Perfil de Glassnode | Binance Square

A Stagnant MarketExecutive Summary Market demand-side remains lacklustre for digital assets, with the magnitude of both capital inflows and outflows remaining small in scale. HODLing remains the primary investor dynamic, with all measures of actively tradable supply declining and large volumes of coins maturing into Long-Term Holder status. Price action has been remarkably stagnant over the past six months, driving all variants of the Sell-Side Risk Ratio to low levels, suggesting an expectation for higher volatility ahead. 💡 View all charts in this edition in The Week On-chain Dashboard. Demand Side Wanes The Realized Cap is a foundational metric that provides an assessment of the cumulative capital netflow into and out of the Bitcoin network. With the market trading in a downward but range-bound manner for the last six months, both capital inflows and outflows have ground to a halt. The Realized Cap has peaked and plateaued at $622B in the previous two months. This suggests that the majority of coins that are being transacted are doing so within proximity of their original acquisition price. Live Chart By assessing the Net Realized Profit / Loss metric, we can visualize the Realised Cap's first derivative, the daily change in onchain capital flows for Bitcoin. When this metric is positive, it represents net capital creation (coins transacting in profit) or destruction when the metric is negative (coins moving at a loss). At present, we can see that both profit and loss forces are largely equal, resulting in a marginal netflow and a general oscillation around the zero bound. This alludes to a degree of equilibrium being established in the market and has some similarities to the Aug-Sep period in 2023. Live Chart We can consider the Realized Profit and Loss as a measure of the excess capital required for a seller to part ways with their coin. Thus, under this framework, we can utilize this metric as a proxy for gauging market demand by evaluating the seller's willingness to transact at a premium (profit) or a discount (loss). The absolute Realized Profit plus Loss has declined significantly since the March ATH, implying that there has been a reduction in overall buy-side pressure within the current price range. Live Chart Supply Side Constricts Having assessed the demand side of the market, it becomes prudent to gauge measures of the supply side to provide a holistic analysis of the two opposing market forces. The ‘Hot Supply’ metric is one proxy we can use to estimate the coins readily available to trade and transact. This supply volume represents the wealth held within coins aged one week or less. Leaning on the assumption that a short holding time in the market increases the probability that the coin will transact again, as discovered in our study of Long and Short-Term Holders, we consider this distinct age group as one of the most readily available in response to market fluctuations. The wealth currently held by coins aged less than one week has declined into the low liquidity zone, accounting for just 4.7% of the aggregate network wealth. This highlights a continually constricting supply side, as the vast majority of coins are aged older than one week. Live Chart We see a similar story told via the supply divergences chart. Here, we profile several measures of ‘available supply,’ such as Short-Term Holder and Highly Liquid supply. We compare this against measures of ‘saved or stored supply’ such as Long-Term Holder or Vaulted supply. One observation is the prevalence and dominance of HODLing behaviour amongst market participants, leading to a rapid increase in ‘stored supply.’ This speaks to an overall tightening supply side as the volume of coins available to actively transact continues to reduce. Live Chart Stablecoin Liquidity Rises Stablecoins remain the preferred quote currency on both centralized and decentralized exchanges. As such, the growth in total stablecoin capital can be utilized as a proxy for investor demand and appetite. The Aggregate Stablecoin Supply is on the rise, residing just under the ATH at $160.4B. This can be considered as a constructive sign suggesting the build-up of crypto-native dollar-denominated capital, which is easily able to be exchanged into digital assets. However, we can also infer that this Stablecoin capital is not actively rotating into risk assets at this stage. Live Chart The SSR Oscillator compares the Market Capitalization of Bitcoin against the total circulating stablecoin supply. This can be considered under the following interpretation: When the SSR is low, the current stablecoin supply has more "buying power" to purchase BTC When the SSR is high, the current stablecoin supply has less "buying power" to purchase BTC The divergence between a range-bound Bitcoin market cap and a growing stablecoin supply has pushed the SSR Oscillator to a historic low. This suggests that investor stablecoin-based buying power is increasing, with a recursive effect where higher purchasing power can lead to an improving demand side in the future. Live Chart Heightened Volatility Expectations With price action oscillating within a well-defined range over the last six months, volatility begins to tighten and compress, akin to a coiling spring. After such a lengthy period without a significant macro movement, there is a growing expectation for higher volatility on the road ahead. We can gauge the compression of market volatility by measuring the percent range between the highest and lowest price ticks over the last 180 days. By this metric, only Aug 2023 and May 2016 exhibit a tighter 180-day price range. This highlights the relative tightness of the current market structure. Live Chart We can support this volatility assessment by using the Sell-Side Risk Ratio. This tool assesses the absolute sum of realized profit and loss locked in by investors relative to the asset size (the Realized Cap). We can consider this metric under the following framework: High values indicate that investors spend coins at a significant profit or loss relative to their cost basis. This condition indicates that the market likely needs to re-find equilibrium and usually follows a high volatility price move. Low values indicate that most coins are being spent relatively close to their break-even cost basis, suggesting a degree of equilibrium has been reached. This condition often signifies an exhaustion of ‘profit and loss’ within the current price range and usually describes a low volatility environment. The Sell-Side Risk Ratio has now dropped below the low-value band, suggesting minimal profit and loss-taking is occurring within the current range. The interpretation here is that equilibrium has been reached, and there is a need for further range expansion to incentivize investors to spend their coins (take profit or loss). Live Chart The above assessment is held solely when assessing the Short-Term Holder cohort. Historically, the STH Sell-Side Risk is at one of its lowest values, highlighting a remarkable absence of demand for new investors. Live Chart Similarly, the Long-Term Holder Sell-Side Risk Ratio has also dropped below its low-valuation band, suggesting that even mature investors have slowed their onchain interactions within the current price range. Live Chart Summary and Conclusions The current state of the Bitcoin market is one of equilibrium and reduced activity. On the demand side, capital flows have slowed significantly, and the Realized Cap remained effectively unchanged over the last two months. Simultaneously, the supply side is tightening, and there is a notable decline in readily available coins. However, the uptick in stablecoin supplies carries more future purchasing power, creating tension between current inactivity and potential future demand. This creates a sort of coiled-spring effect in the market and alludes to a regime of higher volatility on the road ahead. Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data. Join our Telegram channel. For on-chain metrics, dashboards, and alerts, visit Glassnode Studio For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

A Stagnant Market

Executive Summary

Market demand-side remains lacklustre for digital assets, with the magnitude of both capital inflows and outflows remaining small in scale.

HODLing remains the primary investor dynamic, with all measures of actively tradable supply declining and large volumes of coins maturing into Long-Term Holder status.

Price action has been remarkably stagnant over the past six months, driving all variants of the Sell-Side Risk Ratio to low levels, suggesting an expectation for higher volatility ahead.

💡 View all charts in this edition in The Week On-chain Dashboard. Demand Side Wanes

The Realized Cap is a foundational metric that provides an assessment of the cumulative capital netflow into and out of the Bitcoin network.

With the market trading in a downward but range-bound manner for the last six months, both capital inflows and outflows have ground to a halt. The Realized Cap has peaked and plateaued at $622B in the previous two months. This suggests that the majority of coins that are being transacted are doing so within proximity of their original acquisition price.

Live Chart

By assessing the Net Realized Profit / Loss metric, we can visualize the Realised Cap's first derivative, the daily change in onchain capital flows for Bitcoin. When this metric is positive, it represents net capital creation (coins transacting in profit) or destruction when the metric is negative (coins moving at a loss).

At present, we can see that both profit and loss forces are largely equal, resulting in a marginal netflow and a general oscillation around the zero bound. This alludes to a degree of equilibrium being established in the market and has some similarities to the Aug-Sep period in 2023.

Live Chart

We can consider the Realized Profit and Loss as a measure of the excess capital required for a seller to part ways with their coin. Thus, under this framework, we can utilize this metric as a proxy for gauging market demand by evaluating the seller's willingness to transact at a premium (profit) or a discount (loss).

The absolute Realized Profit plus Loss has declined significantly since the March ATH, implying that there has been a reduction in overall buy-side pressure within the current price range.

Live Chart Supply Side Constricts

Having assessed the demand side of the market, it becomes prudent to gauge measures of the supply side to provide a holistic analysis of the two opposing market forces.

The ‘Hot Supply’ metric is one proxy we can use to estimate the coins readily available to trade and transact. This supply volume represents the wealth held within coins aged one week or less. Leaning on the assumption that a short holding time in the market increases the probability that the coin will transact again, as discovered in our study of Long and Short-Term Holders, we consider this distinct age group as one of the most readily available in response to market fluctuations.

The wealth currently held by coins aged less than one week has declined into the low liquidity zone, accounting for just 4.7% of the aggregate network wealth. This highlights a continually constricting supply side, as the vast majority of coins are aged older than one week.

Live Chart

We see a similar story told via the supply divergences chart. Here, we profile several measures of ‘available supply,’ such as Short-Term Holder and Highly Liquid supply. We compare this against measures of ‘saved or stored supply’ such as Long-Term Holder or Vaulted supply.

One observation is the prevalence and dominance of HODLing behaviour amongst market participants, leading to a rapid increase in ‘stored supply.’ This speaks to an overall tightening supply side as the volume of coins available to actively transact continues to reduce.

Live Chart Stablecoin Liquidity Rises

Stablecoins remain the preferred quote currency on both centralized and decentralized exchanges. As such, the growth in total stablecoin capital can be utilized as a proxy for investor demand and appetite.

The Aggregate Stablecoin Supply is on the rise, residing just under the ATH at $160.4B. This can be considered as a constructive sign suggesting the build-up of crypto-native dollar-denominated capital, which is easily able to be exchanged into digital assets. However, we can also infer that this Stablecoin capital is not actively rotating into risk assets at this stage.

Live Chart

The SSR Oscillator compares the Market Capitalization of Bitcoin against the total circulating stablecoin supply. This can be considered under the following interpretation:

When the SSR is low, the current stablecoin supply has more "buying power" to purchase BTC

When the SSR is high, the current stablecoin supply has less "buying power" to purchase BTC

The divergence between a range-bound Bitcoin market cap and a growing stablecoin supply has pushed the SSR Oscillator to a historic low. This suggests that investor stablecoin-based buying power is increasing, with a recursive effect where higher purchasing power can lead to an improving demand side in the future.

Live Chart Heightened Volatility Expectations

With price action oscillating within a well-defined range over the last six months, volatility begins to tighten and compress, akin to a coiling spring. After such a lengthy period without a significant macro movement, there is a growing expectation for higher volatility on the road ahead.

We can gauge the compression of market volatility by measuring the percent range between the highest and lowest price ticks over the last 180 days. By this metric, only Aug 2023 and May 2016 exhibit a tighter 180-day price range. This highlights the relative tightness of the current market structure.

Live Chart

We can support this volatility assessment by using the Sell-Side Risk Ratio. This tool assesses the absolute sum of realized profit and loss locked in by investors relative to the asset size (the Realized Cap). We can consider this metric under the following framework:

High values indicate that investors spend coins at a significant profit or loss relative to their cost basis. This condition indicates that the market likely needs to re-find equilibrium and usually follows a high volatility price move.

Low values indicate that most coins are being spent relatively close to their break-even cost basis, suggesting a degree of equilibrium has been reached. This condition often signifies an exhaustion of ‘profit and loss’ within the current price range and usually describes a low volatility environment.

The Sell-Side Risk Ratio has now dropped below the low-value band, suggesting minimal profit and loss-taking is occurring within the current range. The interpretation here is that equilibrium has been reached, and there is a need for further range expansion to incentivize investors to spend their coins (take profit or loss).

Live Chart

The above assessment is held solely when assessing the Short-Term Holder cohort. Historically, the STH Sell-Side Risk is at one of its lowest values, highlighting a remarkable absence of demand for new investors.

Live Chart

Similarly, the Long-Term Holder Sell-Side Risk Ratio has also dropped below its low-valuation band, suggesting that even mature investors have slowed their onchain interactions within the current price range.

Live Chart Summary and Conclusions

The current state of the Bitcoin market is one of equilibrium and reduced activity. On the demand side, capital flows have slowed significantly, and the Realized Cap remained effectively unchanged over the last two months.

Simultaneously, the supply side is tightening, and there is a notable decline in readily available coins. However, the uptick in stablecoin supplies carries more future purchasing power, creating tension between current inactivity and potential future demand. This creates a sort of coiled-spring effect in the market and alludes to a regime of higher volatility on the road ahead.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio

