The co-founder and chief technical officer of the crypto analytics firm Glassnode says on-chain data shows that Bitcoin (BTC) is headed straight for a supply crunch. The firm’s latest data shows nearly 2,000,000 BTC has shifted from short-term to long-term holders since April of this year. Glassnode’s Rafael Schultze-Kraft says the data clearly shows “supply […]
The post On-Chain Data Shows Bitcoin Supply Will Not Be Able To Meet Demand: Glassnode Co-Founder appeared first on The Daily Hodl.
More than $1 billion worth of Ether has been withdrawn from centralized exchanges within a 24-hour period. It's the second time this year and the price went vertical last time.
More than $1 billion worth of Ether has been removed from centralized exchanges in 24 hours, leading to speculation about imminent price gains for Ethereum as supply shrinks on many trading venues.
According to data shared by crypto analytics provider IntoTheBlock, $1.2 billion worth ETH was withdrawn from centralized exchanges on Sept. 16 to mark a new record in short-term outflows from exchanges.
IntoTheBlock noted that Ether’s price rallied by 60% in the 30 days after $1 billion was pulled from centralized trading platforms in April.
The net amount of $ETH leaving exchanges just hit a new record
— IntoTheBlock (@intotheblock) September 16, 2021
Over $1.2B worth of $ETH left centralized exchanges yesterday
Last time $1B+ left CEXs, #Ethereum increased by 60% within 30 days pic.twitter.com/wfRuX11Rtk
The situation has changed since April however. Last month’s London upgrade introduced a burn mechanism into Ethereum’s fee market, creating increased deflationary pressure on Ether’s supply dynamics.
At the time of writing, 309,505 Ether worth more than $1.1 billion has been burned in the 42 days since EIP-1559 went live, according to Ultrasound Money. As such, Ether has been removed from supply at a rate of roughly 5.05 ETH ($18,061) every minute or $26 million daily since the upgrade.
#ethereum supply on exchanges just keeps dropping, and the price just keeps rising. $10,000 is programmed in already. pic.twitter.com/jRTUYHK4Ca
— Lark Davis (@TheCryptoLark) September 17, 2021
Booming NFT marketplace OpenSea is Ethereum’s leading DApp by burn rate representing more than 14% of all ETH that has been removed from supply, followed by Uniswap V2 with 5.5%, Tether with 4.9%, and Axie Infinity with 3%. Ether transfers have also driven 8.7% of burned Ethereum.
Related: Ethereum options data suggests the battle for $4K ETH is at least a week away
Bitcoin has also seen steady outflows from centralized trading venues since peaking at 17% of supply in May.
According to on-chain analytics firm Glassnode, centralized exchanges’ BTC reserves have fallen to their lowest level since February 2018.
#Bitcoin exchange balances have returned to 13.1% of circulating $BTC supply, winding back the clock on inflows to Feb 2018.
— Yann & Jan (@Negentropic_) September 14, 2021
The all-time peak exchange balance was 17%, hit on the exact bottom of the March 2020 sell-off.
The trend changed that day. pic.twitter.com/CooGIBmaCh
For years analysts have predicted that ETH’s market capitalization will flip BTC’s but data shows it's still nothing more than a guessing game.
After a 13% rise in two days, Bitcoin's (BTC) market capitalization surpassed $800 billion to reach its highest value in 79 days. During the same timeframe, Ether (ETH) accumulated a 45% gain in two weeks, placing the network's market capitalization at $340 billion.
Positive expectations for the London hard fork and its potential deflationary effect undoubtedly played a role, but some investors continue to question how Ether's valuation stacks against Bitcoin. Some, including Pantera Capital CEO Dan Morehead, expect Ether to outpace Bitcoin as the largest cryptocurrency.
Market participants may have also been excited after Minneapolis Federal Reserve President Neel Kashkari suggested that the Fed may stick with the asset-purchase program a bit longer. The reason cited was the Delta variant's spread and its potential harm to the labor market.
Kashkari said:
Extending the stimulus for longer raises the inflationary risk, which increases the attractiveness of scarce assets like real estate, commodities, stocks, and cryptocurrencies. However, the impact of these macroeconomic changes should equally impact Bitcoin and Ether.
