Research Summary
The report provides a comprehensive analysis of the performance of Bitcoin and Ethereum in the second quarter of 2023. It covers key aspects such as price levels, on-chain metrics, network activity, and market sentiment. The report also discusses the impact of long-term holders, miners, and validators on the market dynamics of these cryptocurrencies.
Key Takeaways
Bitcoin’s Performance
- Stable Price Levels: Bitcoin has maintained important price levels, with long-term holders continuing to accumulate around the $30,000 level. The price is trading above the 200-day and 200-week moving averages, indicating a positive short-term and long-term outlook.
- Healthy Miner Profitability: The Puell Multiple suggests that miner profitability is on par with that of the previous year, indicating a familiar profit margin zone for miners.
- Positive On-Chain Metrics: Bitcoin’s on-chain metrics are returning to a more “normal” state, with a substantial rise in the transaction count and a slow recovery in address momentum.
- Increasing Reserve Risk: Bitcoin’s reserve risk has been slowly climbing since the beginning of 2023, indicating a relatively low risk zone.
- Growth in Addresses in Profit: The percentage of addresses in profit for Bitcoin has grown from roughly 52% at the beginning of 2023 to just over 75% at the end of Q2.
Ethereum’s Performance
- Positive Price Signals: Ethereum is seeing potentially positive price signals, with the price trading above the 200-day moving average and a golden cross formation intact.
- Growth in On-Chain Metrics: Ethereum’s on-chain metrics are growing, with an overall growth of 15% in the validator count and a comeback in the “New Address Momentum” metric.
- Higher Rate of Burn than Issuance: The Ethereum network continues to maintain a higher rate of burn than issuance, leading to a decrease in supply.
- Neutral Market Sentiment: Ethereum’s NUPL ratio remains in the “Fear” zone, indicating a neutral market sentiment.
- Steady Validator Count: The active validator count on Ethereum has increased by 29% YTD, with 15% of the increase occurring in Q2.
Actionable Insights
- Monitor Bitcoin’s Reserve Risk: Given the slow climb in Bitcoin’s reserve risk since the beginning of 2023, it would be prudent to keep a close watch on this metric.
- Investigate the Potential of Ethereum’s Burn Rate: The higher rate of burn than issuance in the Ethereum network is leading to a decrease in supply, which could potentially impact the price of Ethereum.
- Assess the Impact of On-Chain Metrics: The growth in on-chain metrics for both Bitcoin and Ethereum could have significant implications for their market dynamics. These metrics should be closely monitored.
- Consider the Role of Long-Term Holders: The continued accumulation of Bitcoin by long-term holders around the $30,000 level could indicate a new bottom forming at this price. This trend warrants further investigation.
- Examine Ethereum’s Validator Count: The increase in Ethereum’s validator count could have implications for the network’s security and decentralization. This trend should be closely examined.