For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Glassnode Expands ERC-20 Token Support: Pioneering On-Chain Analysis for the Ethereum EcosystemWe are excited to announce that our analytics platform now supports more than 500 new ERC-20 tokens. This major expansion reinforces Glassnode's commitment to providing the highest quality data and most innovative analysis tools for both Bitcoin and Ethereum markets. You can access the full list of supported tokens here. Solidifying Our Leadership in On-Chain Analytics For years, Glassnode has been the leader in on-chain analytics for Bitcoin, offering fresh insights into the market dynamics that drive the world's first and largest cryptocurrency. Now, we are extending that leadership to the Ethereum ecosystem. With the addition of 500+ ERC-20 tokens, our users can now apply the same depth of analysis to Ethereum-based assets as they do to Bitcoin. This release includes a wide range of popular and emerging tokens, spanning various sectors. Whether you're interested in well-established DeFi projects, innovative AI-driven tokens, or the latest trends in staking, Glassnode now provides the tools to analyze these assets with the same rigor you expect for Bitcoin. Enabling In-Depth Analysis with Enhanced Metric Coverage With the expansion of our ERC-20 token support, we are enabling some of our most popular metrics across these new assets, categorized into key areas for comprehensive market analysis: Asset Fundamentals: Track the health and underlying value of assets with metrics such as Active Addresses, New Addresses, Market Cap, Price, Circulating Supply, Supply in Smart Contracts, and Supply of Top 1% Addresses. Capital Flows: Gain insights into the movement of assets across the network and exchanges with Transfer Volume (Total, Median, Mean), Transfer Count, Exchange Balances, Netflows, and more. Profit and Loss Data: Analyze sentiment, financial outcomes and investor performance using SOPR (Spent Output Profit Ratio), MVRV (Market Value to Realized Value), Realized Profit and Loss, and their detailed breakdowns by wallet size, age, and holding period. This comprehensive metric coverage allows users to analyze a significant portion of the Ethereum ecosystem with unprecedented depth and detail. Whether you're comparing sectors, identifying market cycles, or predicting shifts in momentum, Glassnode's expanded toolkit offers the depth and precision needed for sophisticated analysis. 30 Days of Free Access to ERC-20 Metrics To celebrate this major expansion, we are excited to announce that all ERC-20-based token metrics will be available for free for the first 30 days. Starting today, this limited-time offer provides our users with a unique opportunity to explore the full potential of our new metrics, test out different strategies, and see firsthand how Glassnode's tools can enhance their market analysis. We encourage everyone to take advantage of this offer to experience the unparalleled depth and quality of our analytics. Comprehensive Market Analysis, All in One Place As we continue to evolve and expand our platform, we are making it easier for users to conduct comprehensive market analysis without needing to rely on multiple data providers. Our recent infrastructure upgrade allows us to scale horizontally, quickly integrating more assets and metrics into our platform. This means that investors can now perform detailed analysis of both Bitcoin and Ethereum landscapes from a single, unified platform. Application Case Study: Applying the Weekly-Monthly Seller Exhaustion Model to ERC-20 Ecosystem In Q2 of 2024, we incorporated a detailed breakdown of our most popular metrics, focusing on the age of holdings and wallet size distributions, to enhance our understanding of critical market dynamics. This enables our users to make more informed decisions through granular cohort analysis, answering complex questions such as: How do short-term investor actions influence asset valuations, particularly when analyzed over holding periods that range from days to months? Does the concentration of network wealth in larger wallets suggest a market driven by a few influential investors? Are new investors realizing more losses than seasoned holders, indicating potential short-term volatility but also an underlying market strength? For more information on the Breakdown Metrics, see our product announcement here. By combining our expanded ERC-20 coverage with the depth provided by the Breakdown Metrics, we can now significantly enhance our clients’ insights into capital flows, asset fundamentals, and market sentiment within the ERC-20 ecosystem. In this case study, we applied the Weekly-Monthly Seller Exhaustion model to the MATIC token. Seller Exhaustion represents a critical point where most market sellers have exited, allowing us to identify potential local bottoms. This model, previously validated within the Bitcoin market, has now been extended to the ERC-20 universe. For this analysis, we focused on three key metrics: MVRV Ratio: Measures the unrealized profit or loss held by investors within a specific cohort, helping to assess overall market sentiment. SOPR (Spent Output Profit Ratio): Evaluates the average profit or loss realized by the cohort, providing insight into investor behavior. Realized Loss: Isolates the magnitude of losses realized in USD terms by the cohort, indicating periods of heightened sell-side pressure. These metrics were selected because they offer complementary insights into market sentiment - MVRV reveals unrealized potential, SOPR uncovers realized actions, and Realized Loss highlights critical sell pressure points. Click to view in Glassnode Studio When combined, these metrics allow us to simulate scenarios where significant realized and unrealized losses suggest potential seller exhaustion. This approach helps us gauge when sell-side pressure might be absorbed by new buy-side demand, marking local bottoms in the market. The chart above highlights these periods in blue, showing points where significant loss metrics converge to signal potential bottoms. Extending the Seller Exhaustion model across ERC-20 tokens offers users a tool that deepens their understanding of market sentiment and provides a data-driven method for identifying local bottoms, thus enhancing trading strategies. With the ability to apply this methodology to all supported ERC-20 tokens across various time frames, we are excited to offer unparalleled depth in on-chain analysis, empowering research teams and traders to navigate the Ethereum ecosystem with greater confidence. What’s Next: Upcoming Insights and Tools This is just the first step in our most recent efforts to broaden our coverage and enhance the analytical depth of our platform. Stay tuned for more updates as we continue to innovate and provide our users with the best possible tools for on-chain analysis.

Glassnode Expands ERC-20 Token Support: Pioneering On-Chain Analysis for the Ethereum Ecosystem

We are excited to announce that our analytics platform now supports more than 500 new ERC-20 tokens. This major expansion reinforces Glassnode's commitment to providing the highest quality data and most innovative analysis tools for both Bitcoin and Ethereum markets.

You can access the full list of supported tokens here.

Solidifying Our Leadership in On-Chain Analytics

For years, Glassnode has been the leader in on-chain analytics for Bitcoin, offering fresh insights into the market dynamics that drive the world's first and largest cryptocurrency. Now, we are extending that leadership to the Ethereum ecosystem. With the addition of 500+ ERC-20 tokens, our users can now apply the same depth of analysis to Ethereum-based assets as they do to Bitcoin.

This release includes a wide range of popular and emerging tokens, spanning various sectors. Whether you're interested in well-established DeFi projects, innovative AI-driven tokens, or the latest trends in staking, Glassnode now provides the tools to analyze these assets with the same rigor you expect for Bitcoin.

Enabling In-Depth Analysis with Enhanced Metric Coverage

With the expansion of our ERC-20 token support, we are enabling some of our most popular metrics across these new assets, categorized into key areas for comprehensive market analysis:

Asset Fundamentals: Track the health and underlying value of assets with metrics such as Active Addresses, New Addresses, Market Cap, Price, Circulating Supply, Supply in Smart Contracts, and Supply of Top 1% Addresses.

Capital Flows: Gain insights into the movement of assets across the network and exchanges with Transfer Volume (Total, Median, Mean), Transfer Count, Exchange Balances, Netflows, and more.

Profit and Loss Data: Analyze sentiment, financial outcomes and investor performance using SOPR (Spent Output Profit Ratio), MVRV (Market Value to Realized Value), Realized Profit and Loss, and their detailed breakdowns by wallet size, age, and holding period.

This comprehensive metric coverage allows users to analyze a significant portion of the Ethereum ecosystem with unprecedented depth and detail. Whether you're comparing sectors, identifying market cycles, or predicting shifts in momentum, Glassnode's expanded toolkit offers the depth and precision needed for sophisticated analysis.

30 Days of Free Access to ERC-20 Metrics

To celebrate this major expansion, we are excited to announce that all ERC-20-based token metrics will be available for free for the first 30 days. Starting today, this limited-time offer provides our users with a unique opportunity to explore the full potential of our new metrics, test out different strategies, and see firsthand how Glassnode's tools can enhance their market analysis. We encourage everyone to take advantage of this offer to experience the unparalleled depth and quality of our analytics.

Comprehensive Market Analysis, All in One Place

As we continue to evolve and expand our platform, we are making it easier for users to conduct comprehensive market analysis without needing to rely on multiple data providers. Our recent infrastructure upgrade allows us to scale horizontally, quickly integrating more assets and metrics into our platform. This means that investors can now perform detailed analysis of both Bitcoin and Ethereum landscapes from a single, unified platform.

Application Case Study: Applying the Weekly-Monthly Seller Exhaustion Model to ERC-20 Ecosystem

In Q2 of 2024, we incorporated a detailed breakdown of our most popular metrics, focusing on the age of holdings and wallet size distributions, to enhance our understanding of critical market dynamics. This enables our users to make more informed decisions through granular cohort analysis, answering complex questions such as:

How do short-term investor actions influence asset valuations, particularly when analyzed over holding periods that range from days to months?

Does the concentration of network wealth in larger wallets suggest a market driven by a few influential investors?

Are new investors realizing more losses than seasoned holders, indicating potential short-term volatility but also an underlying market strength?

For more information on the Breakdown Metrics, see our product announcement here.

By combining our expanded ERC-20 coverage with the depth provided by the Breakdown Metrics, we can now significantly enhance our clients’ insights into capital flows, asset fundamentals, and market sentiment within the ERC-20 ecosystem.

In this case study, we applied the Weekly-Monthly Seller Exhaustion model to the MATIC token. Seller Exhaustion represents a critical point where most market sellers have exited, allowing us to identify potential local bottoms. This model, previously validated within the Bitcoin market, has now been extended to the ERC-20 universe.

For this analysis, we focused on three key metrics:

MVRV Ratio: Measures the unrealized profit or loss held by investors within a specific cohort, helping to assess overall market sentiment.

SOPR (Spent Output Profit Ratio): Evaluates the average profit or loss realized by the cohort, providing insight into investor behavior.

Realized Loss: Isolates the magnitude of losses realized in USD terms by the cohort, indicating periods of heightened sell-side pressure.

These metrics were selected because they offer complementary insights into market sentiment - MVRV reveals unrealized potential, SOPR uncovers realized actions, and Realized Loss highlights critical sell pressure points.

Click to view in Glassnode Studio

When combined, these metrics allow us to simulate scenarios where significant realized and unrealized losses suggest potential seller exhaustion. This approach helps us gauge when sell-side pressure might be absorbed by new buy-side demand, marking local bottoms in the market. The chart above highlights these periods in blue, showing points where significant loss metrics converge to signal potential bottoms.

Extending the Seller Exhaustion model across ERC-20 tokens offers users a tool that deepens their understanding of market sentiment and provides a data-driven method for identifying local bottoms, thus enhancing trading strategies. With the ability to apply this methodology to all supported ERC-20 tokens across various time frames, we are excited to offer unparalleled depth in on-chain analysis, empowering research teams and traders to navigate the Ethereum ecosystem with greater confidence.

What’s Next: Upcoming Insights and Tools

This is just the first step in our most recent efforts to broaden our coverage and enhance the analytical depth of our platform. Stay tuned for more updates as we continue to innovate and provide our users with the best possible tools for on-chain analysis.

A Network OverviewExecutive Summary Hash Rate remains just shy of ATHs, as continued investment by Miners demonstrates immense conviction in the Bitcoin Network despite depressed revenues. Investor interactions with exchanges are in decline, with contracting volumes across the board, suggesting there is a diminished appetite for investors and trade. Both the Bitcoin and Ethereum ETFs are exhibiting outflows, however, investor interest in the Bitcoin ETFs remain significantly larger in scale and magnitude. 💡 View all charts in this edition in The Week On-chain Dashboard. Miners Miners remain fundamental participants in the Bitcoin network and act as the primary production source for new coins. Miners provide the hashing power used to discover the next valid block, with the network autonomously rewarding them with newly issued coins and transaction fees. This makes mining an exceptionally challenging industry, as they have control over neither the input cost of energy nor the output cost of BTC. Despite choppy and uncertain market conditions, Bitcoin miners have continued to install new ASIC hardware, pushing the overall hash rate higher (14D-MA), reaching 666.4EH/s, and just 1% shy of the ATH. Live Chart As the hash rate increases, so does the target Difficulty to successfully mine a valid block. The Bitcoin protocol automatically adjusts the difficulty to account for rising and falling hash rate on the network. Presently, the average required number of hashes to mine a block is 338k exahash. This is the second largest difficulty throughout Bitcoin’s lifespan, highlighting the ever-growing competitiveness of the mining industry. Live Chart Nevertheless, a significant decline in Miner Revenue can be seen since the market price peaked at a new ATH in March. A significant portion of this revenue decline can be attributed to falling fee pressure. This is driven by declining demand for monetary transfers and falling fees generated from Runes and Inscription-related transactions. Miner revenue associated with the block subsidy remains relatively high due to spot prices trading above $55k, however remain around 22% below the previous ATH. Block Subsidy Revenue: $824M Transaction Fee Revenue: $20M Live Chart As revenues decline, we can infer that a degree of income stress may start to develop. We can estimate the percentage of the mined supply spent by miners over a 30-day window to measure whether this is the case. Due to the competitive and capital-intensive nature of the mining industry, miners have historically needed to distribute a majority of the coins mined to cover input costs. Interestingly, Miners have transitioned from net distribution over the mined supply to now retaining a portion of mined supply in their treasury reserves. This highlights an interesting development, as Miners tend to be pro-cyclical, being sellers during drawdowns and HODLers during uptrends. The uptick in hash rate and difficulty represents an increasingly expensive production cost for BTC, which may adversely affect miner profitability in the near future. Live Chart Settlement Slowdown The magnitude of volume settled on-chain can also provide colour into the degree of network adoption and health. When filtering for entity-adjusted volume, the network is currently processing and settling around $6.2B worth of transaction volume per day. However, settlement volume is beginning to fall towards its yearly average, suggesting a marked cooling off in network usage and throughput. Generally speaking, this is a net negative observation. Live Chart Reduced Trading Appetite In an ever-evolving market landscape, centralized exchanges have remained the centrepiece venue for speculation activity and price discovery. Therefore, we can evaluate onchain volumes aggregated across these venues as a proxy for investor activity and appetite for speculation. Running a similar 30d/365d momentum cross-over for exchange-related inflows and outflows, we can see that the monthly average volume has fallen well below the yearly. This underscores a decline in investor demand and less trading by speculators within the current price range. Live Chart Next, we will look at spot trade volumes at exchange venues. Here, we apply a 90d MinMax scalar, which normalizes the value set over a range of 1 to -1 relative to the maximum and minimum values of the selected period. From this, a similar observation can be ascertained, with spot volume momentum continuing to decay. This adds more weight to the idea that there has been a notable decline in trade activity over the last quarter. Live Chart The CVD metric can estimate the present net balance between market buying and selling pressure in spot markets. Utilizing the same methodology, we note that investor sell-pressure has been increasing across the last 90d, contributing toward the downward tilt in price action. Live Chart Finally, we can evaluate the momentum of price action for the Bitcoin price. Here, a degree of indecision can be seen, with positive and negative data points occurring over August. This starkly compares to the two previously highlighted indicators, both of which have been decisively negative across the same period. Live Chart Combining the MinMax Transformations for Volume, CVD and Price Action, respectively, we are able to produce a Sentiment Heatmap concerning the values of the features between 1 and -1. We can consider this over the following framework: 🟢 Values of 1 suggest High Risk 🟡 Values of 0 suggest Moderate Risk 🔴 Values of -1 Suggest Low Risk Presently, all three indicators are suggesting the market is entering a low-risk zone relative to the last 90 days of data points. Such confluence among the discussed spot indicators can be translated into diminishing ( Spot Volume Momentum ) sell volume ( CVD < 0) while price action is slowly chopping downward. Such a structure may be susceptible to external forces and could potentially break out on either side if the tides shift. ETFs The Ethereum ETFs have now followed the launch of the US Bitcoin ETFs in January in August. These two events mark a “Crossing the Rubicon” event for the Digital Asset Ecosystem, providing US traditional markets with an accessible access point for exposure to the leading two cryptocurrencies. Starting with the Bitcoin ETFs, we can see that net capital flows in USD have softened since Aug 2024 and are now reporting an outflow of $107M/week. Live Chart Demand for the more recent Ethereum ETFs has been relatively tepid, experiencing a net negative outflow. This is driven primarily by redemptions from the Grayscale ETHE product, which has not been counterbalanced by sufficient inflow demand across the other instruments. On aggregate, the Ethereum ETFs have experienced a total outflow of $-13.1M. This highlights a disparity in the magnitude of demand between BTC and ETH, at least within the context of current market conditions. Live Chart To approximate the impact of the ETFs on the Bitcoin and Ethereum markets, we have normalized the bias in ETF netflow volume by the corresponding Spot Volumes. This ratio enables us to directly compare the relative weight of ETFs in each market. As shown in the chart below, the relative influence of ETFs on the Ethereum market is equivalent to a maximum of 1.7% of the spot volume, compared to a maximum of 17% for the Bitcoin ETF. This suggests that despite normalization, the appetite for the Bitcoin ETF remains an order of magnitude larger than its Ethereum counterpart. Live Chart Summary and Conclusion Miners continue to demonstrate immense conviction in the Bitcoin Network with the Hash Rate just shy of ATHs despite collapsing revenues. However, as Miners tend to be pro-cyclical, being sellers during drawdowns, and HODLers during uptrends, a degree of sell-side pressure can be expected in the event of further drawdowns. Alongside this, Investor interaction with exchanges continue to fall, with contracting volumes across the board, suggesting there is a diminished appetite for investors, and trade. This is also apparent across the Institutional landscape with both the Bitcoin and Ethereum ETFs exhibiting net outflows. Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data. Join our Telegram channel For on-chain metrics, dashboards, and alerts, visit Glassnode Studio For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

A Network Overview

Executive Summary

Hash Rate remains just shy of ATHs, as continued investment by Miners demonstrates immense conviction in the Bitcoin Network despite depressed revenues.

