Recurring market commentary on what’s happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.
Market commentary
Good Morning!
The market has been in a decline since the beginning of the year. During times like this, investors look for fundamental indicators that may impact the price of crypto assets.
Blockchain data
On-chain data includes all information of all occurred transactions on a public blockchain. This data is made up of transaction data, block data, and smart contract code. The aggregation and analysis of on-chain data has framed a new way of fundamental analysis, very similar to traditional finance analysis, such as share buybacks and amount of stock held by insiders. The difference is that public blockchains are completely transparent, and live data is available 24/7. Some examples of valuation frameworks made from on-chain data are:
- Blockchain usage will have a direct impact on the demand of the native coin and therefore on the price
- Price volatility determined by the number of coins moved on and off exchanges
- Price volatility according to the change in amount of coins addresses hold
Let us take a look at the last example. Lookintobitcoin.com aggregates bitcoin on-chain metrics into free live charts. The chart below shows the price of BTC, and addresses that hold more than 1,000 BTC - often referred to as whale addresses.
When looking at this chart, there seems to be a correlation between the number of whale addresses and the price of BTC. Before the price of BTC increased, the number of whale addresses increased. Before the price of BTC dropped, the number of whale addresses decreased. Ultimately, this indicates that whale addresses are likely able to dictate the price of BTC.
Sudden on-chain movements
As of recent, the overall crypto market price activity has been looking dull, moving downwards and sideways. On February 27 however, there was a sudden bullish signal. In just one day, 137 addresses joined the > 1,000 BTC club. One assumption is that investors see bitcoin as a safe haven among the turmoil currently going on between governments. Another is that the BTC price is simply just too low.
You can visit the following on-chain data websites to see what other indicators are available:
- https://glassnode.com/
- https://cryptoquant.com/
- https://www.theblockcrypto.com/data/on-chain-metrics/bitcoin
Happy Trading!
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This publication provided by Crypto Broker AG, a corporate entity registered under Swiss law, is published for information purposes only. This publication shall not constitute any investment advice respectively does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. This publication is not intended for solicitation purposes but only for use as general information. All descriptions, examples and calculations contained in this publication are for illustrative purposes only. While reasonable care has been taken in the preparation of this publication to provide details that are accurate and not misleading at the time of publication, Crypto Broker AG (a) does not make any representations or warranties regarding the information contained herein, whether express or implied, including without limitation any implied warranty of merchantability or fitness for a particular purpose or any warranty with respect to the accuracy, correctness, quality, completeness or timeliness of such information, and (b) shall not be responsible or liable for any third party’s use of any information contained herein under any circumstances, including, without limitation, in connection with actual trading or otherwise or for any errors or omissions contained in this publication.
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Investments in virtual currencies are high-risk investments with the risk of total loss of the investment and you should not invest in virtual currencies unless you understand and can bear the risks involved with such investments. No information provided in this publication shall constitute investment advice. Crypto Broker AG excludes its liability for any losses arising from the use of, or reliance on, information provided in this publication.
