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Unveiling The Bitcoin Market Structure: A Comprehensive History-Match Analysis

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There is always something new to learn and explore in the cryptocurrency world. Recently, a Senior Researcher at Glassnode tweeted about a history-matching analysis of the Bitcoin market structure. The research aims to identify the equivalent statuses in the 2014-15 and 2018-19 cycles, given the current market structure.

Insights Into Bitcoin’s Performance

The research on history-matching was approached from four different perspectives or angles. The first perspective involved examining the quarterly average (90-day moving average) ratio between profits and losses. 

It provided a broad overview of the market’s profitability for actively engaged investors. Based on the findings, the current P/L ratio is approximately 2.36, and a comparison with the corresponding figures from 2018-19 and 2014-15 is shown in the chart.

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The second perspective involved examining the proportion of the overall supply that had generated profits, which provided insight into the potential selling pressure from long-term holders. 

Over the past few months, approximately 69% of players’ holdings have been profitable, with the current level being represented as 0.69 and equivalent levels observed in 2018-19 and 2014-15.

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The market is characterized by two types of participants, those who are making a profit and those who are experiencing losses. To evaluate the overall level of distress in the market, a third perspective is taken into account, which measures how far the current spot price is from the cost basis of these two groups. 

If the spot price is closer to the cost basis of those who are experiencing losses, the level of distress is higher. The stress ratio at present is around 0.9, and the chart illustrates its corresponding values during 2018-19 and 2014-15.

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Lastly, one indication that demand is returning to the market is the amount of wealth that has been transferred in the short term (less than 1 month). Currently, around 11.4% of the wealth that has changed hands belongs to younger investors, and this figure is comparable to the percentages from 2018-19 and 2014-15.

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However, this examination offers valuable perspectives on the structure of the Bitcoin market, empowering investors to make well-informed decisions. In a rapidly expanding cryptocurrency market, keeping oneself informed and abreast of the latest developments and information is vital.

Related Reading | Bitcoin Core Loses A Key Developer As Dhruvkaran Mehta Resigns

Glassnode Signals End Of Bitcoin’s Downturn: Strong Rebound In Q1 2023

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Glassnode, a prominent provider of on-chain analytics, has suggested through a tweet that the Bitcoin market downturn might have ended, as there are indications of a strong rebound in the market. 

Bitcoin has been performing remarkably well, with on-chain metrics indicating that it has gained considerable support and strength, surpassing its performance since reaching an all-time high in 2021.

The returns of Bitcoin over the last quarter have experienced a significant surge of 70% since October 2021, while the weekly returns have climbed up to 36%. 

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Source: Glassnode

This outstanding performance has positioned Bitcoin as the top-performing asset class of the year thus far. These trends are in contrast to those observed in 2022, indicating a favorable shift in the market.

Bitcoin: Long-term & Short-term Holder Metrics Suggest Favorable Regime Shift

Glassnode’s report analyzes Bitcoin’s on-chain indicators, such as its correlation with gold and the risk of counter-party, and notes a high balance of BTC held by long-term holders at 14.161 million BTC, nearing an all-time high, while short-term holders have maintained a steady balance of 2.914 million BTC in 2023.

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Source: Glassnode

There are three significant supply clusters noticeable in the chart of investor acquisition prices, namely the Bottom Formation Cluster, the Recent Acquisition Cluster, and the Cycle Survivors. 

Interestingly, more than 23.3% of the available supply is held by long-term holders currently facing losses. These holdings are not traded on exchanges. Additionally, the current supply structure appears similar to that of early 2016 and early 2019.

Glassnode’s report further suggests that YTD market strength is supported by an explosive uptick in coins held at a profit, with 6.2 million BTC returning to profit in 2023, indicating a large cost basis foundation below $30k.

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Source: Glassnode

The report concludes that several on-chain indicators suggest that the worst of the bear market conditions may be behind us, with Bitcoin sitting in neutral territory above the forming supply cluster between $16k to $25k. 

For further insight, the report advises readers to review Glassnode’s previous reports on the bear market conditions in 2022 and the May 2021 sell-off.

Nevertheless, Glassnode’s report shows that on-chain indicators are pointing to a robust recovery in the Bitcoin market, with several crucial factors supporting the market’s strength. 

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Source: Glassnode

With Bitcoin posting strong returns and showing increased correlation with gold, the market may well be behind the bear, and investors may want to keep a close eye on Glassnode’s upcoming reports for further insights.

