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Leap of Faith by Dangiuz was the highest selling art NFT in the last 30 days, awarding the seller 66 ETH or $277,100

Crypto price thankful for the Fed

Welcome back to Efficient Frontier’s biweekly newsletter!
This time we look into the Ethereum Foundation’s $ETH selling and share our market overview including 4 reasons Bitcoin’s bull market may still have room to go

Published November 22nd on Substack

History of the Ethereum Foundation $ETH sales

On November 11th, news broke of the Ethereum Foundation’s selling of 20,000 $ETH. This gave rise to speculation on social media that this may be a sign (or perhaps cause) of an Ethereum market top, due to the foundation’s well remembered 70,000 ETH sale on January 6th 2018.

We used on-chain information from Dune Analytics to create a historical chart of the Foundation’s selling. As you can see below, Ethereum Foundation sells large chunks of $ETH into market strength rather than specific cycle tops:

Ethereum log price chart 2015–2021

Market overview

It’s been a long two weeks. Last Monday Bitcoin surpassed the record price of $66,995 and two days later peaked at $68,958 per-coin. From there the rise lost steam and prices oscillated between $62K and $66K for almost a week. This Monday Bitcoin started falling out of that range, and by Friday Bitcoin reached a 35 days low at $55,653, now at $56,120.

The drop below $60,00 on the Monday (the 15th) liquidated futures long positions worth $783M, a 2 month record, though barely seen on the yearly view:

Daily Bitcoin future’s liquidations YTD
Perpetual contract funding rates. Source: CryptoQuant

During the initial drop, longs and shorts briefly reached parity, making funding neutral. Over the weekend funding went briefly negative on Saturday following the drop to $55,600 before recovering to a slightly positive rate currently.

Bitcoin futures basis rates on off-shore exchanges were around 20% during last weeks highs, and since have dropped roughly by half, going below 10% during Tuesday’s price drop and moving closer to the Chicago Mercantile Exchange’s rate.

BTC futures OI. Source:Skew

Open interest in the leading exchanges is $23.1 B, losing 13% since our last email.

Timeline of notable events and price swings

November 7th, $61,500 — $63,000: Barry Silbert, CEO of Digital Currency Group tweets “It’s going to be a crazy week”

November 10, $68,900 — $63,000: US Consumer Price Inflation highest in 30 years

November 12, $62,000: Bitcoin spot ETF denied by SEC

November 15, $63,600: Twitter CFO says Bitcoin is too volatile for their balance sheet

November 16, $58,900: Japanese government approves Mt. GOX 141,000 Bitcoin payout to clients

After the VanEck’s Bitcoin spot ETF was rejected by the SEC on the 12th, the next comment deadlines are December 5th for WisdomTree Bitcoin Trust ETF and December 24th for the Kryptoin Bitcoin Trust ETF. Meanwhile, dozens of other Bitcoin ETF proposals await comment from the SEC.

In better news, during 2021 the total value of tokens hosted in on-chain applications (excluding Bitcoin), grew from $23B to $260B. During this time Ethereum’s share of value ‘locked’ in these DeFi app dropped from over 97% in January to 67% today.


Don’t panic

On-chain profit/loss. Green:Realized profits. Red:Realized losses. Source:GlassNode

Looking at the on-chain realized profit and loss gives insight into the state of fear induced by the recent price drop. On-chain loss taking volume spiked to a 4+ month high of $1.46b on Tuesday, following $2.34b profit taking which occurred right before the drop.

Despite the fear, various data points show Bitcoin’s market is relatively healthy:

  1. Less leverage: In April, the last time Bitcoin prices were at record levels, futures basis was 3.3 (!) times higher and funding rates were 4 times higher. This may also be due to Binance and FTX, who lowered the maximum leverage from 100x to 20x since July 2021.
  2. Coins keep leaving the exchanges: A balance of 23,346 Bitcoins (valued over $1.3 billion) left exchanges from November 15th to 18th, signaling increased buying and holding, with exchange balances reaching a 4 year low.
All exchanges Bitcoin balance
  1. Inflows: The average historical price paid for a Bitcoin according to GlassNode’s blockchain data, has risen from $20,000 in May 2021 to a new record of $24,000 per-coin today. This reflects an additional (estimated) $50b flowing into the Bitcoin market since May.
  2. On-chain institutional selling has cooled down: The number of accounts with over 1,000 Bitcoins flattening since July.

News & links

  1. One of the biggest themes of the last two weeks is crypto gaining awareness in popular culture through sports sponsorships
  2. Paradigm raises $2.5B to invest across industry, creating the cryptocurrency space’s biggest fund yet
  3. Indonesia declares cryptocurrency generally illegal for Muslims
  4. Bank of England’s deputy governor Cunliffe and former US Secretary of State Clinton warn cryptocurrency may pose threat to the dollar and global financial stability
  5. El Salvador strikes deal with Bitfinex, Blockstream to issue $1 billion bitcoin bond
  6. Cryptocurrency DAO lose $40 million bid to buy the US constitution to Citadel Ex-CEO



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