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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 24, 2024
Despite impressive US ETF inflows, a market-neutral Cash-and-Carry trade appears to be subduing buy-side pressure, requiring non-arbitrage demand to further stimulate price action. Alongside this, we explore the divergence between declining active addresses and surging transaction counts.
Executive Summary
- In the advent of the Runes protocol, a counterintuitive divergence has formed between declining active addresses and increasing transaction counts.
- Major labelled entities now hold a staggering ~4.23M BTC, accounting for over 27% of the adjusted supply, with US Spot ETFs now commanding a balance of 862k BTC.
- The Cash-and-Carry trade structure appears to be a meaningful source of ETF inflow demand, with the ETFs being utilized as the instrument for obtaining the long spot exposure, whilst an increasingly large net short position for Bitcoin accrues in the CME Group futures market.
Read more in The Week On-Chain newsletter.
Assessing for Bitcoin Long-Term Holders, we can see that the total volume of LTH Supply held in loss is negligible, with only 4.9k BTC (0.03% of LTH Supply) acquired above the spot price.
Given new ATHs were only set in March (less than 155-days ago), these LTH coins in loss are the small few holders who bought the 2021 cycle top, and have held ever since.
Discover more in the latest Week On-Chain below👇
glassno.de/3VbNYW0
The Week On-Chain 23, 2024
After months of apathy and sideways price action, the first glimmers of speculative activity is beginning to re-appear. The market responded to a false alarm regarding the distribution of Mt.Gox supply, however this offers a lens into how we can consider these events using onchain data.
Executive Summary
- The majority of Bitcoin investors are holding unrealized profits, and the first signs of speculation appetite is returning to the market after two months of sideways trading.
- The Short-Term Holder cohort are shouldering the vast majority of market losses, a condition typically observed during bull market corrections from new ATHs.
- Both Long and Short-Term Holders have experienced a reset in their Sell-Side Risk ratio, suggesting a new equilibrium has been found. This indicates that the market is ready to move, and volatility expectations for the near future should be heightened.
Read more in The Week On-Chain newsletter.
As the Bitcoin market breaks towards a new ATH and price discovery, it enters the Euphoria phase, where the supply in profit starts to fluctuate around the 90% level for the next 6-12 months.
The current euphoria phase is relatively young but has been active for around 2.5 months, with 93.4% of supply held in profit as of current.
Discover more in the latest Week On-Chain below👇
https://glassno.de/3wS4sKE
After recording the deepest correction on a closing basis since the FTX lows (-20.3%), Bitcoin has recovered back towards the ATH, reaching $71k on 20-May.
From a comparative point of view, the drawdowns pattern across the 2023-24 uptrend appears to be remarkably similar to the 2015-17 bull market.
Discover more in the latest Week On-Chain below 👇
https://glassno.de/3wS4sKE
The Bitcoin Long-Term Holder (LTH) Binary Spending Indicator is a tool we can use to profile and visualize the intensity of HODLer distribution pressure. We note a significant and sustained decline in LTH Supply into the $73k ATH in March.
As of the last few weeks however, this distribution pressure has eased off markedly, giving the bulls more breathing room, and less resistance overall.
Discover more in the latest Week On-Chain below 👇
https://glassno.de/3UQ7NBV
We’re launching the first video walkthrough for our cutting-edge 28 breakdown metrics for Bitcoin and Ethereum. See how professional and institutional traders can utilize these new metrics for unprecedented depth and learn to use them in practice, for example, to identify local market bottoms. https://glassno.de/44U4Ncz
Curious to learn more? Read our insights article for the full analysis: https://glassno.de/3WWWzOV
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
In the newest release from our checklist series, we focus on recognizing important stages of bull markets—ideal for optimizing exit strategies. Utilizing our innovative suite of on-chain metrics, this checklist equips traders with the tools necessary to navigate through and capitalize on euphoric market phases.
To learn more, download the checklist here: https://glassno.de/4caTI9i
Whilst both inflowing liquidity and appetite for speculation have slowed down over the last 2 months, the reclamation of the $68k level has driven a majority of the Bitcoin Short-Term Holder cohort back into holding an unrealized profit.
This indicates that despite recent sideways choppy price action, the majority of recent buyers now have a cost basis which is more favourable and below the current spot price.
Discover more in the latest Week On-Chain below 👇
https://glassno.de/3VbNYW0
To highlight periods of particularly strong Bitcoin price performance, we can count the number of trading days within a 90d window where the performance across Weekly, Monthly and Quarterly timeframes exceeds +20%.
As of current, only 5 of the last 90 days have reached this threshold so far.
In prior cycles, this count reached between 18 and 26-days, which suggests the current market may be somewhat more measured relative to historical bull markets.
Discover more in the latest Week On-Chain below👇
https://glassno.de/3wS4sKE
We are pleased to announce that Glassnode is an official partner of TOKENFUTURE 2024, Europe’s premier conference about tokenization.
Join us on June 18 in Frankfurt to engage with industry leaders from VanEck, Sygnum, Galaxy, Coinbase Asset Management, and many more. We look forward to seeing you there.
Visit: http://www.tokenfuture.io/
The Week On-Chain 22, 2024
Residing just shy of the ATH, Bitcoin continues to consolidate, with long-term investors beginning to re-accumulate coins for the first time since Dec 2023. Alongside this, a historic first tranche of Ethereum spot ETFs have been approved in the US, seeing a +20% surge in the ETH price.
Executive Summary
- Both Ethereum and Bitcoin markets are showing relative strength after a lengthy post-ATH consolidation, although prices have remained choppy and sideways since March.
- The SEC has surprised the market with the approval of the Ethereum Spot ETFs, resulting in a +20% rally in the ETH price.
- Bitcoin US Spot ETFs netflows have once again turned positive after four weeks of net outflows, suggesting a return of TradFi demand.
- Long-Term Holder spending pressure has cooled off significantly, with investors back to accumulation patterns, suggesting volatility is required to motivate the next wave.
Read more in The Week On-Chain newsletter.
In the latest addition to our checklist series, we aim to help traders identify key market trends and momentum shifts using on-chain data. By analyzing various metrics across different timeframes, we show when the market is gaining strength or beginning to falter.
What's inside?
- How to use transaction volume and capital flow to gauge market expansion.
- Why demand absorption is crucial for understanding market strength.
- What unrealized profits can tell you about positive momentum.
- When wealth transfer between holders reveals market phases.
To learn more, download the checklist here: https://glassno.de/3yEtOMw
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