Bitcoin Surpasses the Ruble
Plus: Whales accumulating Cardano
This week we dive into the moves whales and entities in crypto are doing in light of the war on Ukraine. Particularly, we cover Bitcoin’s rise in price and how it has surpassed the Russian Ruble in value.
As well we discuss the growth and signs of accumulation popping up for one of retail traders’ favorite crypto-assets.
Weekly Fees — Sum of total fees spent to use a particular blockchain in a week. This tracks the willingness to spend and demand to use Bitcoin or Ether.
- Bitcoin fees increased sharply, hitting a 6-month high on Wednesday
- Ethereum’s network revenues plummeted 25% as NFT and DeFi volumes continue on a downward trend
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges over the past seven days. Crypto going into exchanges may signal selling pressure, while withdrawals potentially point to accumulation.
- Bitcoin recorded relatively modest inflows of $200M after seeing outflows of half a billion the previous week
- Over $1 billion worth of Ether left centralized exchanges, the highest weekly amount since the first week of November
Bitcoin Surpasses the Ruble
As war on Ukraine continues, Russia has been hit with severe economic sanctions causing ripple effects across markets. These measures have led the Russian Ruble to collapse 25% since the invasion began on February 24.
Most markets saw strong volatility that day, but quickly recovered. Bitcoin has led macro markets with an increase of 8% since the invasion, while the S&P 500 and gold rallied 3% and 2% respectively. The divergence between the Ruble and Bitcoin has led to the cryptocurrency becoming more valuable than Russia’s currency.
3rd time’s the charm? Bitcoin’s valuation had previously surpassed the Ruble twice during March and September of 2021.
- Bitcoin’s volatility had previously resulted in it’s value dropping back below the Russian Ruble
- This time around, the Ruble’s crash makes it likely that Bitcoin “flippens” Russia’s currency for a prolonged amount of time
- This makes Bitcoin the 14th largest currency based on the official supply of fiat currencies by central banks and their dollar price
Along with Bitcoin’s recent climb, signs of speculative activity have re-emerged.
Traders growing — The number of addresses holding Bitcoin for under 30 days has been climbing since mid-February
- Addresses holding 30 days have grown particularly faster since the invasion of Ukraine
- Growth of short-term traders has outpaced that of long- and mid-term investors throughout the past month
Diving deeper into on-chain data we can get a better understanding of who has been buying during the recent rally.
All-time high — The aggregate balance held by addresses with 0.1 to 1 BTC reached a record of over 780,000 Bitcoin
- The group holding between $4,000 to $40,000 roughly worth of Bitcoin was the fastest grower over the past month
- This suggests retail traders have been buying, with speculation about Russia using crypto to bypass sanctions circulating
- At the same time, it may be concerning that the group with the largest decrease in holdings is that with 10k to 100k BTC
Overall, this suggests large institutions may be taking risk off the table in light of the geo-political uncertainty, while smaller traders continue to speculate.
Cardano Whales Accumulate
Contrary to what was discussed about some Bitcoin institutions decreasing their holdings, Cardano whales appear to be accumulating.
$10 Billion — The group holding between 1M and 10M ADA reached record aggregate holdings of 12 billion ADA, worth north of $10 billion
- Interestingly, these addresses had previously sold a large amount of their holdings right before ADA began to crash
- Following a 70% correction these addresses have now been accumulating aggressively
- This group, as well as those holding over 100M ADA, recorded double digit growth month over month
One factor behind the recent bullishness on Cardano may be the increasing development of its decentralized finance (DeFi) ecosystem
Record Total Value Locked (TVL) — The amount of capital deposited into Cardano DeFi applications surpassed $130 million for the first time
- Cardano’s DeFi ecosystem is nascent, with only six protocols online at the moment as per DeFi Llama
- However after years lacking smart contract capabilities Cardano is starting to show some traction in its application layer
- DEXes on Cardano have raised capital from reputable crypto funds such as Three Arrows Capital
- Despite the quick growth in TVL, Cardano’s DeFi ecosystem is still an order of magnitude below Ethereum’s $128 billion
Ultimately, Cardano appears to be showing signs of promise for more to come after years without launching smart contracts. This appears to be translating into accumulation of ADA from large players.
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