Investor interactions with exchanges are in decline, with contracting volumes across the board, suggesting there is a diminished appetite for investors and trade.

Both the Bitcoin and Ethereum ETFs are exhibiting outflows, however, investor interest in the Bitcoin ETFs remain significantly larger in scale and magnitude.

💡 View all charts in this edition in The Week On-chain Dashboard. Miners

Miners remain fundamental participants in the Bitcoin network and act as the primary production source for new coins. Miners provide the hashing power used to discover the next valid block, with the network autonomously rewarding them with newly issued coins and transaction fees.

This makes mining an exceptionally challenging industry, as they have control over neither the input cost of energy nor the output cost of BTC.

Despite choppy and uncertain market conditions, Bitcoin miners have continued to install new ASIC hardware, pushing the overall hash rate higher (14D-MA), reaching 666.4EH/s, and just 1% shy of the ATH.

Live Chart

As the hash rate increases, so does the target Difficulty to successfully mine a valid block. The Bitcoin protocol automatically adjusts the difficulty to account for rising and falling hash rate on the network.

Presently, the average required number of hashes to mine a block is 338k exahash. This is the second largest difficulty throughout Bitcoin’s lifespan, highlighting the ever-growing competitiveness of the mining industry.

Live Chart

Nevertheless, a significant decline in Miner Revenue can be seen since the market price peaked at a new ATH in March. A significant portion of this revenue decline can be attributed to falling fee pressure. This is driven by declining demand for monetary transfers and falling fees generated from Runes and Inscription-related transactions.

Miner revenue associated with the block subsidy remains relatively high due to spot prices trading above $55k, however remain around 22% below the previous ATH.

Block Subsidy Revenue: $824M

Transaction Fee Revenue: $20M

Live Chart

As revenues decline, we can infer that a degree of income stress may start to develop. We can estimate the percentage of the mined supply spent by miners over a 30-day window to measure whether this is the case.

Due to the competitive and capital-intensive nature of the mining industry, miners have historically needed to distribute a majority of the coins mined to cover input costs. Interestingly, Miners have transitioned from net distribution over the mined supply to now retaining a portion of mined supply in their treasury reserves.

This highlights an interesting development, as Miners tend to be pro-cyclical, being sellers during drawdowns and HODLers during uptrends. The uptick in hash rate and difficulty represents an increasingly expensive production cost for BTC, which may adversely affect miner profitability in the near future.

Live Chart Settlement Slowdown

The magnitude of volume settled on-chain can also provide colour into the degree of network adoption and health. When filtering for entity-adjusted volume, the network is currently processing and settling around $6.2B worth of transaction volume per day.

However, settlement volume is beginning to fall towards its yearly average, suggesting a marked cooling off in network usage and throughput. Generally speaking, this is a net negative observation.

Live Chart Reduced Trading Appetite

In an ever-evolving market landscape, centralized exchanges have remained the centrepiece venue for speculation activity and price discovery. Therefore, we can evaluate onchain volumes aggregated across these venues as a proxy for investor activity and appetite for speculation.

Running a similar 30d/365d momentum cross-over for exchange-related inflows and outflows, we can see that the monthly average volume has fallen well below the yearly. This underscores a decline in investor demand and less trading by speculators within the current price range.

Live Chart

Next, we will look at spot trade volumes at exchange venues. Here, we apply a 90d MinMax scalar, which normalizes the value set over a range of 1 to -1 relative to the maximum and minimum values of the selected period.

From this, a similar observation can be ascertained, with spot volume momentum continuing to decay. This adds more weight to the idea that there has been a notable decline in trade activity over the last quarter.

Live Chart

The CVD metric can estimate the present net balance between market buying and selling pressure in spot markets. Utilizing the same methodology, we note that investor sell-pressure has been increasing across the last 90d, contributing toward the downward tilt in price action.

Live Chart

Finally, we can evaluate the momentum of price action for the Bitcoin price. Here, a degree of indecision can be seen, with positive and negative data points occurring over August. This starkly compares to the two previously highlighted indicators, both of which have been decisively negative across the same period.

Live Chart

Combining the MinMax Transformations for Volume, CVD and Price Action, respectively, we are able to produce a Sentiment Heatmap concerning the values of the features between 1 and -1. We can consider this over the following framework:

🟢 Values of 1 suggest High Risk

🟡 Values of 0 suggest Moderate Risk

🔴 Values of -1 Suggest Low Risk

Presently, all three indicators are suggesting the market is entering a low-risk zone relative to the last 90 days of data points. Such confluence among the discussed spot indicators can be translated into diminishing ( Spot Volume Momentum ) sell volume ( CVD < 0) while price action is slowly chopping downward. Such a structure may be susceptible to external forces and could potentially break out on either side if the tides shift.

ETFs

The Ethereum ETFs have now followed the launch of the US Bitcoin ETFs in January in August. These two events mark a “Crossing the Rubicon” event for the Digital Asset Ecosystem, providing US traditional markets with an accessible access point for exposure to the leading two cryptocurrencies.

Starting with the Bitcoin ETFs, we can see that net capital flows in USD have softened since Aug 2024 and are now reporting an outflow of $107M/week.

Live Chart

Demand for the more recent Ethereum ETFs has been relatively tepid, experiencing a net negative outflow. This is driven primarily by redemptions from the Grayscale ETHE product, which has not been counterbalanced by sufficient inflow demand across the other instruments.

On aggregate, the Ethereum ETFs have experienced a total outflow of $-13.1M. This highlights a disparity in the magnitude of demand between BTC and ETH, at least within the context of current market conditions.

Live Chart

To approximate the impact of the ETFs on the Bitcoin and Ethereum markets, we have normalized the bias in ETF netflow volume by the corresponding Spot Volumes. This ratio enables us to directly compare the relative weight of ETFs in each market.

As shown in the chart below, the relative influence of ETFs on the Ethereum market is equivalent to a maximum of 1.7% of the spot volume, compared to a maximum of 17% for the Bitcoin ETF. This suggests that despite normalization, the appetite for the Bitcoin ETF remains an order of magnitude larger than its Ethereum counterpart.

Live Chart Summary and Conclusion

Miners continue to demonstrate immense conviction in the Bitcoin Network with the Hash Rate just shy of ATHs despite collapsing revenues. However, as Miners tend to be pro-cyclical, being sellers during drawdowns, and HODLers during uptrends, a degree of sell-side pressure can be expected in the event of further drawdowns.

Alongside this, Investor interaction with exchanges continue to fall, with contracting volumes across the board, suggesting there is a diminished appetite for investors, and trade. This is also apparent across the Institutional landscape with both the Bitcoin and Ethereum ETFs exhibiting net outflows.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio

For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Announcing: "Digital Assets: Insights and Market Trends H1 2024" Report By CME & GlassnodeWe are thrilled to announce the release of our latest report, "Digital Assets: Insights and Market Trends H1 2024," produced collaboratively by CME Group and Glassnode. This comprehensive guide provides a detailed analysis of key developments in the digital asset markets, offering institutional investors valuable insights into the latest trends and data. To read the full report, download it here. This report synthesizes a wide range of information, including price performance, on-chain analytics, industry events, and derivatives data. Our goal is to equip institutional traders with the knowledge needed to navigate the complexities of the digital asset landscape effectively. Key highlights from the report include: Market Overview: An extensive look at the current state of the digital asset market, focusing on major asset classes, their market caps, and the dominance of Bitcoin and Ethereum within the ecosystem. Capital Flows and Market Cycles: Analysis of capital movements across Bitcoin, Ethereum, and stablecoins, providing insights into market cycles and investor behavior during different market phases. Derivatives Market Fundamentals: Detailed review of the growing futures and options markets for digital assets, including insights into open interest, trading volumes, and the increasing dominance of institutional players like CME Group. Here is a short preview of insights institutional traders and investors will be able to find in this special report: CME Futures Dominance The futures market for digital assets has seen significant growth, with CME Group emerging as a dominant player. CME's futures contracts for Bitcoin and Ethereum have attracted substantial institutional interest, highlighting the shift towards more regulated and sophisticated trading environments. CME Futures Dominance Interactive Chart Bull Market Correction Drawdown The current bull market has exhibited relatively shallow drawdowns compared to previous cycles. This trend points to a maturing market, with reduced volatility and more stable price performance, providing a more predictable environment for investors. Bull Market Corrections Interactive Chart ETH/BTC Ratio The ETH/BTC ratio serves as a key indicator of capital rotation and market sentiment. Despite a bullish market since late 2022, Ethereum has underperformed relative to Bitcoin, influenced by competitive pressures and regulatory advancements. ETH/ BTC Ratio Interactive Chart Settlement Volume Comparison Bitcoin's daily on-chain transaction volumes have reached levels comparable to traditional financial giants like Visa and Mastercard. This milestone underscores Bitcoin's increasing role in the global financial system and its potential for further integration and adoption. Settlement Volume Comparison Interactive Chart Discover More These insights offer just a glimpse of the detailed analysis contained in "Digital Assets: Insights and Market Trends H1 2024." Download your copy today to explore these topics in depth and gain the knowledge needed to invest in digital assets at the institutional level with more confidence. Glassnode is a trusted data provider partner to institutions in the financial world. Our expertise in on-chain analytics complements traditional price data, providing a holistic view of the digital asset markets. Contact us to explore our offerings for data, bespoke reports, and more.

Announcing: "Digital Assets: Insights and Market Trends H1 2024" Report By CME & Glassnode

We are thrilled to announce the release of our latest report, "Digital Assets: Insights and Market Trends H1 2024," produced collaboratively by CME Group and Glassnode. This comprehensive guide provides a detailed analysis of key developments in the digital asset markets, offering institutional investors valuable insights into the latest trends and data.

To read the full report, download it here.

This report synthesizes a wide range of information, including price performance, on-chain analytics, industry events, and derivatives data. Our goal is to equip institutional traders with the knowledge needed to navigate the complexities of the digital asset landscape effectively.

Key highlights from the report include:

Market Overview: An extensive look at the current state of the digital asset market, focusing on major asset classes, their market caps, and the dominance of Bitcoin and Ethereum within the ecosystem.

Capital Flows and Market Cycles: Analysis of capital movements across Bitcoin, Ethereum, and stablecoins, providing insights into market cycles and investor behavior during different market phases.

Derivatives Market Fundamentals: Detailed review of the growing futures and options markets for digital assets, including insights into open interest, trading volumes, and the increasing dominance of institutional players like CME Group.

Here is a short preview of insights institutional traders and investors will be able to find in this special report:

CME Futures Dominance

The futures market for digital assets has seen significant growth, with CME Group emerging as a dominant player. CME's futures contracts for Bitcoin and Ethereum have attracted substantial institutional interest, highlighting the shift towards more regulated and sophisticated trading environments.

CME Futures Dominance Interactive Chart

Bull Market Correction Drawdown

The current bull market has exhibited relatively shallow drawdowns compared to previous cycles. This trend points to a maturing market, with reduced volatility and more stable price performance, providing a more predictable environment for investors.

Bull Market Corrections Interactive Chart

ETH/BTC Ratio

The ETH/BTC ratio serves as a key indicator of capital rotation and market sentiment. Despite a bullish market since late 2022, Ethereum has underperformed relative to Bitcoin, influenced by competitive pressures and regulatory advancements.

ETH/ BTC Ratio Interactive Chart

Settlement Volume Comparison

Bitcoin's daily on-chain transaction volumes have reached levels comparable to traditional financial giants like Visa and Mastercard. This milestone underscores Bitcoin's increasing role in the global financial system and its potential for further integration and adoption.

Settlement Volume Comparison Interactive Chart

Discover More

These insights offer just a glimpse of the detailed analysis contained in "Digital Assets: Insights and Market Trends H1 2024." Download your copy today to explore these topics in depth and gain the knowledge needed to invest in digital assets at the institutional level with more confidence.

Glassnode is a trusted data provider partner to institutions in the financial world. Our expertise in on-chain analytics complements traditional price data, providing a holistic view of the digital asset markets. Contact us to explore our offerings for data, bespoke reports, and more.