Comparing some of Ethereum's metrics could shed some light on whether Ether's 58% discount is justified. The first step should be to measure the number of active addresses, excluding low amounts.
As shown above, Bitcoin has 6 million addresses worth $1,000 or higher, and 3.67 million have been created since 2020. Meanwhile, Ether has less than half at 2.7 million addresses with $1,000. The altcoin's growth has also been slower, with 2.4 million of those created since 2020.
This metric is 55% lower for Ether, and this corroborates the market capitalization gap. However, this analysis does not include how much large clients have invested. Although there is no good way to estimate this number, measuring cryptocurrency exchange-traded products could be a good proxy.
Ether lags on exchange-traded products
After aggregating data from multiple exchange-traded instruments, the result is telling. Bitcoin dominates with $32.3 billion in assets under management, while Ether totals $11.7 billion. Grayscale GBTC plays a vital role in this discrepancy because its product was launched in September 2013.
Meanwhile, Ether's first exchange-traded product came in October 2017, when the XBT Provider Ether Tracker was launched. This difference partially explains why Ether's total is 64% lower than Bitcoin's.
Lastly, one should compare the futures markets data. Open interest is the best metric of professional investors' actual positions because it measures market participants' total number of contracts.
An investor could have bought $50 million worth of futures and sold the entire position a couple of days later. This $100 million in traded volume does not currently represent any market exposure; therefore, it should be disregarded.
Bitcoin futures open interest currently amounts to $14.2 billion, down from a $27.7 billion peak on April 13. Binance exchange leads with $3.4 billion, followed by FTX with another $2.3 billion.
On the other hand, the open interest on Ether futures peaked about a month later at $10.8 billion, and the indicator currently stands at $7.6 billion. Therefore, it is 46% lower than Bitcoin's, which further explains the valuation discount.
Related: Ethereum market cap hits $337 billion, surpassing Nestle, P&G, and Roche
Other metrics like on-chain data and miner revenues show a more balanced situation, but both cryptocurrencies have different use cases. For example, 54% of the Bitcoin supply has remained untouched for longer than one year.
The truth is that any indicator has a downside, and there is no definitive valuation metric to determine whether a cryptocurrency is above or below its fair value. However, the three metrics analyzed suggest that Ether's upside, when priced in Bitcoin, does not signal a "flippening" anytime soon.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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Despite the May sell-off, strong hands are mostly holding firm at prices which seemed impossible two years ago.
Bitcoin (BTC) is less active than at any time this year, new data shows as traders stubbornly refuse to sell.
One metric from on-chain monitoring resource Glassnode reveals that the Bitcoin supply is becoming less and less available despite lower prices.
On June 2, Bitcoin’s active supply hit a five-month low of 44.5%.
The number measures coins which have moved in the past two years or earlier — and last time it measured that low, BTC/USD traded at around $22,000.
The figure shows just how unattractive the idea of selling Bitcoin at current prices is to investors who purchased up until the 2019 bull run. As Cointelegraph reported, 2017 buyers already represent a strong cohort of "hodlers of last resort."
This goes some way to shoring up morale over future price action — as various indicators including sentiment measure the Crypto Fear & Greed Index show, a $36,000 Bitcoin appears undervalued.
Nonetheless, the May sell-off ushered in a surge of newly-liquid coins, something which managed to buck a two-year accumulation trend.
“The magnitude of accumulation over the past two years is remarkable, however, the scale of the sell-pressure in May is also notable,” Glassnode wrote in a digest last week.
“Investors were clearly spooked during this recent sell-off.”
Just as reluctant to sell, meanwhile, are miners. Relative to historical average, the outflows from miner addresses is now at a seven-month low.
May’s action likewise triggered an uptick in sales, but this has since reversed — and is now at its lowest since November 2020, when Bitcoin traded around its all-time highs from 2017.
Only retail traders are waiting in the wings for a potential switch-up, as the balance of BTC on exchanges continues to climb after its mid-April bottom. This also coincides with the comedown from current all-time highs of nearly $65,000.
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