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Ethereum’s Shanghai Hard Fork: Glassnode Report Eases Sell-Side Pressure Concerns

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A new report from Glassnode has suggested that the highly anticipated Shanghai/Capella hard fork, scheduled for April 12, will not have as dramatic an impact on the Ethereum economy as some had feared. 

The hard fork is set to enable withdrawals of staked ETH. It has raised much speculation about the potential market and supply impacts as the approximately 18 million ETH staked (worth $33.92 billion and 15% of ETH’s total circulating supply) becomes unlocked. 

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Staking Cohorts: Understanding The Ethereum Staking Landscape

Glassnode’s report establishes cohorts of stakers and assesses the potential sell-side pressure that may occur due to the unlock event.

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After the Shanghai upgrade, Glassnode predicts that only 100k ETH ($190M) of the total collected awards will be withdrawn and sold and that only about 70k ETH ($133M) will become liquid.

It is significantly less than the 170k ETH that had been anticipated to be sold after the upgrade. Furthermore, Glassnode predicts that only a fraction of the amount withdrawn will become liquid.

Glassnode’s report also establishes different staking cohorts to determine who will most likely withdraw staked ETH and how much sell-side pressure could be expected from these withdrawals. 

The analysis categorizes those who send 32 ETH to the Ethereum smart contract to become a validator, namely depositors, into distinct groups. 

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These groups are determined by various factors such as the duration of their active stake, the number of validators they own, their unrealized profit/loss across owned validators, and whether they are individual depositors or third-party staking providers.

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The analysis comes to the conclusion that the sell-side volume remains within the typical weekly exchange inflow volume range even in the extreme scenario when the maximum rewards and stakes are withdrawn and sold.

Therefore, the report suggests that even the most extreme case will have an acceptable impact on the price of ETH. It will come as welcome news to Ethereum investors concerned about the potential sell-side pressure that could result from unlocking staked ETH.

The report also highlights the growing market share of liquid staking providers, particularly Lido, which holds a market share of over 30% of the total staked ETH.

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Holding Strong: Over Half Of Bitcoin In Circulation Remains Dormant For 2+ Years

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In a recent tweet, entrepreneur and crypto investor APompliano, shared some interesting data from Glassnode regarding the movement of Bitcoin in circulation. According to the data, more than 1 out of every 2 Bitcoin in circulation has not moved in the last 2 years. It marks a new all-time high of 53% today.

According to Anthony Pompliano, almost 29% of all Bitcoin in circulation has remained stationary for the past 5 years. It represents a market valuation that has been static for half a decade of over $150 billion. Furthermore, according to data from Glassnode, he noted that less than 15% of all BTC in circulation had not changed hands in ten years.

What implications does this data have for cryptocurrency? A few individuals in the community shared their thoughts, and some proposed that the Bitcoins that have remained dormant for an extended period may have been misplaced or abandoned. Alternatively, some believe that the owners of these digital coins could be holding out for an opportune moment to cash out.

APompliano disagreed with the suggestions, saying that although some individuals may be waiting for the breakeven price, he believes that the majority of the 53% are not.

During a community discussion, a member brought up the topic of how the data reflects Bitcoin’s status as a currency. Some participants expressed their opinion that Bitcoin cannot be considered a currency and never will be, while others viewed the data as an encouraging indication of the resolute holding tendencies of Bitcoin investors.

Nevertheless, the data from Glassnode suggests that a significant portion of BTC in circulation is being held onto for the long term, indicating a strong belief in the digital asset’s value. However, the reasons behind this holding behavior remain debated among the cryptocurrency community.

Bitcoin Price Analysis

The value of Bitcoin has been steadily increasing. According to CoinMarketCap’s data, it is currently trading at $29,261.48, and daily and weekly charts indicate a positive trend.

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Source: CoinMarketcap

Over the past 24 hours, BTC’s price has increased by approximately 3.09%, and the weekly chart shows a notable gain of 6%. Additionally, its 24-hour trading volume has increased by around 60%, adding to the optimistic trend.

BTC’s market capitalization has also risen by nearly 2.90%, indicating increased demand for cryptocurrency. These developments suggest a favorable market outlook for Bitcoin, potentially attracting more investors soon.

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Binance Under Scrutiny, Dubai Cracks Down On Crypto License Applicants: Report

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Dubai is ramping up its oversight of crypto license applicants, with officials at the Virtual Assets Regulatory Authority (VARA) requesting more information from Binance, one of the world’s largest crypto exchanges, according to the latest report, citing a person with knowledge of the matter.

The move comes after last year’s bankruptcy of digital-asset exchange FTX and reflects a wider trend of increasing global scrutiny of the crypto industry.