Grounding Through ConfluenceExecutive Summary Despite Bitcoin prices trading sideways to down, a significant proportion of the market remains in profit, with Short-Term Holders carrying the majority of losses. Using a combination of on-chain pricing models and technical indicators, we define and explore the a set of potential scenarios for the market moving forwards. Volatility continues to be historically compressed, which suggests a degree of both investor apathy, but also suggests an under-indexing for heightened volatility ahead. 💡 View all charts in this edition in The Week On-chain Dashboard. Market Profitability Remains Robust As BTC prices sold off down into the $60k region, a degree of fear and bearish sentiment could be discerned amongst many digital asset investors. This is not uncommon when market volatility stagnates and goes to sleep, as apathy creeps in. Nevertheless, from the lens of MVRV Ratio, aggregate investor profitability remains remarkably robust, with the average coin still holding a 2x profit multiple. This is a level that often delineates the 'Enthusiastic' and the 'Euphoric' bull market phases. Live Chart Moving one layer deeper, we can segregate all coins held either in a position of unrealized profit or loss. This allows us to evaluate the average cost basis of each group, as well as the average magnitude of unrealized profit and loss held per coin. 🔴 The average coin in profit is holding an unrealized gain of +$41.3k, with a cost basis of approximately $19.4k. Of note, this figure will be partially skewed by coins last moved in earlier cycles, including the Patoshi entity, early miners, and lost coins. 🔵 The average coin in loss is holding an unrealized loss of -$5.3k, and has a cost basis of approximately $66.1k. These coins are primarily held by Short-Term Holders, since very few 'top buyers' from the 2021 cycle still hold on today. Both of these metrics can help identify points of potential sell-pressure, as investors seek to hold onto their gains, and/or avoid holding onto even heavier unrealized losses. Live Workbench If we look at the ratio between the unrealized profit/loss per coin, we can see that the magnitude of paper gains held is 8.2x larger than paper losses. Only 18% of trading days have recorded a larger relative value, all of which are within Euphoric bull market regimes. It could be argued that the March ATH set following the approval of the ETFs had several characteristics which are coincident with historical bull market peaks. Live Workbench Grounding Expectations Using Confluence Bitcoin prices have been consolidating within a well defined $60k to $70k range since the March ATH, and a degree of investor apathy and boredom has taken hold. This has led to widespread indecision, and a market which has failed to establish a robust trend in either direction. To ground our position in the cycle, we shall consult a simplified framework for thinking about historical Bitcoin market cycles: 🔴 Deep Bear Market: Prices trades below the Realized Price. 🔵 Early Bull Market: Prices trade between Realized Price and True Market Mean. 🟠 Enthusiastic Bull Market: Prices trade between the ATH and True Market Mean. 🟢 Euphoric Bull Market: Prices trade above the previous cycles ATH. At the moment, prices remains within the Enthusiastic bull regime, after a few very brief excursions into the Euphoric zone. The True Market Mean resides at a value of $50k, which represents the average cost basis per active investor. This level remains a key pricing levels for the market to remain above if the macro bull market is expected to continue. Live Workbench Next we will look towards the Short-Term Holder cohort, and overlay their cost basis with levels denoting +-1 standard deviations from it. This provides insight into areas where these price sensitive holders may start to react: 🔴 Significant unrealized profit signals a potentially overheated market, which is currently at a value of $92k. 🟠 The break-even level of the STH cohort is at $64k, which the spot price is currently below, but making an attempt to reclaim. 🔵 Significant unrealized loss signals a potentially oversold market, which is currently at at a value of $50k. This aligns with True Market Mean as a bull market break-point. Of note, only 7% of trading days have recorded spot prices trading below the -1SD band, making it a relatively uncommon occurrence. Live Workbench With price trading below the STH cost basis, it is judicious to inspect the degree of financial stress within various subsets of this cohort. Using our breakdown by age metrics, we can dissect and inspect the cost-basis of differing age constituents within the Short-Term Holder cohort. Currently, coins aged 1d-1w, 1w-1m and 1m-3m are all holding an unrealized loss on average. This shows that this consolidation range has been largely unproductive for traders and investors. The 3m-6m cohort remains the only sub-group to remain in an unrealized profit, with an average cost-basis of $58k. This aligns with the price low of this correction, which again marks this as a key area of interest. Live Workbench Moving towards technical indicators. we can use the widely used Mayer Multiple metric, which assesses the ratio between price and its 200DMA. The 200DMA is often used as a simple indicator for assessing bullish or bearish momentum, making any breaks above or below a key market pivot point. The 200DMA currently resides at a value of $58k, once again providing confluence with on–chain price models. Live Workbench We can use the URPD metric to further assess concentrations of supply around particular cost basis clusters. Currently, the spot price is near the lower bound of a large supply node between $60k and the ATH. This aligns with the cost basis models of Short-Term Holders. With 2.63M BTC (13.4% of the circulating supply) located within the $60k to $70k cluster, small price fluctuations are able to substantially affect the profitability of coins and investor portfolios. Overall, this indicates a risk that many investors may be sensitive to any price drops below $60k. Live Chart Volatility Expectations After several months of range-bound price action, we note a marked decline in volatility across many rolling window time frames. To visualise this phenomena, we introduce a simple tool to detect periods of realized volatility contraction, which often provides an indicator that heightened volatility is likely ahead. The model assesses the 30d change in Realized Volatility across 1-week, 2-week, 1-month, 3-month, 6-month and 1-year timeframes. When all windows are exhibiting negative 30d change, a signal is triggered, inferring that volatility is compressing, and so are investor expectations of lower volatility ahead. Live Workbench We can also assess market volatility by measuring the percent range between the highest and lowest price ticks over the last 60-days. By this metric, volatility continues to compress to levels rarely seen, but usually after lengthy consolidations, and prior to large market moves. Live Workbench Finally, we can bolster our volatility assessment using the Sell-Side Risk Ratio. This tool assesses the absolute sum of realised profit and loss locked in by investors, relative to the size of the asset (the Realized Cap). We can consider this metric under the following framework: High values indicate that investors are spending coins at a large profit or loss relative to their cost basis. This condition indicates that the market likely needs to re-find equilibrium, and usually follows a high volatility price move. Low values indicate that the majority of coins are being spent relatively close to their break even cost basis, suggesting a degree of equilibrium has been reached. This condition often signifies an exhaustion of ‘profit and loss’ within the current price range, and usually describes a low volatility environment. Notably, the STH Sell-Side Risk has contracted to historic lows, with only 274 out of 5083 trading days (5%) recording a lower value. This suggests that a degree of equilibrium has been established during this price consolidation, and alludes to heightened volatility expectations in the near future. Live Workbench Summary and Conclusion The Bitcoin market is in an interesting place, with apathy and boredom dominating, despite prices being 20% below the ATH. The average coin is still holding a 2x unrealized profit. however newer buyers are disproportionately underwater on their positions. We also explored key pricing levels where investor behavior patterns may shift. We sought a degree of confluence across both on-chain and technical indicators, and derived three key areas of interest. A break below $58k to $60k would put a significant number of STHs into loss, and trade below the 200DMA price level. Price action between $60k and $64k continues the current sideways trajectory of market indecision. A decisive break above $64k would put a meaningful volume of STH coins back into profit, with a likely uptick in investor sentiment. Volatility continues to compress across multiple time-frames, both from a pricing, and an on-chain perspective. Metrics like the Sell-Side Risk Ratio, and 60-day price range have fallen towards historic lows. This suggests that the current trading range is in the later stages of developing towards the next range expansion. Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data. Join our Telegram channel For on-chain metrics, dashboards, and alerts, visit Glassnode Studio For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Grounding Through Confluence

Executive Summary

Despite Bitcoin prices trading sideways to down, a significant proportion of the market remains in profit, with Short-Term Holders carrying the majority of losses.

Using a combination of on-chain pricing models and technical indicators, we define and explore the a set of potential scenarios for the market moving forwards.

Volatility continues to be historically compressed, which suggests a degree of both investor apathy, but also suggests an under-indexing for heightened volatility ahead.

💡 View all charts in this edition in The Week On-chain Dashboard. Market Profitability Remains Robust

As BTC prices sold off down into the $60k region, a degree of fear and bearish sentiment could be discerned amongst many digital asset investors. This is not uncommon when market volatility stagnates and goes to sleep, as apathy creeps in.

Nevertheless, from the lens of MVRV Ratio, aggregate investor profitability remains remarkably robust, with the average coin still holding a 2x profit multiple. This is a level that often delineates the 'Enthusiastic' and the 'Euphoric' bull market phases.

Live Chart

Moving one layer deeper, we can segregate all coins held either in a position of unrealized profit or loss. This allows us to evaluate the average cost basis of each group, as well as the average magnitude of unrealized profit and loss held per coin.

🔴 The average coin in profit is holding an unrealized gain of +$41.3k, with a cost basis of approximately $19.4k. Of note, this figure will be partially skewed by coins last moved in earlier cycles, including the Patoshi entity, early miners, and lost coins.

🔵 The average coin in loss is holding an unrealized loss of -$5.3k, and has a cost basis of approximately $66.1k. These coins are primarily held by Short-Term Holders, since very few 'top buyers' from the 2021 cycle still hold on today.

Both of these metrics can help identify points of potential sell-pressure, as investors seek to hold onto their gains, and/or avoid holding onto even heavier unrealized losses.

Live Workbench

If we look at the ratio between the unrealized profit/loss per coin, we can see that the magnitude of paper gains held is 8.2x larger than paper losses. Only 18% of trading days have recorded a larger relative value, all of which are within Euphoric bull market regimes.

It could be argued that the March ATH set following the approval of the ETFs had several characteristics which are coincident with historical bull market peaks.

Live Workbench Grounding Expectations Using Confluence

Bitcoin prices have been consolidating within a well defined $60k to $70k range since the March ATH, and a degree of investor apathy and boredom has taken hold. This has led to widespread indecision, and a market which has failed to establish a robust trend in either direction.

To ground our position in the cycle, we shall consult a simplified framework for thinking about historical Bitcoin market cycles:

🔴 Deep Bear Market: Prices trades below the Realized Price.

🔵 Early Bull Market: Prices trade between Realized Price and True Market Mean.

🟠 Enthusiastic Bull Market: Prices trade between the ATH and True Market Mean.

🟢 Euphoric Bull Market: Prices trade above the previous cycles ATH.

At the moment, prices remains within the Enthusiastic bull regime, after a few very brief excursions into the Euphoric zone. The True Market Mean resides at a value of $50k, which represents the average cost basis per active investor.

This level remains a key pricing levels for the market to remain above if the macro bull market is expected to continue.

Live Workbench

Next we will look towards the Short-Term Holder cohort, and overlay their cost basis with levels denoting +-1 standard deviations from it. This provides insight into areas where these price sensitive holders may start to react:

🔴 Significant unrealized profit signals a potentially overheated market, which is currently at a value of $92k.

🟠 The break-even level of the STH cohort is at $64k, which the spot price is currently below, but making an attempt to reclaim.

🔵 Significant unrealized loss signals a potentially oversold market, which is currently at at a value of $50k. This aligns with True Market Mean as a bull market break-point.

Of note, only 7% of trading days have recorded spot prices trading below the -1SD band, making it a relatively uncommon occurrence.

Live Workbench

With price trading below the STH cost basis, it is judicious to inspect the degree of financial stress within various subsets of this cohort. Using our breakdown by age metrics, we can dissect and inspect the cost-basis of differing age constituents within the Short-Term Holder cohort.

Currently, coins aged 1d-1w, 1w-1m and 1m-3m are all holding an unrealized loss on average. This shows that this consolidation range has been largely unproductive for traders and investors.

The 3m-6m cohort remains the only sub-group to remain in an unrealized profit, with an average cost-basis of $58k. This aligns with the price low of this correction, which again marks this as a key area of interest.

Live Workbench

Moving towards technical indicators. we can use the widely used Mayer Multiple metric, which assesses the ratio between price and its 200DMA. The 200DMA is often used as a simple indicator for assessing bullish or bearish momentum, making any breaks above or below a key market pivot point.

The 200DMA currently resides at a value of $58k, once again providing confluence with on–chain price models.

Live Workbench

We can use the URPD metric to further assess concentrations of supply around particular cost basis clusters. Currently, the spot price is near the lower bound of a large supply node between $60k and the ATH. This aligns with the cost basis models of Short-Term Holders.

With 2.63M BTC (13.4% of the circulating supply) located within the $60k to $70k cluster, small price fluctuations are able to substantially affect the profitability of coins and investor portfolios.

Overall, this indicates a risk that many investors may be sensitive to any price drops below $60k.

Live Chart Volatility Expectations

After several months of range-bound price action, we note a marked decline in volatility across many rolling window time frames. To visualise this phenomena, we introduce a simple tool to detect periods of realized volatility contraction, which often provides an indicator that heightened volatility is likely ahead.

The model assesses the 30d change in Realized Volatility across 1-week, 2-week, 1-month, 3-month, 6-month and 1-year timeframes. When all windows are exhibiting negative 30d change, a signal is triggered, inferring that volatility is compressing, and so are investor expectations of lower volatility ahead.

Live Workbench

We can also assess market volatility by measuring the percent range between the highest and lowest price ticks over the last 60-days. By this metric, volatility continues to compress to levels rarely seen, but usually after lengthy consolidations, and prior to large market moves.

Live Workbench

Finally, we can bolster our volatility assessment using the Sell-Side Risk Ratio. This tool assesses the absolute sum of realised profit and loss locked in by investors, relative to the size of the asset (the Realized Cap). We can consider this metric under the following framework:

High values indicate that investors are spending coins at a large profit or loss relative to their cost basis. This condition indicates that the market likely needs to re-find equilibrium, and usually follows a high volatility price move.

Low values indicate that the majority of coins are being spent relatively close to their break even cost basis, suggesting a degree of equilibrium has been reached. This condition often signifies an exhaustion of ‘profit and loss’ within the current price range, and usually describes a low volatility environment.

Notably, the STH Sell-Side Risk has contracted to historic lows, with only 274 out of 5083 trading days (5%) recording a lower value. This suggests that a degree of equilibrium has been established during this price consolidation, and alludes to heightened volatility expectations in the near future.

Live Workbench Summary and Conclusion

The Bitcoin market is in an interesting place, with apathy and boredom dominating, despite prices being 20% below the ATH. The average coin is still holding a 2x unrealized profit. however newer buyers are disproportionately underwater on their positions.

We also explored key pricing levels where investor behavior patterns may shift. We sought a degree of confluence across both on-chain and technical indicators, and derived three key areas of interest.

A break below $58k to $60k would put a significant number of STHs into loss, and trade below the 200DMA price level.

Price action between $60k and $64k continues the current sideways trajectory of market indecision.

A decisive break above $64k would put a meaningful volume of STH coins back into profit, with a likely uptick in investor sentiment.

Volatility continues to compress across multiple time-frames, both from a pricing, and an on-chain perspective. Metrics like the Sell-Side Risk Ratio, and 60-day price range have fallen towards historic lows. This suggests that the current trading range is in the later stages of developing towards the next range expansion.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio

For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

A Data-Driven Approach to Identifying Short Opportunities With High Conviction

Bitcoin's inherent volatility and potential for significant drawdowns present unique opportunities for strategic short positions. To help institutional investors identify these opportunities with high confidence and improve their risk-adjusted returns, we are excited to introduce the Bitcoin Sharpe Signal Short (BSS Short). Building on the success of the Bitcoin Sharpe Signal Long, our previous automated trading strategy grounded in on-chain data, the BSS Short signal provides our clients with a data-driven approach that effectively leverages market downturns.

The Bitcoin Sharpe Signal Short utilizes on-chain data to pinpoint a high degree of possibility for an imminent market downturn, enabling investors to capitalize on Bitcoin's volatility and periodic price corrections. This tool is designed to help you navigate Bitcoin's cycles and take advantage of the 50 to 90% drawdowns that occur each cycle, maximizing returns from market corrections. For long-only investors, the signal also offers the benefit of reducing exposure during high-risk periods, helping manage volatility and protect portfolios.

