Research Summary
The report analyzes the current state of the Bitcoin market, highlighting the robust profitability of investors despite the chaotic price action. It discusses the market’s range-bound trading, the decline in investor activity, and the growing presence of institutional investors in the futures market.
Key Takeaways
Robust Market Profitability
- Investor Profitability: Despite the sideways price movement, the average Bitcoin investor holds an unrealized profit of around 120%. Over 87% of the circulating supply is held in profit, with a cost basis below the spot price.
- Stable Demand and Sell-Side: The demand side has been sufficient to absorb sell-side pressure and HODLer divestment, but insufficient to promote further upward growth, resulting in range-bound trading.
Declining Investor Activity
- Reduced Onchain Activity: The volume being processed and transferred on the Bitcoin Network has declined drastically following the ATH, indicating a reduced appetite for speculation and heightened indecision in the market.
- Exchange Activity: Onchain inflows to exchanges have seen a considerable reduction in activity. Short-Term Holders are sending around +17.4k BTC/day to exchanges, markedly lower than the peak of +55k BTC/day recorded as the market hit the $73k ATH in March.
Growing Institutional Presence
- Futures Market: The futures market has seen a sustained elevation in open interest, currently over $30B, just shy of its previous ATH. A substantial portion of this open interest is related to the market-neutral cash-and-carry basis trade.
- Institutional Investors: The considerable growth of open interest at the CME Group exchange highlights a growing presence of institutional investors. The CME Group exchange currently hosts over $10B in OI, representing just under a third of the global market share.
Range-Bound Market
- Market Equilibrium: An equilibrium in both the demand and sell-side appears to be established, resulting in relatively stable prices, and a notable lack in volatility. This stagnation in market movement translates into a degree of boredom, apathy, and indecision by investors.
Actionable Insights
- Monitor Market Activity: Given the current state of the Bitcoin market, it would be prudent to closely monitor market activity for any signs of increased volatility or decisive price movement.
- Assess Institutional Presence: The growing presence of institutional investors in the futures market could have significant implications for the overall market. Keeping an eye on this trend could provide valuable insights.
- Consider Range-Bound Strategies: With the market currently range-bound, strategies that capitalize on this, such as range trading and arbitrage, could be more beneficial than directional and trend trading strategies.
