Crypto Underperforms as Miners & German Government Sell
BTC down 10% as $2.5B is sold by miners and German government
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This week, we dive into crypto’s underperformance relative to stocks. We analyze the current path of the market, the entities weighing down on prices, and a potential catalyst to lead markets to resurge in the near future.
Network Fees — Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether
- Bitcoin fees dropped by 64% as volatility slumped
- Ethereum fees declined by 36% despite LayerZero’s and ZKSync’s airdrops generating on-chain activity
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges
- $400M worth of Bitcoin was withdrawn from CEXs, and slightly higher amounts for ETH
Crypto Underperforms as Miners & German Government Sell
Crypto is off to a rocky summer. Excitement from the Ethereum ETF approvals has cooled down, as crypto prices have trended down over the past four weeks, despite stocks hitting fresh all-time highs. Let’s analyze some of the reasons for crypto’s underperformance.
Crypto’s Underperformance — Bitcoin and Ether are down over 10% from their yearly highs
- Other large cap crypto-assets such as SOL, ADA and LINK are down by more than 25% from local highs
- Meme coin mania seems long gone, with PEPE and WIF down over 40%
- Despite stock markets hitting new highs, risk appetite in crypto has slowed down dramatically
What is behind the sell-off? Partly it could be profit-taking from crypto’s market cap nearly doubling between Q4 2023 and Q1 2024, but there also seem to be other sellers weighing down on the space.
Bitcoin Miners Sell Reserves at Fastest Pace in Over 1 Year
- Bitcoin miners have offloaded over 30k BTC (~$2B) since June
- The Bitcoin halving two months ago might be a driver behind the recent miner sell-off as margins have decreased since then
- Bitcoin’s hash rate is also down by approximately 15% over the last month
Outside of miners, the German government appears to be selling Bitcoin it had previously seized from a piracy website. A German government tied Bitcoin address recently sent 6,500 BTC (~$420M) to centralized exchanges, a likely sign that they are selling.
87% of BTC Holders Are Still Sitting on Profits
- The recent correction has not affected Bitcoin holders as severely, with the vast majority of them still making money on their positions
- Bitcoin’s dominance of the crypto-market has reached a 3-year high as the rest of assets have fallen off significantly more in the past few weeks
Overall, sentiment in the crypto market has gone awry as most crypto-assets other than Bitcoin are significantly below their previous highs. Summers in crypto have historically been slow compared to other quarters. Will the Ethereum ETFs make it different?