With this release, we aim to identify key on-chain metrics that have predictive power to anticipate market downturns as well as metrics that can prevent being caught on the wrong side of a short bet during a market upswing. The signal is available with daily and hourly resolution, catering to a wide variety of investors and trading entities regardless of their preferred timeframe.

Bitcoin Sharpe Signal in a Nutshell

The Bitcoin Sharpe Signal Short is a machine-learning-based strategy designed to identify prime shorting opportunities with high conviction. This strategy adopts a conservative approach, activating only when the model has a high level of confidence in predicting market downturns. The signal provides a clear indicator for when to go short on Bitcoin, ensuring informed decisions.

Historically, when the indicator surges beyond the 0.5 mark, it has been associated with imminent market downturns. Additionally, the signal helps investors avoid bear traps by identifying key metrics that signal potential market upswings, thereby preventing short positions during periods of upward momentum. By leveraging on-chain data, we enable investors to capitalize on Bitcoin's long-term volatility, effectively managing drawdowns and improving risk-adjusted returns.

The Signal’s Performance

The out-of-sample performance demonstrates that the model effectively captured the bear market of 2022, offering a robust hedge against market downturns. Conversely, the model accurately identified the "risk-on" environments of 2023 and 2024, avoiding false risk signals during that period and providing a reliable indicator for shifting market conditions.

Live Performance Tracker Available for Enterprise OTS Package Customers Bitcoin Sharpe Signal Short Key Stats Use Cases and Opportunities

The Bitcoin Sharpe Signal Short is designed for institutional investors, including hedge funds, family offices, trading desks, and other entities engaged in sophisticated trading strategies. While the primary use case is identifying shorting opportunities, the signal also offers valuable insights for managing long-only exposure and strategic hedging.

Identifying Short Opportunities with High Conviction: The Bitcoin Sharpe Signal Short's main function is to pinpoint high-confidence shorting opportunities. This allows institutional investors to capitalize on significant market corrections, ensuring a substantial, risk-adjusted return.

Risk Management for Long-Only Investors: Long-only investors can benefit from the signal by reducing exposure during high-risk periods indicated by the signal. This approach helps manage portfolio volatility and protect against significant drawdowns without needing to take short positions directly.

Strategic Hedging: For investors who use derivatives or other hedging instruments, the signal can be employed to hedge against potential market downturns. This strategic approach helps mitigate risks associated with holding Bitcoin positions, allowing investors to maintain their core holdings while protecting against adverse price movements.

Hourly Resolution

We offer an hourly resolution to the Bitcoin Sharpe Signal Short, providing intraday insights into market positioning. This version of the signal updates on an hourly basis, allowing investors to stay informed about imminent market shifts and make timely trading decisions. By analyzing real-time on-chain data, the model accurately anticipates market downturns, offering a strategic advantage for both short-term traders and those looking to reduce exposure during volatile periods.

Explore More Glassnode Signals in our On-Chain Trading Signals Package

Glassnode offers a suite of advanced signals designed to empower institutional investors with actionable insights and sophisticated trading strategies. Our On-Chain Trading Signals (OTS) Package includes the Bitcoin Sharpe Signal Long and Short, leveraging proprietary on-chain data and advanced analytics. Beyond signals, the OTS Package provides comprehensive trading heuristics, valuable trading insights, and detailed feature transformations, ensuring you have the tools needed to optimize your investment decisions.

The Bitcoin Sharpe Signal Long (BSS) identifies ideal conditions for going long on Bitcoin, minimizing downside risks while capitalizing on upward trends. This signal, part of our OTS Package, analyzes historical data to provide high-confidence indicators for optimal entry points, helping investors maximize their returns during bullish phases.

Complementary to this, the Bitcoin Sharpe Signal Short (BSS Short) provides high-confidence indicators for market downturns, enabling institutional investors to strategically take short positions and reduce exposure during high-risk periods. This tool is designed to enhance risk-adjusted returns by accurately anticipating significant market corrections.

Contact Sales

For more information on the methodology and insights provided by our Data Science team, or to access the OTS Package, please contact your Sales representative. Our team is ready to provide detailed explanations, personalized demonstrations, and comprehensive support to help you integrate these powerful tools into your trading strategies. Reach out today to discover how Glassnode's advanced signals can enhance your investment decisions and risk management practices.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Sizing Up Diamond HandsExecutive Summary The market has effectively traded sideways since the $73k all-time-high which was set in March. By our estimates, demand momentum has turned negative since early May. We analyse the cost-basis of short-term investors as a method to inspect capital flows into the market. To analyze the supply side, we refer to long-term holders, and identify that the unrealized profit held by this cohort is statistically far from historical peaks. Looking at the spending behaviour of long-term holders, it can be seen that although the spent volume by these players constitutes only 4%-8% of the total volume, the profits realized from this spending typically account for 30%-40% of cumulative profits realized over bull markets. This finding underlines the concentration of wealth in older coins gradually paying back the diamond hands over the bull market. 💡 View all charts in this edition in The Week On-chain Dashboard. Tracking Demand In WoC 18, we explored a methodology to identify the direction and intensity of capital flows in or out of the market. We consider a framework utilizing the average cost-basis of various age brackets within the short-term holder cohort: When the cost basis of these cohorts is in an uptrend, it suggests capital flows into the market as new buyers acquire coins at higher prices (and vice versa for downtrends). As spot prices deviate above or below the cost basis, we can approximate the degree of unrealized profit held by each group via the MVRV Ratio. We can consider MVRV values to be a gauge on the incentive for investors to take profits (high values), or an indicator of seller exhaustion (low values). We will start by comparing the spot price in relation to the cost basis of two cohorts: 🟠 Holders with 1-week to 1-month old coins. 🔴 Holders with 1 to 3-month old coins. From this, we can identify when macro tides change in capital flows during the early stages of the bull and bear phases. The chart below presents how these two price models have provided market support during the 2023-24 bull. Since mid-June, the spot price has plunged below the cost basis of both the 1w-1m holders 🟠($68.5k) and 1m-3m holders 🔴 ($66.4k). If this structure persists, it has historically resulted in a deterioration of investor confidence, and risks this correction being deeper and taking longer to recover from. Live Workbench We can also characterise market momentum by comparing the cost basis of these cohorts to each other. The chart below highlights: Capital Inflows 🟦 when the cost basis of the 1w-1m holders trades above the 1m-3m cost basis. This underscores a positive momentum in demand, and, attracting new capital into the market Capital Outflows 🟪 when the cost basis of the 1w-1m holders plunges below the 1m-3m cost basis. This structure signals a diminishing momentum in the demand side, and a net capital outflow from the asset. During previous bull markets, a negative capital flow structure has occurred up to five times. We can also see that this structure has been in play since May and into early June. Live Workbench Navigating the Supply Side To achieve a complete macro view of the current market, we can leverage metrics which describe the behavior of Long-term holders (LTHs). The LTH cohort is the primary actor on the supply side during bull markets as they distribute coins and take profits. Market cycle tops are established, in part, when LTHs ramp up their selling intensity until it overwhelms and exhausts demand. The following chart compares the spot price against significant multiples applied to the average cost basis of the LTH cohort (LTH Realized Price). 1.0 * LTH Realized Price 🟢 historically aligns with the bottom formation phase of the bear cycle and into the market recovery. 1.5 * LTH Realized Price 🟠 delineates the recovery phase from a longer-term equilibrium phase of the bull. Price tends to experience a slower rate of growth, and on average, LTHs are holding an unrealized profit is around +50%. 3.5 * LTH Realized Price 🔴 provides a distinguishing boundary between the equilibrium phase, and the euphoria phases of the bull market. This is a point where price tends to appreciate quickly, and LTHs tend to increase their distribution pressure due to being at an unrealized profit of 250% or more. If we apply this framework to recent cycles, we can see that the ongoing bull has been very similar to the 2017 cycle from a macro perspective. In particular, the recent consolidation phase near the previous ATH aligns with the equilibrium to euphoria boundary described by the 3.5 multiple applied to the LTH-Realized Price 🔴. Live Workbench The magnitude of unrealized profit held by LTHs can be considered as a measurement of the incentive for this group to spend coins, and take chips off the table. We can visualise this psychological incentive using the LTH-NUPL metric. At the time of writing, LTH-NUPL is at 0.66, which resides between levels associated with the pre-euphoria phase 🟢. This condition has been in play for 96-days, which is a very similar duration to the 2016-17 cycle. Live Chart Using the Long-Term Holder Spending Binary Indicator, we can identify periods where strong spending by this cohort is underway. During these events, the aggregate balance held by LTHs declines consistently, and significantly. From this, we can identify the following LTH-spending regimes: Weak Spending 🟩 where LTH supply declines for at least 3 of the last 15-days. Moderate Spending 🟧 where LTH supply declines for at least 8 of the last 15-days. Strong Spending 🟥 where LTH supply declines for more than 12 of the last 15-days. Live Workbench The next chart has been designed to combine both of the previous models to assess LTH sentiment and behavior. This combines the incentive for this cohort to take profits with their actual spending behaviour. We consider four regimes describing shifts in LTH divestment and behavior patterns: Capitulation 🟥 where spot price is lower than the LTH cost basis, and therefore any strong spending is likely associated with fear and capitulation. Transition 🟧 where price trades slightly above the LTH cost basis, and with occasional light spending. This is considered to be associated with typical day-to-day activity. Equilibrium 🟨 after recovering from a prolonged bear, where the market seeks a new balance between a light inflow of new demand, lighter liquidity, and a gradual divestment by underwater holders from the previous cycle. Strong LTH spending during this stage is usually associated with sudden rallies or corrections. Euphoria 🟩 as LTH-MVRV trades above 3.5, and is historically aligned with the market hitting the prior cycle ATH. The LTH cohort holds upwards of +250% in unrealized profits on average. The market enters a euphoric rise, which motivates these investors to spend at very high and accelerating rates. Using this stencil, we can see an elevated spending regime by LTHs throughout Q4 2023 and into 2024 Q1. This puts the market into the equilibrium regime over this period. Live Workbench Dissecting the Spending By Strong Hands The previous metric considers periods when the aggregate Long-Term Holder supply declines. Similarly, the Short-Term Holder cohort, we can also inspect which sub-age-groups are responsible for the sell-side pressure. Live Chart To assess the contribution of each sub-group of LTH spending, we have highlighted the days when their spending volume is at least one standard deviation above the yearly average. Whilst there are occasional bursts of spending activity for each cohort, the frequency of high-spending days increases dramatically during the euphoria phase of a bull market. This highlights the relatively consistent behaviour pattern of long-term investors taking profits during periods of rapid price appreciation. Live Workbench Given only 4%-8% of daily on-chain volume corresponds to LTHs, we can leverage another core on-chain metric to explain the relative weight of these investors on the supply side. Live Chart Despite their small share of spent volume, LTH coins are typically moving at significantly higher (or lower) prices than when they were initially acquired. Therefore, the magnitude of the realized profit or loss via spent coins provides a valuable lens into their behavior patterns. The chart below captures the cumulative volume of realized profit locked in by long-term holders during bull markets. What we find is that LTHs typically account for between 20% and 40% of the total profit locked in over time. Despite their volume being just 4% to 8% of the daily total, the LTH cohort accounts for up to 40% of the profit taking by investors. Live Workbench Conclusion With sideways price action dominating since early March, we leveraged the cost-basis of both long and short-term investors to assess the current degree of supply and demand in the market. Utilizing the change in Short-Term investors' sub-cohorts’ cost basis, we constructed a toolbox that estimates the momentum of capital flow into the network. The results confirmed that the ATH in March was followed by an interval of capital outflow (negative momentum). Following on, we dissected the Long-Term Holder spending into different age sub-cohorts. The conclusion indicated that the frequency of high-spending days increases dramatically during the euphoria phase of a bull market. Interestingly, the Long-Term Holders volume accounts for a only marginal 4% to 8% of the daily total, however, the cohort represents a substantial 40% of the profit taken by investors. Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data. Join our Telegram channel For on-chain metrics, dashboards, and alerts, visit Glassnode Studio For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Sizing Up Diamond Hands

Executive Summary

The market has effectively traded sideways since the $73k all-time-high which was set in March. By our estimates, demand momentum has turned negative since early May.

We analyse the cost-basis of short-term investors as a method to inspect capital flows into the market.

To analyze the supply side, we refer to long-term holders, and identify that the unrealized profit held by this cohort is statistically far from historical peaks.

Looking at the spending behaviour of long-term holders, it can be seen that although the spent volume by these players constitutes only 4%-8% of the total volume, the profits realized from this spending typically account for 30%-40% of cumulative profits realized over bull markets. This finding underlines the concentration of wealth in older coins gradually paying back the diamond hands over the bull market.

💡 View all charts in this edition in The Week On-chain Dashboard. Tracking Demand

In WoC 18, we explored a methodology to identify the direction and intensity of capital flows in or out of the market. We consider a framework utilizing the average cost-basis of various age brackets within the short-term holder cohort:

When the cost basis of these cohorts is in an uptrend, it suggests capital flows into the market as new buyers acquire coins at higher prices (and vice versa for downtrends).

As spot prices deviate above or below the cost basis, we can approximate the degree of unrealized profit held by each group via the MVRV Ratio.

We can consider MVRV values to be a gauge on the incentive for investors to take profits (high values), or an indicator of seller exhaustion (low values).

We will start by comparing the spot price in relation to the cost basis of two cohorts:

🟠 Holders with 1-week to 1-month old coins.

🔴 Holders with 1 to 3-month old coins.

From this, we can identify when macro tides change in capital flows during the early stages of the bull and bear phases. The chart below presents how these two price models have provided market support during the 2023-24 bull.

Since mid-June, the spot price has plunged below the cost basis of both the 1w-1m holders 🟠($68.5k) and 1m-3m holders 🔴 ($66.4k). If this structure persists, it has historically resulted in a deterioration of investor confidence, and risks this correction being deeper and taking longer to recover from.

Live Workbench

We can also characterise market momentum by comparing the cost basis of these cohorts to each other. The chart below highlights:

Capital Inflows 🟦 when the cost basis of the 1w-1m holders trades above the 1m-3m cost basis. This underscores a positive momentum in demand, and, attracting new capital into the market

Capital Outflows 🟪 when the cost basis of the 1w-1m holders plunges below the 1m-3m cost basis. This structure signals a diminishing momentum in the demand side, and a net capital outflow from the asset.

During previous bull markets, a negative capital flow structure has occurred up to five times. We can also see that this structure has been in play since May and into early June.

