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Hey onchainers,
Welcome back to IntoTheBlock’s newsletter. We have created a different type of newsletter for crypto fans that is not about news, but about data and analytics. Every week, we deliver valuable data insights about the crypto market.
The current state of Bitcoin
Another volatile week for Bitcoin. The market cap of the flagship cryptocurrency fell by $68 billion or 11% of its value on June 22, as the price plunged to its lowest price since January of this year. After dropping below $29,000, BTC price has been moving around $34,000, while on-chain activity has slowed down considerably, showing levels not seen since 2020. In this week's analysis, we explore the recent price action and its on-chain behavior.
What happened on Tuesday?
Miners capitulating with deleveraged markets.
Nail-biting session on Tuesday. Attributed to Chinese miners' capitulating their positions following the recent shut down of their operation, the price of Bitcoin reached its lowest level since January 22, but only lasted 15 minutes as it quickly bounced above $32,000.
One key aspect that differentiates this correction from others experienced recently is the marginal role that derivatives had. As we have mentioned before, derivatives traders continue to remain cautious, and this can be evidenced with the Open Interest being still 55% below its all-time high of $18.46 billion.
Unlike previous corrections, data shows that markets weren't overleveraged, as, with a 20% drop in the price, the total long liquidations on June 22 accounted for less than $600 million. On days like May 18, the total liquidations went as high as $7.09 billion. What this shows is that speculation in the market has decreased dramatically.
Moreover, although the Perpetual Swaps skyrocketed to $129 billion on that day, the Open Interest barely moved compared to June 21, as it only dropped by 0.5%.
In exchanges like FTX, the Open Interest actually increased, pointing to long-traders consolidating positions on the local bottom. While Bitcoin price may have bounced back, on-chain data is still showing relative weakness.
On-chain data shows a lack of institutional apetite.
IntoTheBlock categorizes on-chain transfers of over $100,000 as Large Transactions. The aggregate volume in large transactions serves as a proxy to institutional investors’ and high net worth individuals’ transaction activity.
Bitcoin has experienced a dramatic slow-down in on-chain activity, as the total value transacted in USD above $100k is showing levels not seen since December of 2020.
The total value transacted in these large transactions has seen a decline of 61.7% compared to the recent highs set in February of this year. And with the upcoming unlock of the 140,000 BTC in the Grayscale Bitcoin Trust, we might see a further decline. Looks like there aren't a lot of institutions joining the Microstrategy "buy the dip" narrative.
But the decline in on-chain activity was not only reflected in institutional demand, as the number of daily active addresses (DAA) is going back to December 2020 levels.
The number of active addresses has fallen by 26% to an average of 787k over the past 7-days, following the peak achieved between March and April of this year.
Overall, despite El Salvador's Bitcoin Legal Tender adoption and Paraguay's recent announcement, looks like the bearish sentiment is still surrounding the crypto-asset market. On-chain data still needs to confirm the recent bottom experienced this week, and while the recent shut-down in China had a negative effect on the price, it will positive on the long term as it is decentralizing the mining power.
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IntoTheBlock Webinars
The IntoTheBlock's webinar series is a curated monthly program created to provide a unique view of the crypto analytics space. Each month we choose a different topic and analyze it using ITB data, providing insightful and unique perspectives on the market.
Next Webinar: June 30, 12pm EST
Awesome Analytics and Indicators from the Polygon Blockchain
(Limited to 300 seats)
Polygon is becoming one of the most relevant Ethereum L2 protocols and one that seems to be here to stay. Among its many benefits, Polygon has attracted several of the top DeFi protocols in the Ethereum blockchain which have contributed to the growth of its ecosystem. What are investors doing in Polygon and how real is the traction of this new runtime?
This session will take an in depth look to analytics and indicators that highlight fascinating trends in the Polygon blockchain. Using blockchain datasets, we will provide unique insights into the behavior of investors, the protocol traction and some of the fundamental patterns observed in the Polygon activity. We will emphasize in the analysis of DeFi protocols in the Polygon blockchain compared to other alternatives.