Dubai, which has been trying to foster innovation while ensuring proper oversight of the crypto industry, is a significant hub for Binance’s Middle Eastern expansion plans. 

The emirate’s stricter approach could pose a challenge for Binance CEO Changpeng “CZ” Zhao, who is based in Dubai and is under pressure from US regulators.

According to anonymous sources, VARA requests similar information from other international companies seeking permits. The regulator is looking for information on ownership, board procedures and auditing at the global group level of Binance, which has a complicated corporate structure with several holding companies.

Binance has said that “it has disclosed all necessary information to VARA on a proactive basis and in line with regulatory and fiduciary responsibilities.” However, according to sources, the queries from VARA are taking longer to address due to Binance’s size and complexity.

In early February, a senior executive at Binance said that the exchange had been trying to hire an auditor for its entire balance sheet, but finding a firm able to take on the work was challenging. 

The recent lawsuit by the US Commodity Futures Trading Commission against the largest crypto exchange and its CEO, CZ, for alleged derivatives violations has added to the pressure on the company.

Moreover, as reported by TronWeekly, in Q1, the company suffered a major setback as it saw a 16% decline in its market share, resulting in a closing market share of 54%. The primary reasons behind this decline were the CFTC’s legal actions against Binance and the termination of its zero-fee trading program.

US Regulators Pressure Binance As Net Flow of Funds Decline

According to a report by Glassnode, a crypto data analyst, US regulators are exerting pressure on Binance. Given the uncertainty surrounding the solvency of banks and exchanges, market sentiment has been evaluated by examining the net flow of funds into and out of the exchange.

Glassnode’s analysis indicates that the net flow of stablecoins on the Ethereum blockchain through the company has been negative, with a 14-day Exponential Moving Average (EMA) displaying a net outflow of -$295M/day, the largest in history. 

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Source: Glassnode

In addition, the overall USD value of Binance reserves has decreased by 45.1% or $29.6 billion but has stabilized at $35.9 billion since the FTX fallout. The drop can be attributed to the decline in token prices and significant redemptions of BUSD, a stablecoin. 

Nonetheless, the YTD market rally has pushed the total USD-denominated value of Binance reserves back above $35 billion this week.

Bitcoin Bull Run Continues: Soars to New Heights Not Seen Since August 2022

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The crypto market has been sent skyrocketing once again as Bitcoin (BTC) reaches new heights not seen since August 2022. According to leading crypto analyst site Santiment, the world’s most popular digital currency has now soared past the $22,700 mark, marking the first time it has reached this level since August 18, 2022.

According to CoinMarketcap’s latest data, Bitcoin is currently trading at $22,976.12, indicating a strong bullish sentiment and a potential break past the $23,000 level. The daily and weekly charts are also showing impressive gains of 9.00% and 10.13%, respectively. Furthermore, trading volume for BTC has seen a significant increase of 75% in the past 24 hours, further demonstrating the market’s upward momentum.

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Source: Tradingview

But what is driving this impressive surge in Bitcoin’s price? Experts point to the actions of a powerful group of investors known as “whales,” who have been collectively accumulating a massive 64,638 BTC (worth over $1.46 billion) in the past 15 days. This influx of investment from the whale tier group of addresses holding 1,000 to 10,000 BTC has sent ripples through the crypto market, propelling Bitcoin to new heights.

This latest rally in the crypto market is sure to be welcomed by investors and traders, who have been eagerly watching Bitcoin’s progress in recent months. It remains to be seen just how high the digital currency can go, but one thing is for certain: the crypto market is showing no signs of slowing down.

As the world’s leading digital currency continues to make waves in the financial world, many experts are predicting that this is just the beginning of an even more significant rally. With Bitcoin reaching new highs and showing no signs of slowing down, it’s clear that the crypto market is a force to be reckoned with.

4.283M Bitcoin (BTC) Returns to Unrealized Profit

In a recent development, data analytics firm Glassnode has reported that a significant volume of Bitcoin has returned to an Unrealized Profit position since the market lows set during the FTX collapse.

According to Glassnode, a total of 4.283 million BTC, valued between $15.5k and $22.3k, have transacted and changed hands during this period. This provides a clear indication of the level of activity and movement in the market.

This news is particularly noteworthy as it suggests that the crypto market may be recovering from the recent turbulence caused by the FTX collapse. The return of such a large volume of Bitcoin to an Unrealized Profit position indicates that investors are once again becoming optimistic about the future of the market.

It’s worth noting that this is a positive sign for the crypto market, and it could be a sign of a bullish trend in the near future. However, it’s also important to keep in mind that the market is always subject to fluctuations, and investors should exercise caution and do their own research before making any decisions.