Live Workbench Navigating the Supply Side

To achieve a complete macro view of the current market, we can leverage metrics which describe the behavior of Long-term holders (LTHs). The LTH cohort is the primary actor on the supply side during bull markets as they distribute coins and take profits. Market cycle tops are established, in part, when LTHs ramp up their selling intensity until it overwhelms and exhausts demand.

The following chart compares the spot price against significant multiples applied to the average cost basis of the LTH cohort (LTH Realized Price).

1.0 * LTH Realized Price 🟢 historically aligns with the bottom formation phase of the bear cycle and into the market recovery.

1.5 * LTH Realized Price 🟠 delineates the recovery phase from a longer-term equilibrium phase of the bull. Price tends to experience a slower rate of growth, and on average, LTHs are holding an unrealized profit is around +50%.

3.5 * LTH Realized Price 🔴 provides a distinguishing boundary between the equilibrium phase, and the euphoria phases of the bull market. This is a point where price tends to appreciate quickly, and LTHs tend to increase their distribution pressure due to being at an unrealized profit of 250% or more.

If we apply this framework to recent cycles, we can see that the ongoing bull has been very similar to the 2017 cycle from a macro perspective. In particular, the recent consolidation phase near the previous ATH aligns with the equilibrium to euphoria boundary described by the 3.5 multiple applied to the LTH-Realized Price 🔴.

Live Workbench

The magnitude of unrealized profit held by LTHs can be considered as a measurement of the incentive for this group to spend coins, and take chips off the table. We can visualise this psychological incentive using the LTH-NUPL metric.

At the time of writing, LTH-NUPL is at 0.66, which resides between levels associated with the pre-euphoria phase 🟢. This condition has been in play for 96-days, which is a very similar duration to the 2016-17 cycle.

Live Chart

Using the Long-Term Holder Spending Binary Indicator, we can identify periods where strong spending by this cohort is underway. During these events, the aggregate balance held by LTHs declines consistently, and significantly.

From this, we can identify the following LTH-spending regimes:

Weak Spending 🟩 where LTH supply declines for at least 3 of the last 15-days.

Moderate Spending 🟧 where LTH supply declines for at least 8 of the last 15-days.

Strong Spending 🟥 where LTH supply declines for more than 12 of the last 15-days.

Live Workbench

The next chart has been designed to combine both of the previous models to assess LTH sentiment and behavior. This combines the incentive for this cohort to take profits with their actual spending behaviour.

We consider four regimes describing shifts in LTH divestment and behavior patterns:

Capitulation 🟥 where spot price is lower than the LTH cost basis, and therefore any strong spending is likely associated with fear and capitulation.

Transition 🟧 where price trades slightly above the LTH cost basis, and with occasional light spending. This is considered to be associated with typical day-to-day activity.

Equilibrium 🟨 after recovering from a prolonged bear, where the market seeks a new balance between a light inflow of new demand, lighter liquidity, and a gradual divestment by underwater holders from the previous cycle. Strong LTH spending during this stage is usually associated with sudden rallies or corrections.

Euphoria 🟩 as LTH-MVRV trades above 3.5, and is historically aligned with the market hitting the prior cycle ATH. The LTH cohort holds upwards of +250% in unrealized profits on average. The market enters a euphoric rise, which motivates these investors to spend at very high and accelerating rates.

Using this stencil, we can see an elevated spending regime by LTHs throughout Q4 2023 and into 2024 Q1. This puts the market into the equilibrium regime over this period.

Live Workbench Dissecting the Spending By Strong Hands

The previous metric considers periods when the aggregate Long-Term Holder supply declines. Similarly, the Short-Term Holder cohort, we can also inspect which sub-age-groups are responsible for the sell-side pressure.

Live Chart

To assess the contribution of each sub-group of LTH spending, we have highlighted the days when their spending volume is at least one standard deviation above the yearly average.

Whilst there are occasional bursts of spending activity for each cohort, the frequency of high-spending days increases dramatically during the euphoria phase of a bull market. This highlights the relatively consistent behaviour pattern of long-term investors taking profits during periods of rapid price appreciation.

Live Workbench

Given only 4%-8% of daily on-chain volume corresponds to LTHs, we can leverage another core on-chain metric to explain the relative weight of these investors on the supply side.

Live Chart

Despite their small share of spent volume, LTH coins are typically moving at significantly higher (or lower) prices than when they were initially acquired. Therefore, the magnitude of the realized profit or loss via spent coins provides a valuable lens into their behavior patterns.

The chart below captures the cumulative volume of realized profit locked in by long-term holders during bull markets. What we find is that LTHs typically account for between 20% and 40% of the total profit locked in over time.

Despite their volume being just 4% to 8% of the daily total, the LTH cohort accounts for up to 40% of the profit taking by investors.

Live Workbench Conclusion

With sideways price action dominating since early March, we leveraged the cost-basis of both long and short-term investors to assess the current degree of supply and demand in the market.

Utilizing the change in Short-Term investors' sub-cohorts’ cost basis, we constructed a toolbox that estimates the momentum of capital flow into the network. The results confirmed that the ATH in March was followed by an interval of capital outflow (negative momentum).

Following on, we dissected the Long-Term Holder spending into different age sub-cohorts. The conclusion indicated that the frequency of high-spending days increases dramatically during the euphoria phase of a bull market. Interestingly, the Long-Term Holders volume accounts for a only marginal 4% to 8% of the daily total, however, the cohort represents a substantial 40% of the profit taken by investors.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio

For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Establishing EquilibriumExecutive Summary Despite chaotic price action, investor profitability remains robust, with the average coin holding an unrealized profit of around 120%. The demand side has been sufficient to absorb sell-side pressure and HODLer divestment but insufficient to promote further upward growth. The cash-and-carry trade continues, with a particular uptick by institutional traders, reinforcing an expectation of range-bound trading for the time being. 💡 View all charts in this edition in The Week On-chain Dashboard. Market Profitability Remains Robust Sideways price movement tends to manifest as investor boredom and apathy, which appears to be the dominant response across all Bitcoin markets. BTC prices are consolidating within a well-established trade range. Investors remain in a generally favourable position, with over 87% of the circulating supply held in profit, with a cost basis below the spot price. Live Chart Employing the MVRV metric, we can assess the magnitude of unrealized profit the average investor is holding. Currently, the average coin holds an unrealized profit of around +120%, typical of previous markets trading around the previous cycle ATH. The MVRV Ratio remains above its yearly baseline, suggesting that the macro uptrend remains intact. Live Workbench We can use the MVRV Ratio to define pricing bands which assess points of extreme deviations in investor profitability relative to the long-term mean. Historically, breakouts above 1 standard deviation have aligned with longer-term macro topping formations. Currently, the BTC price is stabilizing and consolidating between the 0.5 and 1 standard deviation range. This again highlights the statistically high profit the average investor is holding despite the recent choppy market conditions. Live Workbench When the market decisively punched above the 2021 ATH, significant investor distribution occurred, driven largely by the Long-Term Holder cohort. This reflected a substantial profit being made, which acts to increase the actively traded and liquid supply. Typically, in the immediate aftermath of a new ATH, the market needs ample time to consolidate and digest the introduced supply overhang. As an equilibrium is established, this leads to a decline in both realized profits and sell-side pressure. This reduction in sell-side pressure and profit-taking naturally reduces overhead market resistance. Nevertheless, the BTC price has been unable to sustain a palpable upward rally since the March ATH. This demonstrates that while the demand side is stable enough to keep the market range bound, it is ultimately not increasing sufficiently to reestablish upward momentum. Live Workbench Lackluster Volume Despite healthy investor profitability, the magnitude of volume being processed and transferred on the Bitcoin Network following the ATH has declined drastically. This underscores a reduced appetite for speculation and heightened indecision in the market. Live Chart A similar story can be observed when assessing the Spot Volume traded across major centralized exchanges. This demonstrates the strong correlation between onchain network settlement volumes and trade volumes, echoing a sentiment of boredom amongst investors. Live Chart Exchange Activity Tumbles Moving one level deeper, we can inspect the onchain inflows to exchanges in a BTC denomination, we note once more a considerable reduction in activity. At present, Short-Term Holders are sending around +17.4k BTC/day to exchanges. However, this is markedly lower than the peak of +55k BTC/day recorded as the market hit the $73k ATH in March, where speculation levels were becoming excessive. Conversely, Long-Term Holder distribution into exchanges is relatively low, with only a marginal 1k+ BTC/day in inflows currently. Live Workbench We can visualize the stark decline in LTH investor activity via the percentage of Long-term Holder balances sent to exchanges. LTHs are sending less than 0.006% of their total holdings into exchanges, suggesting that this cohort has reached equilibrium and that higher or lower prices are required to stimulate further action. Live Workbench More coins are currently being transferred in a position of profit (+11k BTC) than in loss (+8.2k BTC). This suggests that a profit driven bias remains overall, albeit by a relatively small margin. Live Workbench Currently, the average coin sent to Exchanges is realizing a profit of around +$5.5k and a -$735 haircut, respectively, for coins sent in the loss. This puts the average profit at 7.5x larger than losses, and only 14.5% of trading days have recorded a higher value in this ratio. This infers that HODLers are still divesting, and demand is sufficient to absorb the sell-side pressure but not large enough to push market prices higher. This suggests that the market structure is more beneficial for range traders and arbitrage strategies rather than directional and trend trading strategies. Live Workbench Cash and Carry Basis Trades Another tool that enables us to characterize spot markets is the Spot Cumulative Volume Delta (CVD). This metric describes the net bias in market taker buy vs sell volume, measured in USD. At the moment, a net sell-side bias dominates the spot market, however, the market continues to trend sideways. This confluences the aforementioned idea that the demand-side is approximately equivalent to the sell-side pressure, keeping the market range bound. Live Chart Assessing the futures market, we note a sustained elevation in open interest, currently over $30B, and just shy of its previous ATH. However, as highlighted in WoC-23, a substantial portion of this open interest is related to the market-neutral cash-and-carry basis trade. In a range-bound market, increases in open interest can signify an uptick of volatility capture strategies as traders collect the premium available in the perpetual swap, futures, and options markets. Live Chart The considerable growth of open interest at the CME Group exchange highlights a growing presence of institutional investors. The CME Group exchange currently hosts over $10B in OI, representing just under a third of the global market share. Live Chart In contrast to the rising open interest, futures trade volumes have experienced a similar decline to spot markets and onchain transfer volumes. This suggests a relatively light appetite for speculation, and a higher dominance from set-and-forget basis trade and arbitrage positions. Live Chart Summary and Conclusions Despite the choppy and sideways market conditions the average Bitcoin investor has remained largely profitable. However, investor decisiveness has declined as signified by contracting volumes across spot, and derivatives market, and also in on-chain settlement. An equilibrium in both the demand and sell-side appears to be established, resulting in relatively stable prices, and a notable lack in volatility. This stagnation in market movement translates into a degree of boredom, apathy, and indecision by investors. Historically, this suggests that a decisive price movement in either direction is necessary to stimulate the next round of market activity. Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data. Join our Telegram channel For on-chain metrics, dashboards, and alerts, visit Glassnode Studio For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Establishing Equilibrium

Executive Summary

Despite chaotic price action, investor profitability remains robust, with the average coin holding an unrealized profit of around 120%.

The demand side has been sufficient to absorb sell-side pressure and HODLer divestment but insufficient to promote further upward growth.

The cash-and-carry trade continues, with a particular uptick by institutional traders, reinforcing an expectation of range-bound trading for the time being.

💡 View all charts in this edition in The Week On-chain Dashboard. Market Profitability Remains Robust

Sideways price movement tends to manifest as investor boredom and apathy, which appears to be the dominant response across all Bitcoin markets. BTC prices are consolidating within a well-established trade range. Investors remain in a generally favourable position, with over 87% of the circulating supply held in profit, with a cost basis below the spot price.

Live Chart

Employing the MVRV metric, we can assess the magnitude of unrealized profit the average investor is holding.

Currently, the average coin holds an unrealized profit of around +120%, typical of previous markets trading around the previous cycle ATH. The MVRV Ratio remains above its yearly baseline, suggesting that the macro uptrend remains intact.

Live Workbench

We can use the MVRV Ratio to define pricing bands which assess points of extreme deviations in investor profitability relative to the long-term mean. Historically, breakouts above 1 standard deviation have aligned with longer-term macro topping formations.

Currently, the BTC price is stabilizing and consolidating between the 0.5 and 1 standard deviation range. This again highlights the statistically high profit the average investor is holding despite the recent choppy market conditions.

Live Workbench

When the market decisively punched above the 2021 ATH, significant investor distribution occurred, driven largely by the Long-Term Holder cohort. This reflected a substantial profit being made, which acts to increase the actively traded and liquid supply.

Typically, in the immediate aftermath of a new ATH, the market needs ample time to consolidate and digest the introduced supply overhang. As an equilibrium is established, this leads to a decline in both realized profits and sell-side pressure.

This reduction in sell-side pressure and profit-taking naturally reduces overhead market resistance. Nevertheless, the BTC price has been unable to sustain a palpable upward rally since the March ATH. This demonstrates that while the demand side is stable enough to keep the market range bound, it is ultimately not increasing sufficiently to reestablish upward momentum.

Live Workbench Lackluster Volume

Despite healthy investor profitability, the magnitude of volume being processed and transferred on the Bitcoin Network following the ATH has declined drastically. This underscores a reduced appetite for speculation and heightened indecision in the market.

Live Chart

A similar story can be observed when assessing the Spot Volume traded across major centralized exchanges. This demonstrates the strong correlation between onchain network settlement volumes and trade volumes, echoing a sentiment of boredom amongst investors.

Live Chart Exchange Activity Tumbles

Moving one level deeper, we can inspect the onchain inflows to exchanges in a BTC denomination, we note once more a considerable reduction in activity.

At present, Short-Term Holders are sending around +17.4k BTC/day to exchanges. However, this is markedly lower than the peak of +55k BTC/day recorded as the market hit the $73k ATH in March, where speculation levels were becoming excessive. Conversely, Long-Term Holder distribution into exchanges is relatively low, with only a marginal 1k+ BTC/day in inflows currently.

Live Workbench

We can visualize the stark decline in LTH investor activity via the percentage of Long-term Holder balances sent to exchanges.

LTHs are sending less than 0.006% of their total holdings into exchanges, suggesting that this cohort has reached equilibrium and that higher or lower prices are required to stimulate further action.

Live Workbench

More coins are currently being transferred in a position of profit (+11k BTC) than in loss (+8.2k BTC). This suggests that a profit driven bias remains overall, albeit by a relatively small margin.

