On-chain trends paint an optimistic picture. Investors are becoming confident of the crypto’s ability to weather regulatory and macroeconomic headwinds and emerge victorious. Data can always be interpreted in different ways but we are confident the following trends are a solid representation of hope in the market. Let’s start.
Supply activity shows strong holding pattern for Bitcoin
Supply activity over the past 18 months has seen a meteoric rise as experienced investors are holding BTC. The ‘supply last active’ metric, a measure of how much BTC has moved or not in the past year, has reached an all-time high of 13.4 million BTC. That’s about 70% of its circulating supply! All the speculations and movement we observe in the market are essentially the 30% moving around.
Non-zero BTC wallets surpass 44 million
We have seen steady growth in non-zero wallets in every 4-year cycle. Since 2020, the Bitcoin ecosystem has seen an increase of around 11 million addresses with a non-zero balance. Today, the number of addresses with a non-zero balance has surpassed 44 million addresses.
Checkmate, an analyst from Glassnode, recently shed light on the fascinating behaviour of Bitcoin ‘shrimps.’ These small-scale holders, each with less than one Bitcoin in their portfolio, are aggressively accumulating satoshis (the smallest denomination of BTC). These buyers are collectively stacking approximately 33,800 Bitcoin monthly while the average new monthly supply is around 27,000 — implying that for every coin mined in the market, these shrimps are accumulating 1.25 off the market.
Active wallets (with at least one transaction in the period) excluding Bitcoin are steady at 15 million after a high of 20 million in May this year. Interestingly, Polygon (MATIC) has more active addresses than Ethereum (ETH), mainly for its lower gas fees.
Majority of the Bitcoin supply is in profit
15 million BTC — roughly constituting 79% of the circulating supply — is now worth more than when they last moved implying the current profit rate for asset. For any project, the percentage of supply in profit is a crucial indicator of the crypto’s cyclical highs and lows. With Bitcoin trading above $30,000, many investors are in a profitable position. This healthy scenario signifies that the ongoing run has room for further growth and the market is not overheated.
Bitcoin’s correlation is decreasing with respect to US stocks
Bitcoin’s correlation with the Nasdaq and S&P 500 indices is at its lowest level since July 2021, demonstrating a growing independence of the asset from US stocks.
However, analysts warn that while the spot ETF narrative is driving the current market, potential challenges including SEC rejecting them and overall macro-economic issues may need to pull back the asset class this quarter.
NFTs are struggling
Now, this is the concerning data point. NFT valuations continue to drop even as crypto shows signs of resilience. The floor price of the much-hyped Bored Yacht Ape Club (BAYC) is at a 20-month low below 30 ETH. BAYC NFTs sold at 154 ETH during their peak in 2022 (and when the value of ETH was considerably higher). This trend is felt across all NFT brands indicating that capital is drying up in the market. If so, this will likely impact altcoins first followed by Bitcoin.
Key takeaway
We are with the investors — crypto has a robust future and it should reflect in its pricing and adoption over the next couple of years. In the short-term, there may be challenges this quarter that can pull down prices. As always, we stick to our strategy — invest in Bitcoin and Ethereum for the time being and wait till the market is ready to sustain altcoin rallies. If there is a considerable dip, they may present great buying opportunities in the near future.
