Summary: The crypto market has been characterized by remarkably low volatility in the last month. It appears that the market has found some price stability, from where much flow is required to move the price substantially in either direction. The Bitcoin ETF filing by BlackRock appears to attract investors to other exchange-traded Bitcoin instruments, as the latter saw a substantial inflow in July.
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, and we divide the metrics into short-term and long-term indicators. You find the report for the last month here.
At the risk of repeating ourselves, the exchange balances of Bitcoin and Ethereum continue to slide. The exchange balances are now about 6.04% and 8.09% for Bitcoin and Ethereum, respectively, of which the drop of Ethereum has been especially striking this year, down more than three percentage points from 11.3% since the start of the year. For most of the year, Ethereum has each month taken on a new all-time low in terms of exchange balance.
Other than that, similar to traders on Wall Street, it appears that the crypto market went on summer break as well, as the one-week volatility was notably low. The low volatility led to modest exchange inflow due to limited price movements to trade, overall contributing to sparse volume in July. Due to the minimal volatility upon otherwise potent news such as the Ripple ruling in mid-July, it seems that the market has found some price stability, from where much flow is required to move the price substantially in either direction.
What the crypto market did not offer in spot volatility, the market instead offered in terms of inflow to exchange-traded crypto products such as ETPs, mutual funds, and OTC trusts. The net inflow to Bitcoin-related products was about $244.6mn in July, whereas the net inflow to Ethereum was much less notable in the form of a $4.4mn inflow. The large inflow to Bitcoin is arguably mostly attributed to the filing of a US-based Bitcoin ETF by BlackRock in June, yielding renewed interest and conviction in exchange-traded crypto products.
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