07 July 2023

Hello,

Not much happened this week in the market in spite of MicroStrategy buying 12,333 BTC and Blackrock’s CEO terming Bitcoin as a ‘digital gold’.

As we wait for the crypto market to take a side, Bitcoin (BTC) continues to consolidate above $30,000 with Solana and Litecoin gaining considerably in the past one week (>9%).

After a strong rally in June, today, we track some on-chain and other metrics that tell a solid adoption story. Bitcoin is being stacked, NFTs are losing value and wallet adoption continues to be healthy. Ready to dive in?

Top-3 stories of the week:

1

Larry Fink Says “'Crypto is Digitizing Gold' and That BlackRock's Bitcoin ETF Could Help Make the Sector 'More Democratized”.

BlackRock's CEO, Larry Fink, stated on wednesday that Bitcoin is now viewed as an "international asset". The statement comes after the asset management firm made moves to offer a spot Bitcoin ETF. Fink also compared the role of Bitcoin to digital gold, offering an alternative to physical gold investments as an inflation hedge.

2

Traders Flocking Back to Centralized Exchanges Amid Bitcoin Rally.

The DEX to CEX volume ratio fell from 22% in May to 16.8% in June and has dipped further so far in July according to The Block's data. This comes as attention in the crypto market has shifted from the meme coin craze, we saw in May to excitement around the potential for spot ETFs and what that could mean for institutional adoption.

3

Optimism, Aptos, and ApeCoin Set for Largest Token Unlocks in July.

These tokens are preparing for substantial token unlocks this July, releasing over $100 million worth of crypto into circulation. ApeCoin's unlock is the largest, releasing 15.6 million APE tokens on July 17, a 4.23% increase in circulating supply. Aptos’ token release will cause a token supply increase of 2.17%, while Optimism’s token circulating supply will rise by 3.75%. This could potentially affect the prices of these tokens, so it might be helpful to keep the timing of these releases in mind.

The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $1.17 trillion - DOWN 1.7%

• Bitcoin price - $30,169 - DOWN 1.8%

• The dollar index (DXY) - 103.1 - DOWN 0.1%

• Bitcoin Dominance - 51.51% - DOWN 0.6%

• Crypto Fear and Greed Index - 55 - the market is in greedy state

THE HOT TAKE

Crypto on-chain trends indicate resilience and retention

On-chain trends paint a optimistic picture. Investors are becoming confident of the crypto’s ability to weather regulatory and macro-economic headwinds and emerge victorious. Data can always be interpreted in different ways but we are confident the following trends are a solid representation of hope in the market. Let’s start.

1. Supply activity shows strong holding pattern for Bitcoin

Supply activity over the past 18 months has seen a meteoric rise as experienced investors are holding BTC. The ‘supply last active’ metric, a measure of how much of BTC has moved or not in the past one year, has reached an all-time high of 13.4 million BTC. That’s about 70% of its circulating supply! All the speculations and movement we observe in the market are essentially the 30% moving around.

2. Non-zero BTC wallets surpasses 44 million

We have seen steady growth in non-zero wallets in every 4-year cycle. Since 2020, the Bitcoin ecosystem has seen an increase of around 11 million addresses with a non-zero balance. Today, the number of addresses with a non-zero balance has surpassed 44 million addresses.

Checkmate ,an analyst from Glassnode, recently shed light on the fascinating behaviour of Bitcoin ‘shrimps.’ These small-scale holders, each with less than one Bitcoin in their portfolio, are aggressively accumulating satoshis (the smallest denomination of BTC). These buyers are collectively stacking approximately 33,800 Bitcoin monthly while the average new monthly supply around 27,000 - implying that for every coin mined in the market, these shrimps are accumulating 1.25 off the market.

Active wallets (with at least one transaction in the period) excluding Bitcoin are steady at 15 million after a high of 20 million in May this year. Interestingly, Polygon (MATIC) has more active addresses than Ethereum (ETH), mainly for its lower gas fees.

3. Majority of the Bitcoin supply is in profit

15 million BTC - roughly constituting 79% of the circulating supply - is now worth more than when they last moved implying current profit rate for asset. For any project, percentage of supply in profit is a crucial indicator of the crypto’s cyclical highs and lows. With Bitcoin trading above $30,000, many investors are in a profitable position. This healthy scenario signifies that the ongoing run has room for further growth and the market is not overheated.

4. Bitcoin’s correlation is decreasing with respect to US stocks

Bitcoin's correlation with the Nasdaq and S&P 500 indices is at its lowest level since July 2021, demonstrating a growing independence of the asset from US stocks.

However, analysts warn that while the spot ETF narrative is driving the current market, potential challenges including SEC rejecting them and overall macro-economic issues may need pull back the asset class this quarter.

5. NFTs are struggling

Now, this is the concerning data point. NFT valuations continue to drop even as crypto shows signs of resilience. The floor price of the much-hyped Bored Yacht Ape Club (BAYC) is at a 20-month low below 30 ETH. BAYC NFTs sold at 154 ETH during their peak in 2022 (and when the value of ETH was considerably higher). This trend is felt across all NFT brands indicating that capital is drying up in the market. If so, this will likely impact altcoins first followed by Bitcoin.

Key takeaway

We are with the investors – crypto has a robust future and it should reflect in its pricing and adoption over the next couple of years. In the short-term, there may be challenges this quarter that can pull down prices. As always, we stick to our strategy – invest in Bitcoin and Ethereum for the time being and wait till the market is ready to sustain altcoin rallies. If there is a considerable dip, they may present great buying opportunities in near future.

Disclaimer: Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.