Live Workbench

Currently, the average coin sent to Exchanges is realizing a profit of around +$5.5k and a -$735 haircut, respectively, for coins sent in the loss. This puts the average profit at 7.5x larger than losses, and only 14.5% of trading days have recorded a higher value in this ratio.

This infers that HODLers are still divesting, and demand is sufficient to absorb the sell-side pressure but not large enough to push market prices higher. This suggests that the market structure is more beneficial for range traders and arbitrage strategies rather than directional and trend trading strategies.

Live Workbench Cash and Carry Basis Trades

Another tool that enables us to characterize spot markets is the Spot Cumulative Volume Delta (CVD). This metric describes the net bias in market taker buy vs sell volume, measured in USD.

At the moment, a net sell-side bias dominates the spot market, however, the market continues to trend sideways. This confluences the aforementioned idea that the demand-side is approximately equivalent to the sell-side pressure, keeping the market range bound.

Live Chart

Assessing the futures market, we note a sustained elevation in open interest, currently over $30B, and just shy of its previous ATH. However, as highlighted in WoC-23, a substantial portion of this open interest is related to the market-neutral cash-and-carry basis trade.

In a range-bound market, increases in open interest can signify an uptick of volatility capture strategies as traders collect the premium available in the perpetual swap, futures, and options markets.

Live Chart

The considerable growth of open interest at the CME Group exchange highlights a growing presence of institutional investors. The CME Group exchange currently hosts over $10B in OI, representing just under a third of the global market share.

Live Chart

In contrast to the rising open interest, futures trade volumes have experienced a similar decline to spot markets and onchain transfer volumes. This suggests a relatively light appetite for speculation, and a higher dominance from set-and-forget basis trade and arbitrage positions.

Live Chart Summary and Conclusions

Despite the choppy and sideways market conditions the average Bitcoin investor has remained largely profitable. However, investor decisiveness has declined as signified by contracting volumes across spot, and derivatives market, and also in on-chain settlement.

An equilibrium in both the demand and sell-side appears to be established, resulting in relatively stable prices, and a notable lack in volatility. This stagnation in market movement translates into a degree of boredom, apathy, and indecision by investors. Historically, this suggests that a decisive price movement in either direction is necessary to stimulate the next round of market activity.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio

For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Dissecting DivergencesExecutive Summary In the advent of the Runes protocol, a counterintuitive divergence has formed between declining active addresses and increasing transaction counts. Major labelled entities now hold a staggering ~4.23M BTC, accounting for over 27% of the adjusted supply, with US Spot ETFs now commanding a balance of 862k BTC. The Cash-and-Carry trade structure appears to be a meaningful source of ETF inflow demand, with the ETFs being utilized as the instrument for obtaining the long spot exposure, whilst an increasingly large net short position for Bitcoin accrues in the CME Group futures market. 💡 View all charts in this edition in The Week On-Chain Dashboard. A Divergence in Activity Onchain activity metrics like active addresses, transactions, and volumes provide a valuable toolkit to analyse the growth and performance of blockchain networks. When China imposed restrictions on Bitcoin mining in mid-2021, the number of Active Addresses on the Bitcoin network experienced an aggressive decline, plunging from over ~1.1M/day to just ~800k/day. The Bitcoin network is currently experiencing similar contraction in network activity, albeit, with entirely different drivers. In the following sections, we shall explore how the advent of Inscriptions, Ordinals, BRC-20s, and Runes have significantly altered how on-chain analysts should perceive activity metrics moving forwards. Live Workbench Despite the historical confluence between strong market momentum, and an expansion of active addresses and transaction counts per day, a deviation in this trend is underway. Whilst active addressees appear to be collapsing, the amount of transactions processed by the network has seen is near new all-time-highs. The present monthly average transaction count resides at 617k/day, which is 31% above the yearly average, and signifies a relatively high demand for Bitcoin blockspace. Live Workbench If we compare the recent decline of active addresses with the share of transactions attributed to inscriptions and BRC-20 tokens, we can observe a strong correlation. Of note, Inscription counts have also fallen off a cliff since mid April. This suggests that the initial driver of the decline in address activity is largely due to reduction in inscription and ordinals usage. It is important to note that many wallets and protocols within this sector reuse addresses, which are not double counted if the address is active more than once in a daily period. As such, if a single address generates ten transactions in a day, it would appear as one active address, but ten transactions. Live Chart To illustrate how the inscriptions sector has grown since early 2023, we can see how the cumulative total inscription count has expanded. The number of inscriptions has reached 71M at the time of writing, however, since mid-April this year, the popularity of the protocol has declined markedly. Live Chart To explain the decline in inscription activity, we must highlight the emergence of the Runes protocol, which claims to be a more efficient method to introduce fungible tokens on Bitcoin. Runes went live on the halving block, which explains the inscription drop off in in mid-April. Runes follow a different mechanism to Inscriptions and BRC-20 tokens, by utilziing the OP_RETURN field (80 bytes). This allows the protocol to encode arbitrary data to the chain whilst requiring significantly less blockspace. With the Runes Protocol launching at the time of halving (20 April 2024), the demand for runes transactions skyrocketed to between 600k and 800k per day, and has remained elevated since. Image Metric Runes-related transactions have now largely displaced BRC-20 tokens, as well as Ordinals and Inscriptions, commanding an impressive 57.2% of daily transactions. This indicates that collector speculation has likely shifted from Inscriptions to the Runes market. Image Metric A Divergence in ETF Demand Another recent divergence which has garnered attention is the stagnant, sideways movement of price despite the impressive inflows into the US Spot ETFs. To ground and assess the ETF demand-side, we can compare the ETF balance (862k BTC) to other major labelled entities. US Spot ETF = 862k BTC Mt. Gox Trustee = 141k BTC US Government = 207k BTC All Exchanges = 2.3M BTC Miners (Exc. Patoshi) = 706k BTC The aggregated balance of all these entities is estimated to be ~4.23M, which accounts for 27% of the overall adjusted circulating supply (which is the total supply minus coins that have remained dormant for more than seven years). Live Workbench Coinbase as an entity holds a vast fraction of both aggregate exchange balances, as well the US Spot ETF balances via its custody service. The Coinbase Exchange and Coinbase Custody entities currently hold an estimated 270k and 569k BTC respectively. Image Metric With Coinbase serving both ETF clients and conventional on-chain asset holders, the gravity of the exchange in the market pricing process has become significant. Evaluating the number of Whale Deposits to Coinbase exchange wallets, we can see a considerable increase in deposit transactions following the launch of the ETFs. However, we note a significant portion of the deposits are associated with the outflows from the GBTC address cluster, which has been a long-standing supply overhead throughout the year. Live Workbench In addition to GBTC selling pressure as the market rallied to new ATHs, another factor has recently contributed to the dampening of US Spot ETF demand pressure. Looking at the CME Group futures market, open Interest has stabilized above $8B, after setting a new record high of $11.5B in March 2024. This may signal that an increasing number of traders from traditional markets are adopting a cash-and-carry-arbitrage strategy. This arbitrage involves a market-neutral position, coupling the purchase of a long spot position, and the sale (short) of a position in a futures contract of the same underlying asset which is trading at a premium. Live Chart We can see that entities categorised as hedge funds are building up an increasingly large net short position for Bitcoin. This provides confluence that the cash-and-carry trade structure may be a meaningful source of ETF inflow demand, where the ETFs are the instrument for obtaining the long spot exposure. The CME Group exchange has also seen a dramatic increase in both open interest, and overall market dominance since 2023, suggesting it is becoming a preferred venue for hedge funds to shorting futures via the CME Group exchange. At present, Hedge Funds are net short in both CME Bitcoin and Micro CME Bitcoin markets by $6.33B and $97M, respectively. CME COTs - THE BLOCK Summary and Conclusions The drastic divergence between activity metrics has been accelerated by the extreme popularity of the Runes protocol, which utilizes significant address reuse where singular addresses are generating multiple transactions. The emergence and magnitude of the Cash-and-Carry trade between long US Spot ETF products and shorting futures via the CME Group exchange has largely neutered the buy-side inflows into ETFs. This has resulted in a relatively neutral impact on market prices, suggesting organic buy-side from non-arbitrage demand is required to further stimulate positive price action. Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data. Join our Telegram channel For on-chain metrics, dashboards, and alerts, visit Glassnode Studio For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Dissecting Divergences

Executive Summary

In the advent of the Runes protocol, a counterintuitive divergence has formed between declining active addresses and increasing transaction counts.

Major labelled entities now hold a staggering ~4.23M BTC, accounting for over 27% of the adjusted supply, with US Spot ETFs now commanding a balance of 862k BTC.

The Cash-and-Carry trade structure appears to be a meaningful source of ETF inflow demand, with the ETFs being utilized as the instrument for obtaining the long spot exposure, whilst an increasingly large net short position for Bitcoin accrues in the CME Group futures market.

💡 View all charts in this edition in The Week On-Chain Dashboard. A Divergence in Activity

Onchain activity metrics like active addresses, transactions, and volumes provide a valuable toolkit to analyse the growth and performance of blockchain networks. When China imposed restrictions on Bitcoin mining in mid-2021, the number of Active Addresses on the Bitcoin network experienced an aggressive decline, plunging from over ~1.1M/day to just ~800k/day.

The Bitcoin network is currently experiencing similar contraction in network activity, albeit, with entirely different drivers. In the following sections, we shall explore how the advent of Inscriptions, Ordinals, BRC-20s, and Runes have significantly altered how on-chain analysts should perceive activity metrics moving forwards.

Live Workbench

Despite the historical confluence between strong market momentum, and an expansion of active addresses and transaction counts per day, a deviation in this trend is underway.

Whilst active addressees appear to be collapsing, the amount of transactions processed by the network has seen is near new all-time-highs. The present monthly average transaction count resides at 617k/day, which is 31% above the yearly average, and signifies a relatively high demand for Bitcoin blockspace.

Live Workbench

If we compare the recent decline of active addresses with the share of transactions attributed to inscriptions and BRC-20 tokens, we can observe a strong correlation. Of note, Inscription counts have also fallen off a cliff since mid April.

This suggests that the initial driver of the decline in address activity is largely due to reduction in inscription and ordinals usage. It is important to note that many wallets and protocols within this sector reuse addresses, which are not double counted if the address is active more than once in a daily period. As such, if a single address generates ten transactions in a day, it would appear as one active address, but ten transactions.

Live Chart

To illustrate how the inscriptions sector has grown since early 2023, we can see how the cumulative total inscription count has expanded. The number of inscriptions has reached 71M at the time of writing, however, since mid-April this year, the popularity of the protocol has declined markedly.

Live Chart

To explain the decline in inscription activity, we must highlight the emergence of the Runes protocol, which claims to be a more efficient method to introduce fungible tokens on Bitcoin. Runes went live on the halving block, which explains the inscription drop off in in mid-April.

Runes follow a different mechanism to Inscriptions and BRC-20 tokens, by utilziing the OP_RETURN field (80 bytes). This allows the protocol to encode arbitrary data to the chain whilst requiring significantly less blockspace.

With the Runes Protocol launching at the time of halving (20 April 2024), the demand for runes transactions skyrocketed to between 600k and 800k per day, and has remained elevated since.

Image Metric

Runes-related transactions have now largely displaced BRC-20 tokens, as well as Ordinals and Inscriptions, commanding an impressive 57.2% of daily transactions. This indicates that collector speculation has likely shifted from Inscriptions to the Runes market.

Image Metric A Divergence in ETF Demand

Another recent divergence which has garnered attention is the stagnant, sideways movement of price despite the impressive inflows into the US Spot ETFs. To ground and assess the ETF demand-side, we can compare the ETF balance (862k BTC) to other major labelled entities.

US Spot ETF = 862k BTC

Mt. Gox Trustee = 141k BTC

US Government = 207k BTC

All Exchanges = 2.3M BTC

Miners (Exc. Patoshi) = 706k BTC

The aggregated balance of all these entities is estimated to be ~4.23M, which accounts for 27% of the overall adjusted circulating supply (which is the total supply minus coins that have remained dormant for more than seven years).

Live Workbench

Coinbase as an entity holds a vast fraction of both aggregate exchange balances, as well the US Spot ETF balances via its custody service. The Coinbase Exchange and Coinbase Custody entities currently hold an estimated 270k and 569k BTC respectively.

Image Metric

With Coinbase serving both ETF clients and conventional on-chain asset holders, the gravity of the exchange in the market pricing process has become significant. Evaluating the number of Whale Deposits to Coinbase exchange wallets, we can see a considerable increase in deposit transactions following the launch of the ETFs.

However, we note a significant portion of the deposits are associated with the outflows from the GBTC address cluster, which has been a long-standing supply overhead throughout the year.

Live Workbench

In addition to GBTC selling pressure as the market rallied to new ATHs, another factor has recently contributed to the dampening of US Spot ETF demand pressure.

Looking at the CME Group futures market, open Interest has stabilized above $8B, after setting a new record high of $11.5B in March 2024. This may signal that an increasing number of traders from traditional markets are adopting a cash-and-carry-arbitrage strategy.

This arbitrage involves a market-neutral position, coupling the purchase of a long spot position, and the sale (short) of a position in a futures contract of the same underlying asset which is trading at a premium.

Live Chart

We can see that entities categorised as hedge funds are building up an increasingly large net short position for Bitcoin.

This provides confluence that the cash-and-carry trade structure may be a meaningful source of ETF inflow demand, where the ETFs are the instrument for obtaining the long spot exposure. The CME Group exchange has also seen a dramatic increase in both open interest, and overall market dominance since 2023, suggesting it is becoming a preferred venue for hedge funds to shorting futures via the CME Group exchange.

At present, Hedge Funds are net short in both CME Bitcoin and Micro CME Bitcoin markets by $6.33B and $97M, respectively.

CME COTs - THE BLOCK Summary and Conclusions

The drastic divergence between activity metrics has been accelerated by the extreme popularity of the Runes protocol, which utilizes significant address reuse where singular addresses are generating multiple transactions.