Related Reading | Aptos (APT) Rose 57% in 24 Hours As Binance Announces New liquidity Pools 

Bitcoin Heading Towards “Bottom” Similiar To 2019’s Bull Run?

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In November 2021, Bitcoin hit an all-time high of about $69k, but since then, both the coin and the wider crypto market have lost those gains.

Despite the ongoing bearish sentiments, historical data indicated that Bitcoin could be in for another rally in 2023. 

According to commodity strategist Mike McGlone, the dominant coin might be approaching a Bottom with chances of repeating the patterns of 2019’s bull run.

In a video podcast hosted by popular crypto enthusiast Scott Melker, McGlone said that the biggest rallies often occur in the bear market.

The analyst compared BTC’s recent rally into the $20,000 range to its bottom formation in 2018 at the $5,000 price level.

However, the current situation, apart from in 2018, has seen “aggressive” tightening by “every central bank” and financial organization including the Federal Reserve, he claimed.

“Back then the Fed already started easing and we held the bottom and broke out higher and then we had that issue in 2019,” he said.

The NASDAQ is likely to fall below its 200-week moving average, which, according to McGlone, is another reason why Bitcoin’s rally might not last. The performance of Bitcoin over the past year has been closely correlated with that of the NASDAQ.

This is the NASDAQ. The NASDAQ is at its 200-week moving average. The 200-week moving average in the history of the NASDAQ can be calculated we only broke through that level three times. And every single time the Fed was easing. The last good example was 2008. Fed was easing aggressively.

“Right now they’re tightening aggressively, so you look at that and you can’t be too excited about any markets. Give it some time. Big picture, yes, really bullish Bitcoin,” McGlone added.

It is important to note that recent Glassnode data lends further credence to the notion that the price of Bitcoin has already formed a bottom in the current cycle.

Bitcoin Has Already Reached Its Bottom For This Cycle

The report showed that during the 2018–2019 bear cycle, Bitcoin fell 386 days below its 200-day moving average before making a comeback.

Similar to how it spent 381 days in the last cycle below the well-known market trend indicator, the asset has now broken above it, suggesting a turnaround.

By press time, Bitcoin was trading at $21,155. On the daily chart, the flagship cryptocurrency has corrected by 0.90%. 

Bitcoin USD Value Drops: Daily Transfer Volume Collapses from $40B to $5.8B

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According to WU Blockchain, the total value of USD transactions processed by the Bitcoin network has significantly decreased. Daily volume has declined from its peak of $40 billion in Q3 2022 to $5.8 billion currently. Additionally, the percentage of large-size transfers has dropped from 42.8% before the FTX collapse to 19.0% at present.

After entering the new year, the digital asset market witnessed a peculiar trend – Bitcoin’s trading range between $16.4k and $16.9k hardly fluctuated for three weeks straight. As expected, this New Year period was unsurprisingly tranquil throughout all markets, including the digital asset sphere.

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Source: Glassnode

Yesterday, after three weeks of stagnation, Bitcoin broke through the $17,000 barrier and made significant gains of 2% in the daily chart and 4% in the weekly chart. According to CoinMarketcap’s data, the cryptocurrency is currently trading at $17,225.06, with a 3.21% increase in the weekly chart but no change in the daily chart.

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Source: Glassnode

Despite the incredibly low on-chain utilization, Bitcoin is not the only blockchain that has been affected. Ethereum’s mean gas price has stayed within a range of 16 to 23 Gwei since September, levels similar to what was observed during June-July 2021 and the post-COVID market panic in May 2020.

Bitcoin Network Has Been In Free-Fall

Glassnode reports that there was a temporary increase in the number of new Bitcoin addresses after the FTX incident, but activity has since slowed. The monthly average of new addresses is returning to its usual level, suggesting that network usage has been recovering sustainably.

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Source: Glassnode

The 2019–20 timeframe is an important historical illustration of how on-chain activity indicators may be used to track a recovery in network fundamentals.

According to the report:

Despite this short burst of address activity, the total USD value processed by the Bitcoin network has been in free fall. Daily transfer volume has collapsed from the ~$40B heights in Q3-2022 to just $5.8B/day today. 

This indicates that the daily settlement volumes have returned to their pre-bull 2020 levels and suggests that there has been a decrease in the amount of institutional capital flowing through the network.

A decline in transfer volume is largely due to a decrease in large transactions ($10M+). It may indicate a decrease in institutional capital flows and a lack of confidence in this group. It is possible that this also reflects the removal of questionable capital flows associated with FTX/Alameda.

