Apr 16
Bitcoin on-chain analysis, an overview of 4/8/22–4/15/22
On-Chain and Derivatives
Summary:
- Heavy exchange outflows
- Whale accumulation visible on-chain after a month of distribution
Value in the low $30Ks, Momentum on closes above $47K.
Bitcoin is in “no man’s land” price-wise.
Bitcoin failed to hold short-term holder realized, which is the aggregated cost basis of market participants that have been on-chain for less than 155-days. Until proven otherwise, a failed underside retest.
There are behavioural dynamics built into this:
In raging bull markets new market participants don’t want to sell at a loss and you see price bounce off retests of the cost basis as support. In bear markets new market participants look to break even and exit the market as soon as possible, thus causing several underside rejections of the cost basis on the way down. This currently sits at $47,000.
Have seen spot premium come back over the last week.
There is a non-zero chance that the macro uncertainty could cause a contagion event but even if that were to occur, doubt the decline in Bitcoin would be to the same level of severity as March 13th, 2020.
Why? Derivatives are not nearly as jacked up as they were in March 2020 front running the 2020 halving.
This is illustrated in two main ways; firstly the spot premium we just noted.
The second way is by looking at the percentage of futures contracts collateralized with crypto.
The decrease in the percentage of contracts collateralized with crypto has come down to roughly 40% from 70%, making a healthier overall backdrop and lower likelihood for a cascade to the magnitude of March 2020.
Another factor would be the fact that exchanges that dominate volume over the last 6 months such as FTX have less aggressive liquidation engines than Bitmex did at the time of the March 2020 selloff.
There is a heavy phase of accumulation on-chain.
Exchange outflows have reached a rate that has only ever occurred 3 times before in Bitcoin’s history: following March 2020, December 2020 (a lot of which was likely GBTC), and September 2021.
There have been notable declines that have come from a confluence of United States-based exchanges over the last few weeks.
An all-time high of 63.7% of Bitcoin’s supply hasn’t moved in at least a year. Another measure of holding behaviour is simply looking at the amount of supply last active.
Illiquid supply continues to climb, meaning 76.5% of Bitcoin’s supply is now in the hands of entities who historically have sold less than 25% of the BTC they take into their holdings.
There has seen an uptick in whales holdings for the first time since January, showing an increase in supply held by entities with over 1,000 BTC.
Long-term holder realized cap net position change is in unprecedented territory. This means a few things.
LTHs are averaging down and buying lower, thus lowering their basis.
The newer LTHs with a higher cost basis (the 155-day threshold for LTHs is just past the November ATH right now) are selling, which leaves only LTHs with a lower cost basis.
Lastly, Do Kwon and the Luna Foundation Guard continue their mission to create Bitcoin reserves; their balance has reached 42,406 BTC.
Intra-Bitcoin metrics all look good overall; the only concern is a potential contagion event in traditional markets that would correlate to BTC in the short term.
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