Summary: It seems that sophisticated long-term Bitcoins holders are acquiring more Bitcoins, whereas Ether was likely liquidated in August by long-term holders upon a surge in Ethereum’s price. Though, Ethereum saw an inflow compared to Bitcoin’s outflow in exchange-traded products.
In this new monthly publication series, we look at important indicators for the crypto markets both for short-term and long-term trends. Charts are found below each section.
Immediately upon interacting with a blockchain, much data becomes publicly available on a public ledger. Analyzing this data may provide crypto traders and investors with helpful insight into the present state of the market. In “The state of crypto”, we take a look at the most important metrics to observe the market based on transaction and trading activity. Our main focus is the two largest cryptocurrencies Bitcoin and Ethereum.
In the month of August, Bitcoin exchanges experienced a net withdrawal. Around 9% of the total supply is now left on exchanges in comparison to 12% at the beginning of the year. A lower exchange balance is usually associated with a decrease in potential selling pressure.
As a by-product, the lower exchange balance likely means that the ownership of many Bitcoins has moved from less to more sophisticated crypto holders since the latter often stores them away from exchanges. This is in line with our knowledge that particularly retail investors have left the crypto market this year. It suggests that long-term holders have been interested in acquiring Bitcoin at these prices, while they have not moved existing Bitcoins, as stressed by the moving average for dormant circulation. It may indicate that long-term holders are not willing to sell at this price.
On the other hand, Ether was net sent to exchanges in August. As a result, slightly more than 14% is held on exchanges. This is likely due to the surge of Ethereum in July and August, in which Ethereum surged by over 100% from its low in June, which has increased selling pressure. This is further stressed by the dormant circulation, which shows that more old Ether were moved in July and start-August. It has, though, decreased to the level prior to the notable price increase. Yet, this might likewise have been impacted by the upcoming Ethereum merge, in which event holders are arguably more comfortable in holding Ether on exchanges.
For the past months, both Bitcoin and Ethereum have been priced higher compared to their daily transacted volume. This means that the market values their utility higher, effectively meaning there is more room for a downward trajectory but less room for an upward trajectory when looking at this metric.
Although both Bitcoin and Ethereum constantly issue new coins, the supply that has been moved over the past 5 years continues to plunge. Speaking of a time horizon of 5 years, the average Bitcoin and Ethereum holder seems to be underwater on their investment in this period. Interestingly, the average Bitcoin holder is estimated to be down by 28.3%, whereas the average Ether holder is only down by 10.3%, following Ether’s surge in July and August.
The flow into exchange-traded crypto products e.g., ETPs and mutual funds has been pretty stable in dollar terms in August with a minor inflow. This was mainly the result of a great inflow into Ether, whereas there was an outflow from Bitcoin. This has presumably been due to the anticipation of the upcoming Ethereum merge.
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of FX Strategy
Quarterly Outlook
Head of Commodity Strategy
Quarterly Outlook
Head of FX Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Head of Commodity Strategy
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)