The emergence and magnitude of the Cash-and-Carry trade between long US Spot ETF products and shorting futures via the CME Group exchange has largely neutered the buy-side inflows into ETFs. This has resulted in a relatively neutral impact on market prices, suggesting organic buy-side from non-arbitrage demand is required to further stimulate positive price action.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio

For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Room to GrowExecutive Summary The majority of Bitcoin investors are holding unrealized profits, and the first signs of speculation appetite is returning to the market after two months of sideways trading. The Short-Term Holder cohort are shouldering the vast majority of market losses, a condition typically observed during bull market corrections from new ATHs. Both Long and Short-Term Holders have experienced a reset in their Sell-Side Risk ratio, suggesting a new equilibrium has been found. This indicates that the market is ready to move, and volatility expectations for the near future should be heightened. 💡 View all charts in this edition in The Week On-Chain Dashboard. Mt Gox on the Move On 28-May-2024, the market reacted to an internal wallet consolidation by the Mt.Gox Trustee, the legal entity who custodies the 141k BTC from the failed exchange. After more than a decade, this is the first indication that the long awaited Mt.Gox distribution event is on the horizon. Mark Karpeles, the former CEO of Mt.Gox, confirmed that the nature of the coin movement was due to internal wallet management in preparation for distribution back to creditors. Distributions are expected to be completed by October this year. As far as I know everything is fine with MtGox. The trustee is moving coins to a different wallet in preparation of the distribution that will likely happen this year, there is no imminent sale of bitcoins happening. — Mark Karpelès (@MagicalTux) May 28, 2024 Evaluating the Mt.Gox balance, we can visualize this event leveraging Glassnodes Point-in-Time (PiT) metrics. PiT metrics are immutable, and reflect the state of each metric using all known wallet clusters at the time of observation. The standard MtGox Balance metric is mutable, and reflects the best estimate across all points in time. This demonstrates the learning behaviour and clustering of Glassnode metrics as it tracks entity wallets. Here we can see the internal wallet management, where over 141k BTC were moved over several tranches throughout the day of 28-May. Live Workbench Capital Flows and Composition A major impact of such a large pool of long-dormant coins being spent is that unfiltered metrics like Realized Cap, SOPR, and Coindays destroyed will show a large spike associated with these Mt Gox coins. Theoretically, these coins have been revalued to a higher cost-basis during the wallet management transactions. We can utilize our entity-adjusted variant of the Realized Cap to filter out these non-economical transfers, to maintain a clear picture of capital flows into Bitcoin. The Realized Cap currently resides at an ATH valuation of $580B. However, we can see that the rate of new liquidity inflows has slowed down since late April as the market consolidated. Live Chart The Realized Cap HODL Waves metric can then be used to inspect the composition of this aggregate wealth by age. By isolating coins younger than 3-months old, we are able to evaluate the proportion of liquidity held by ‘new demand’. This cohort currently accounts for a non-trivial 41% of network wealth, providing evidence that a wealth distribution towards new demand is occurring. With respect to historical terminal values across cycles, this wealth transfer often reaches 70%+ saturation by new demand, suggesting that a comparatively smaller volume of supply has been spent and sold by longer-term investors. Live Chart Whilst both inflowing liquidity and appetite for speculation have slowed down over the last 2 months, the reclamation of the $68k level has driven a majority of the Short-Term Holder cohort back into holding an unrealized profit. This indicates that despite recent sideways choppy price action, the majority of recent buyers now have a cost basis which is more favourable and below the current spot price. Live Workbench We can study the average acquisition prices across various age band constituents, and another group of interest are the Single-Cycle holders (coins aged 6m-3y). We note that all components of this group have been holding a significant magnitude of unrealized profit since prices broke above the $40k region. The market absorbed a large magnitude of distribution from this cohort as price rallied into the $73k ATH. We can expect that this cohorts incentive to sell more supply will grow should prices climb high, and elevate their unrealised profit further. Live Workbench A Long-Term Holders Market With the market consolidating just shy of its ATH, we can employing the URPD metric to visualize the BTC supply by the cost basis at which it was acquired. There is a significant cluster of Short-Term Holder coins which have been accumulated in close proximity to the current spot price. This suggests significant investment has taken place within this price region. This however introduces a risk of increased investor sensitivity to any volatile price fluctuations in either direction. Almost all coins held in an unrealized loss are in the Short-Term Holder cohort, which makes sense given the proximity to the prior cycles ATH. Live in Glassnode Engine Room The chart below is a tool describing the proportion of the Short-Term Holder supply which is held in loss. This tool can be used to observe when this cohort experiences heightened sensitivity to changes in price action, particularly when a large volume of supply falls into loss over a short time period. The market recently pulled back to $58k, reflecting a -21% correction, and the largest contraction since the collapse of FTX. At the lows of this move, a staggering 56% (1.9M BTC) of the STH supply moved into a position of loss. However, whilst a large volume of supply was technically underwater, the magnitude of unrealised loss remained in line with typical bull market corrections, and is beginning to abate as the market stabilizes. Live Workbench Turning to Long-Term Holders, we can see that the total volume of LTH Supply held in loss is negligible, with only 4.9k BTC (0.03% of LTH Supply) acquired above the spot price. Given new ATHs were only set in March (less than 155-days ago), these LTH coins in loss are the small few holders who bought the 2021 cycle top, and have held ever since. Live Workbench Another way to visualise this is via the proportion of all supply held in loss, which falls into the LTH cohort. At the bottom of bear markets, LTHs tend to carry the majority of unrealized losses, as speculators are flushed from the market, and the final capitulation results in a major transfer of coin ownership towards high conviction holders. Conversely, during the euphoric phase of the Bull Market, the LTH contribution to the supply held in loss tends towards zero. In parallel, the STHs shoulder the vast majority of market losses, as new demand buys coins near the local and global price peaks. At the moment, the LTHs hold a marginal 0.3% of the supply in loss, whilst subsequently accounting for over 85% of the supply in profit. Live Workbench Room for Growth We can investigate the activity of our Long and Short-Term holder cohorts via analysis of their spending behaviors. For this, we can utilize the Sell-Side Risk Ratio which assesses the absolute value of profit plus loss locked in by investors, in relation to the size of the asset (measured as the Realized Cap). We can consider this metric under the following framework: High values indicate that investors are spending coins at a large profit or loss relative to their cost basis. This condition indicates that the market likely needs to re-find equilibrium, and usually follows a high volatility price move. Low values indicate that the majority of coins are being spent relatively close to their break even cost basis, suggesting a degree of equilibrium has been reached. This condition often signifies an exhaustion of ‘profit and loss’ within the current price range, and usually describes a low volatility environment. Notably, a reset in both profit and loss taking has occurred across the STH cohort, suggesting a degree of equilibrium has been established during the recent sideways price consolidation. Live Workbench For the Long-Term Holder cohort, their Sell-Side Risk ratio increased significantly as profits were taken leading up to and through the $73k ATH. However, in a historical context, their Sell-Side Risk ratio remains at a lower level compared to prior ATH breaks. This implies that the relative magnitude of profit taken by the LTH cohort is small relative to previous market cycles. This may suggest that this cohort is waiting for higher prices before ramping up their distribution pressure. Live Workbench Summary and Conclusion The first glimmers of market speculation appear to be returning after a a multi-month price consolidation. Both new buyers, and single-cycle investors are primarily holding unrealized profits. This observation is bolstered by the fact that only 0.03% of the Long-Term Holders are in a position of loss, which is typical of the early euphoric phase of a bull market. Over the last 2-months, the Sell-Side Risk Ratio for both Long and Short-Term Holders has reset and returned to an equilibrium. This suggests that a majority of profit and loss which was likely to be taken in this price range, has been, and hints to an increased risk of substantial volatility in the near future. Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data. Join our Telegram channel For on-chain metrics, dashboards, and alerts, visit Glassnode Studio For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter

Room to Grow

Executive Summary

The majority of Bitcoin investors are holding unrealized profits, and the first signs of speculation appetite is returning to the market after two months of sideways trading.

The Short-Term Holder cohort are shouldering the vast majority of market losses, a condition typically observed during bull market corrections from new ATHs.

Both Long and Short-Term Holders have experienced a reset in their Sell-Side Risk ratio, suggesting a new equilibrium has been found. This indicates that the market is ready to move, and volatility expectations for the near future should be heightened.

💡 View all charts in this edition in The Week On-Chain Dashboard. Mt Gox on the Move

On 28-May-2024, the market reacted to an internal wallet consolidation by the Mt.Gox Trustee, the legal entity who custodies the 141k BTC from the failed exchange. After more than a decade, this is the first indication that the long awaited Mt.Gox distribution event is on the horizon.

Mark Karpeles, the former CEO of Mt.Gox, confirmed that the nature of the coin movement was due to internal wallet management in preparation for distribution back to creditors. Distributions are expected to be completed by October this year.

As far as I know everything is fine with MtGox. The trustee is moving coins to a different wallet in preparation of the distribution that will likely happen this year, there is no imminent sale of bitcoins happening.

— Mark Karpelès (@MagicalTux) May 28, 2024

Evaluating the Mt.Gox balance, we can visualize this event leveraging Glassnodes Point-in-Time (PiT) metrics. PiT metrics are immutable, and reflect the state of each metric using all known wallet clusters at the time of observation. The standard MtGox Balance metric is mutable, and reflects the best estimate across all points in time. This demonstrates the learning behaviour and clustering of Glassnode metrics as it tracks entity wallets.

Here we can see the internal wallet management, where over 141k BTC were moved over several tranches throughout the day of 28-May.

Live Workbench Capital Flows and Composition

A major impact of such a large pool of long-dormant coins being spent is that unfiltered metrics like Realized Cap, SOPR, and Coindays destroyed will show a large spike associated with these Mt Gox coins. Theoretically, these coins have been revalued to a higher cost-basis during the wallet management transactions.

We can utilize our entity-adjusted variant of the Realized Cap to filter out these non-economical transfers, to maintain a clear picture of capital flows into Bitcoin. The Realized Cap currently resides at an ATH valuation of $580B. However, we can see that the rate of new liquidity inflows has slowed down since late April as the market consolidated.

Live Chart

The Realized Cap HODL Waves metric can then be used to inspect the composition of this aggregate wealth by age. By isolating coins younger than 3-months old, we are able to evaluate the proportion of liquidity held by ‘new demand’.

This cohort currently accounts for a non-trivial 41% of network wealth, providing evidence that a wealth distribution towards new demand is occurring. With respect to historical terminal values across cycles, this wealth transfer often reaches 70%+ saturation by new demand, suggesting that a comparatively smaller volume of supply has been spent and sold by longer-term investors.

Live Chart

Whilst both inflowing liquidity and appetite for speculation have slowed down over the last 2 months, the reclamation of the $68k level has driven a majority of the Short-Term Holder cohort back into holding an unrealized profit.

This indicates that despite recent sideways choppy price action, the majority of recent buyers now have a cost basis which is more favourable and below the current spot price.

Live Workbench

We can study the average acquisition prices across various age band constituents, and another group of interest are the Single-Cycle holders (coins aged 6m-3y). We note that all components of this group have been holding a significant magnitude of unrealized profit since prices broke above the $40k region.

The market absorbed a large magnitude of distribution from this cohort as price rallied into the $73k ATH. We can expect that this cohorts incentive to sell more supply will grow should prices climb high, and elevate their unrealised profit further.

Live Workbench A Long-Term Holders Market

With the market consolidating just shy of its ATH, we can employing the URPD metric to visualize the BTC supply by the cost basis at which it was acquired.

There is a significant cluster of Short-Term Holder coins which have been accumulated in close proximity to the current spot price. This suggests significant investment has taken place within this price region. This however introduces a risk of increased investor sensitivity to any volatile price fluctuations in either direction.

Almost all coins held in an unrealized loss are in the Short-Term Holder cohort, which makes sense given the proximity to the prior cycles ATH.

Live in Glassnode Engine Room

The chart below is a tool describing the proportion of the Short-Term Holder supply which is held in loss. This tool can be used to observe when this cohort experiences heightened sensitivity to changes in price action, particularly when a large volume of supply falls into loss over a short time period.

The market recently pulled back to $58k, reflecting a -21% correction, and the largest contraction since the collapse of FTX. At the lows of this move, a staggering 56% (1.9M BTC) of the STH supply moved into a position of loss.

However, whilst a large volume of supply was technically underwater, the magnitude of unrealised loss remained in line with typical bull market corrections, and is beginning to abate as the market stabilizes.

Live Workbench

Turning to Long-Term Holders, we can see that the total volume of LTH Supply held in loss is negligible, with only 4.9k BTC (0.03% of LTH Supply) acquired above the spot price. Given new ATHs were only set in March (less than 155-days ago), these LTH coins in loss are the small few holders who bought the 2021 cycle top, and have held ever since.

Live Workbench

Another way to visualise this is via the proportion of all supply held in loss, which falls into the LTH cohort. At the bottom of bear markets, LTHs tend to carry the majority of unrealized losses, as speculators are flushed from the market, and the final capitulation results in a major transfer of coin ownership towards high conviction holders.

Conversely, during the euphoric phase of the Bull Market, the LTH contribution to the supply held in loss tends towards zero. In parallel, the STHs shoulder the vast majority of market losses, as new demand buys coins near the local and global price peaks.

At the moment, the LTHs hold a marginal 0.3% of the supply in loss, whilst subsequently accounting for over 85% of the supply in profit.

Live Workbench Room for Growth

We can investigate the activity of our Long and Short-Term holder cohorts via analysis of their spending behaviors. For this, we can utilize the Sell-Side Risk Ratio which assesses the absolute value of profit plus loss locked in by investors, in relation to the size of the asset (measured as the Realized Cap). We can consider this metric under the following framework:

High values indicate that investors are spending coins at a large profit or loss relative to their cost basis. This condition indicates that the market likely needs to re-find equilibrium, and usually follows a high volatility price move.

Low values indicate that the majority of coins are being spent relatively close to their break even cost basis, suggesting a degree of equilibrium has been reached. This condition often signifies an exhaustion of ‘profit and loss’ within the current price range, and usually describes a low volatility environment.

Notably, a reset in both profit and loss taking has occurred across the STH cohort, suggesting a degree of equilibrium has been established during the recent sideways price consolidation.

Live Workbench

For the Long-Term Holder cohort, their Sell-Side Risk ratio increased significantly as profits were taken leading up to and through the $73k ATH.

However, in a historical context, their Sell-Side Risk ratio remains at a lower level compared to prior ATH breaks. This implies that the relative magnitude of profit taken by the LTH cohort is small relative to previous market cycles. This may suggest that this cohort is waiting for higher prices before ramping up their distribution pressure.

Live Workbench Summary and Conclusion

The first glimmers of market speculation appear to be returning after a a multi-month price consolidation. Both new buyers, and single-cycle investors are primarily holding unrealized profits. This observation is bolstered by the fact that only 0.03% of the Long-Term Holders are in a position of loss, which is typical of the early euphoric phase of a bull market.

Over the last 2-months, the Sell-Side Risk Ratio for both Long and Short-Term Holders has reset and returned to an equilibrium. This suggests that a majority of profit and loss which was likely to be taken in this price range, has been, and hints to an increased risk of substantial volatility in the near future.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio

For automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter