BTC Profits Reach Highest Since Dec 2021

COIN sets yearly high and whales accumulate

This week we dive into three key metrics covering the current dynamics in crypto. We evaluate Coinbase’s stock and reasons for its strong performance. Then we explore Bitcoin holders profitability and analyze the accumulation that keeps pushing prices higher.

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 in half as Ordinals-related transactions decelerated
• Ethereum fees increased slightly, holding at relatively high levels leading to ETH being deflationary for a fourth consecutive week

Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges

• $450M worth of Bitcoin left CEXs compared to just $100M the previous week
• $140M of ETH was withdrawn from CEXs compared to nearly $800M last week

COIN Reaches Yearly Highs Fueled by Higher Volumes

Crypto’s momentum in Q4 appears to be continuing into December. As yields drop and appetite for risk rises, many crypto-assets and stocks are trending up. Trading volumes have been rising as well, benefitting Coinbase’s stock in particular.

Source: IntoTheBlock’s Capital Markets Insights

Coinbase Stock Outperforming — Coinbase’s stock is up by 60% over the last three months

• Year-to-date, COIN has increased approximately 250%, outpacing Bitcoin and Ether’s growth of 130% and 75% respectively
• COIN has also outperformed Nvdia’s 220% yearly gains, an impressive statistic given the AI frenzy that has been fueling the semiconductor company
• One key factor driving Coinbase’s valuation is likely to be its trading volumes, with Q4 volumes already surpassing their figures for the last quarter with one month to go

Besides trading volumes, Coinbase is likely also benefitting by USDC’s market cap recovering slightly after a long period of decline, and the continued adoption of its Base layer 2.

BTC Profitability Reaches Highest Since December 2021

In other news, Bitcoin holders are now realizing their highest profits in two years.

Source: IntoTheBlock’s Bitcoin Cycles Perspectives

Highest Profitability Since December 2023 — Over 80% of Bitcoin addresses are earning money on their holdings

• This figure has reached its highest value since December 2021, when prices were above $50k per Bitcoin
• The reason why Bitcoin holders are now seeing higher profits in aggregate than in December 2021 is because the average price at which a Bitcoin holder purchased their holdings is now significantly lower after the bear market
• With just over 80% of addresses profiting, Bitcoin’s aggregate profitability is sitting at levels similar to those seen in late 2020 and mid-2021 prior to the bull market

Source: IntoTheBlock’s Bitcoin Whales Perspectives

Institutional Accumulation — Whale holdings reached a year to date high this week

• The amount of Bitcoin held by addresses with 1k BTC or more reached its highest since December 2022
• Following the aftermath of FTX and Genesis, the aggregate balance held by whales dropped significantly
• One year later, Bitcoin whales’ balance has recovered, currently sitting at 7.66M BTC (~$290B)
• This institutional accumulation appears to be driven largely by North American entities as discussed in the newsletter a few weeks ago

Overall, the crypto market continues to accelerate. Inflows are entering both crypto-assets and stocks, and holders are enjoying sizable profits. With December now beginning, we will see if crypto is able to sustain its momentum into the year end.