May 15, 2021

Onchain Pulse | 04 May 2021

Glassnode analysts on the maturation of coins and the visible manifestations of investor sentiment in Bitcoin and Ethereum, as well as record volume of stablecoin money supply.

Market Review

The price of BTC last week bounced offcorrection minimums, opening the week at $ 49,077, and setting the maximum at $ 58,396. a reflection of the high demand for cryptocurrency-native fiat money.

On-chain data for both Bitcoin andEthereum, indicate a strong investor belief in the further growth of both cryptoassets: the trend towards "maturation" of coins is becoming more evident and on-chain activity in both networks is growing. In particular, there has been a noticeable increase in economic activity in Ethereum after the increase in the gas limit per block and the subsequent decrease in its price.

: TradingView

New record for stablecoin money supply

Stablecoins have become a foundational asset andpreferred basis in trading pairs throughout the industry, providing a globally available and cryptocurrency-native substitute for fiat money. The supply of the centrally issued stablecoin Tether (USDT) hit a new all-time high this week.

Over the week, its money supply increased by $ 1.48 billion (+ 3%) and reached a total volume of $ 51.78 billion.

USDT circulating offer. Link to updated source

As a result of the recent influx of stablecoinsThe Stablecoin Supply Ratio (SSR) dropped to 13.4, approaching an all-time low of 9.6. SSR remained steadily low throughout 2020 and 2021, while the supply of stablecoins increased in proportion to the rise in the price of BTC.

Low and declining SSRs indicatethat the global supply of stablecoins is getting larger compared to the market capitalization of Bitcoin. When the total supply of stablecoins increases, it speaks to an increase in the "purchasing power" of cryptonative capital, which can be exchanged for BTC and other cryptoassets.

Stablecoin Supply Ratio (SSR). Link to updated source

Coin Maturation Confirmation

The phenomenon of bitcoin maturation ("aging"held coins) was already mentioned by us in previous weeks, when we noted that coins older than 155 days are moving into the category of long-term held (LTH, from Long Term Holder).

Note: It was early November 2020 155 days ago and the price rallied from $ 16K to consolidation around $ 18K before breaking past the all-time high of the previous cycle.

These changes can be observed through distributioncoins for different age groups using the Realized Cap HODL waves indicator (HODL waves adjusted for realized capitalization). Colored stripes in this metric change in thickness as coins mature or move to other age groups. The graph below shows that the share of coins in the group is 1 week. - 6 months has been growing since November last year. These are coins accumulated at the beginning of the bull market and have remained motionless since then (blue arrows).

Currently, in particular, therange width 3 months –6 months, suggesting that many coins are approaching the 155-day threshold, indicating strong confidence in their long-term retention tactics.

Realized Cap HODL Waves. Link to updated source

This observation is confirmed by the LTH Net metric.Position Change, which represents the volume of coins that crossed the 155-day threshold in the last month. Since April 8, more coins have moved into the long-term held category than were spent, and last week the value of this ratio reached a 6-month high - 96.5 thousand BTC, “matured” over the last month.

Change in the net position of long-term holders (LTH Net Position Change). Link to updated source

Total share of BTC supply heldlong-term owners also began to grow after a period of distribution and spending. This indicator further confirms that, in aggregate, more coins remain motionless and are held by "strong hands" than are spent by long-term owners in order to fix profits.

Total BTC Supply Held by Long-Term Owners (LTH Total Supply Held). Link to updated source

As a final note onthe last bitcoin correction and the degree of confidence of the hodlers, the number of UTXOs in profit during this correction dropped to 90%, the lowest value for the current bull market. That is, at the low point of the correction at the level of $ 47 thousand, more than 10% of all UTXOs were at a loss. This value coincides with most significant corrections in the 2017 bull market.

While this drop was the most significant in terms of the overall share of coins in loss, long-term owners do not appear to be shocked by market volatility.

The percentage of UTXO in profit. Link to updated source

Ethereum supply dynamics

In the Ethereum blockchain, we can estimate the age of ETH using similar tools such as HODL waves, but taking into account the specifics of the network.

Main narrative and intended scenarioBitcoin's use is a store of capital, making the holding time, or inaction time, of coins a reasonable proxy variable for determining the degree of confidence among long-term owners. But Ethereum is a much more active financial ecosystem, where long-term owners also have the option of placing their coins in smart contracts and various applications. Thus, inactivity time and coin age in the case of ETH is only part of the equation.

First, consider the behavior of dormant coinsto Ethereum using HODL waves. A very similar trend to Bitcoin can be seen here, where coins from the end of 2020 appear to mature over a period ranging from 1 week to more than 6 months (blue arrows). It can also be seen that the width of the range from 1 to 6 months is gradually increasing, which suggests that long-term holding of coins acquired in the early stages of the bull market, on average, is still the preferred strategy.

Ethereum HODL waves. Link to updated source

As we said, the use of ETH coins inthe Ethereum ecosystem is the key to understanding the behavior of the network. This week, a relatively large amount of ETH was withdrawn from well-known exchange wallets - a peak of more than 200 thousand ETH in one day. The graph below shows that in 2021, 10 such cases were recorded with the withdrawal of funds from exchanges in the amount of more than 200 thousand ETH / day. For comparison, during the same period there were only two days when the daily inflow of ETH to exchanges exceeded 200 thousand coins, which can be regarded as an expressed preference of network participants in favor of self-storage of funds.

The ratio of inflow / outflow of funds at exchange addresses. Link to updated source

Not only are ETH withdrawn from centralizedexchanges, they are undoubtedly finding their way into smart contracts and DeFi applications. The graph below compares the percentage of total ETH supply stored in exchange addresses (orange curve, 12.0%) and smart contracts (blue curve, 22.8%). Nearly equal and multidirectional trends for these curves indicate a clear correspondence of the product to the market and the demand for DeFi among ETH holders.

Change in the total balance of exchange addresses (red curve) and smart contract addresses (blue curve). Link to updated source

After Ethereum miners increased the limitgas per block up to 15 million, the total throughput of the main blockchain last week reached a new record level - 16.5 transactions per second. Previous record high of 13.5 tx / sec. was set at the peak of a 2017 bull cycle and has been eclipsed most of the time in the current year.


Finally, let's take a look at the NVT coefficient forEthereum, a metric representing the ratio of the market capitalization of the network to the volume of on-chain transactions in it. We propose the following coordinate system for interpreting the values ​​of the NVT coefficient:

  • An uptrend in NVT - rather bearish, indicating that transaction flows are getting smaller compared to market cap and the network could be overvalued.
  • Downtrend in NVT - a rather bullish factor, indicating an increase in transaction volume compared to market capitalization, and the network may be underestimated.
  • Sideways trend in NVT - confirmation of the prevailing trend, indicating that transaction volumes and market capitalization are increasing in equal measure, and the market's valuation of the network is likely to be correct.

The graph below shows the NVT factor forEthereum has been in a strong downtrend since January 2020, especially after the March 2020 sell-off. Recent high throughput has also contributed to the decline in NVT in the past few weeks, confirming ETH's constructive price movement and a healthy nature.


The article does not contain investment recommendations,all the opinions expressed express exclusively the personal opinions of the author and the respondents. Any activity related to investing and trading in the markets carries risks. Make your own decisions responsibly and independently.