving have a similar effect? Dig deeper into this topic in the first article of our 'Spotlights' series, which will highlight key insights and critical market trends and events detailed in the Q2 Guide. 👇
https://glassno.de/3UlfFMM
During the last two bull markets, the aggregate share of Bitcoin wealth aged less than 6-months old reached between 84% and 95%, indicating a saturation of newer holders.
This metric has increased dramatically since early 2023, rising from 20% on 1-Jan-2023 to 47% today. This suggests that the capital held within the Bitcoin holder base is roughly balanced between long-term holders and new demand.
Discover more in the latest Week On-Chain below👇
https://glassno.de/43OJxEt
If we compare the Bitcoin ATH break in prior cycles, it could be argued that current Euphoria phase (market in price discovery) is still relatively young.
Previous Euphoria phases have seen numerous price drawdowns exceeding -10%, with the majority being much deeper, with 25%+ being commonplace. The current market has seen just two ~10%+ corrections since the ATH was broken.
Discover more in the latest Week On-Chain below 👇
https://glassno.de/43OJxEt
This month's Finance Bridge examines the role of ETF inflows and wealth transitions in Bitcoin's rise, along with the ramifications of Ethereum's upgrade. The analysis includes a look at market momentum indicators and speculative trends as the Bitcoin halving approaches. A crucial read for finance professionals and institutional investors in the digital asset market.
Read the full article here: https://glassno.de/3VR40qg
We can employ the fundamental Realized Cap metric to track the cumulative USD liquidity ‘stored’ within the Bitcoin asset class.
Currently, the Realized Cap resides at a new ATH value of $540B, and is increasing at an unprecedented rate of over $79B/month.
Discover more in the latest Week On-Chain below 👇
https://glassno.de/3VLKLOH