The state of crypto – July 2023

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.

Short-term

The exchange balance of Bitcoin decreased substantially in June. The exchange balance of Ether is nowhere near the one of Bitcoin but was likewise net negative in June, so it once again shows a new all-time low. At present, 9.1% of the Ether supply is on exchanges, down from about 11.3% at the start of the year. The lower exchange balances highlight that fewer Bitcoins and Ether are promptly available to hit the market, potentially hinting at greater market sentiment.

The drop in Ether on exchanges is chiefly attributed to the staking of Ether, as there has been a significant inflow to stake Ether after the Shanghai hard fork in April. These Ether may have been intended to be staked for years but only stored on exchanges until post-Shanghai. On the other hand, holders cannot stake Bitcoin nor utilize it in decentralized applications to the same extent as Ethereum, so the withdrawn Bitcoins may have been acquired recently to enter deep storage far away from any exchange. Although the Bitcoin exchange balance tumbled, both the 30-day moving average of exchange inflow and dormant circulation spiked, indicating that at least some found the 1-year high Bitcoin price of $31,400 in June attractive as exit liquidity. This price surge was mainly driven by the Bitcoin ETF filing by BlackRock.