Bitcoin’s News Trifecta
Plus: The Emergence of the Merge
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Crypto’s risk appetite is on the rise, along with positivity on the news front. In this week’s on-chain insights we dive into the major Bitcoin news driving prices and causing effects throughout the blockchain.
We continue with the growing focus on Ethereum’s merge and the accumulation anticipating this milestone.
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 mildly week over week
- Ethereum’s revenues grew by over 40% as network activity has picked up
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- Bitcoin saw net outflows of $9M after $1.1B withdrawn the previous week
- Ethereum recored the largest yearly outflows, with over $1.7 billion ETH leaving exchanges
Bitcoin’s News Trifecta
There’s been a streak of positive news for Bitcoin. Primarily we will cover three major headlines having concrete impact on Bitcoin short and long-term fundamentals.
40M+ Holders — For the first time the number of addresses holding Bitcoin has surpassed 40 million
- After dropping in February, the number of addresses holding Bitcoin has continued to grow and set new highs
- This points to growing interest and adoption for Bitcoin
Terra’s $3B Accumulation — One of the largest new holders for Bitcoin has been Terra’s Luna Foundation Guard
- The foundation behind the Terra platform has been reportedly been accumulating $125 million per day
- Terra’s plan is to reach $3 billion in Bitcoin holdings to act as collateral supporting UST
- This would prevent de-pegging of UST, while also creating upward price pressure for Bitcoin
Given Terra’s recent buying activity, they likely hold between 1k to 10k BTC at the moment, a group that has received a lot of attention recently.
Fastest growing group — Over the past 30 days the number of addresses holding between 1k and 10k Bitcoin has grown faster than any other
- Given the spike on February 28, many pointed to these addresses possibly belonging to Russians given their economic sanctions in light of the Ukrainian invasion
- There is no proof behind these rumors thus far
- However, the Russian government is opening up to Bitcoin with its Chairman of the State Committee on Energy stating they would accept Bitcoin payments for their oil and gas
Speaking of oil and gas, Exxon Mobil, appears to be entering the booming Bitcoin mining space.
Reducing emissions while mining — Although Bitcoin mining is typically associated with larger carbon emissions, Exxon’s pilot program seems to kill two birds with one stone
- Excess energy production results in millions of gas being burned off, or “flared” due to lack of pipelines making this less costly, damaging the environment in the process
- Exxon’s pilot, which confidentially began in January 2021 as per a Bloomberg report, has been using part of this excess energy to mine Bitcoin as opposed to flaring
- This theoretically reduces the company’s emissions while also netting them revenue from their mined Bitcoin
Overall, Bitcoin mining has been growing, with the hash rate even outpacing Bitcoin’s price itself. Despite Bitcoin’s price being 40% down from its highs, Bitcoin’s hash rate continues to set new records.
Emergence of the Merge
As discussed in last week’s newsletter, Ethereum continues to gain steam ahead of Ethereum’s transition to proof of stake.
Record searches — The number of Google searches for “Ethereum merge” hit an all-time high
- Interest surrounding Ethereum’s merge has been climbing
- There’s been an increasing amount of mainstream coverage about the Ethereum merge, particularly around how it will lead to ETH’s supply decreasing
- Additionally, the reduced environmental impact coming from the transition to proof of stake has also began making news
Hodlers Front-Run the Narrative — It appears that long-term holders anticipated this growing interest
- Addresses holding Ether for over a year grew their positions by over 4 million ETH within weeks as prices plummeted in late January
- This has led to their holdings reaching yearly highs, although it has been dropping in the last few days
Optimism surrounding the merge continues to grow. The implementation of EIP-1559 previously propelled crypto’s rise in August 2021; can the merge do the same now?
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