Related Reading | XRP Investors’ Long Awaited Flare Token Airdrop Has Arrived

BTC.com Losses Over $2.7 Million in A CyberAttack

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BTC.com, a subsidiary of BIT Mining Limited, a leading technology-driven crypto mining company, became the victim of a hack earlier this month, according to the press release published on December 26th.

BTC.com is the world’s top blockchain browser. BIT Mining also owns the complete mining pool company that operates under BTC.com and offers multi-currency mining services, which include Bitcoin, Ethereum, and Litecoin (LTC).

According to the press release, several digital assets were taken during the incident, including those worth around $700,000 that belonged to BTC.com’s clients and roughly $2.3 million that belonged to the company.

Shenzhen, China’s law enforcement agencies, were notified of this event by BIT Mining Limited. However, the company ensures that some of BTC.com’s digital assets have already been secured due to local and internal collaboration.

Additionally, to get back the digital assets that were taken, the company will put in a lot of effort that will necessary. The investigation was started, evidence was gathered, and the authorities sought assistance from and coordinated with the appropriate agencies on December 23rd.

“In the wake of discovering this cyberattack, the company has implemented technology to better block and intercept hackers.” Nevertheless, the company claims that BTC.com is now conducting business as normal and that all of its client fund services are unaffected except for its services related to digital assets.

Bitcoin (BTC) Outflows Hit Lowest Levels 

The outflow of Bitcoin from exchanges has fallen to its lowest point in over 8 months. The token’s withdrawals from exchange wallets have completely reversed the rise, which experienced an astounding increase due to the FTX breakdown.

Outflows from the trading platforms peaked at 142,788 BTC on November 14th and have since decreased more than ten times. According to on-chain analytics firm Glassnode, total exchange outflows were only 967.509 BTC on December 26th. Furthermore, eight months ago, in April of this year, was the last time outflows were this low (about 978.059).

Moreover, the data also shows that today’s 4,520.946 Bitcoin sent to exchange addresses marked a 1-month low. On November 30th, the previous low for the month was 4,553.976.

Additionally, the data from CoinMarketCap shows that Bitcoin is currently trading at $16,854.54, and its 24 hours trading volume is up by 35.64%.

Related Reading | Weekly Market Watch: Bitcoin & ETH Remain Below Key Marks, Some Altcoins Recovers

Bitcoin’s Accumulation By Retail Investors Peaked By 17% In 2022

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Bitcoin’s total circulating supply in the hands of retail investors shot up to 17%, the highest in a year, according to the blockchain data analytics platform, Glassnode.

According to Glassnode “retail” indicate holders with less than 10 BTC in a wallet, currently worth nearly $169,000.

This number was not even 12% at the beginning of 2020, but things changed in 2022. Prior to it, each late bull market/early bear market era for Bitcoin experienced periods of substantial retail accumulation including late 2013, early 2014, as well as late 2017.

Financial analyst Will Clemente, co-founder of Reflexivity Research spoke on the data saying that the asset is heading in the right direction.

Not perfect yet, but solid for a 12-year-old asset and definitely trending in the right direction. Bitcoin’s supply disperses over time, while fiat’s holder base concentrates to whales over time.

The Glassnode chart illustrated by Clemente showed the percentage of Bitcoin supply held by retail investors on a steady climb dating back to 2011.

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Bitcoin's Accumulation By Retail Investors Peaked By 17% In 2022 20

On the other hand, BTC’s long-term holder supply had reached an all-time high of 13.9 million according to a recent weekly on-chain report. With regards to realized losses this year, it stated:

“Despite these spectacularly large losses, the age of the coin supply, and propensity for HODLing by those who remain continue to rise.”

Investors Bought Bitcoin Mostly In The Range Of $18k & $24k

The amount of long-term Bitcoin holdings is equivalent to around 72.3% of the circulating supply.

Despite FTX crashing in early November, the accumulation that began in late July kept on going. Glassnode observed that coin re-distribution and re-accumulation periods had grown following each market leg down in 2022.

A lot of BTC was acquired between $18,000 and $24,000, and this supply is now aging into a long-term bracket which is over six months held.  

That being said, Bitcoin holders continue to remove their holdings from exchanges—and not necessarily to sell them. The quantity of Bitcoin held outside of exchanges is at an all-time high, indicating long-term confidence in the asset.

While the massive Bitcoin migration from Binance has calmed down, it is still happening. On December 13, more than $5 billion departed Binance as investors began to worry about its capacity to survive a run.