Research Summary
The report provides an analysis of Bitcoin’s on-chain indicators for January 2024. It covers aspects such as Bitcoin’s price action, network activity, adoption, fees, market health, profitability, and miner revenues. The report also highlights the impact of regional trading and the launch of Bitcoin ETFs on the market.
Key Takeaways
Bitcoin’s Market Position
- Bitcoin’s Dominance: Bitcoin maintained a steady dominance of 51% in the market, despite a 3% drop in its 30-day average price in January.
- Regional Trading Dynamics: US traders remained more bullish than their counterparts in the EU and Asia. Bitcoin’s price rose during US trading hours but fell in EU and Asia trading, continuing a long-standing trend.
Bitcoin’s Network Activity and Adoption
- Decrease in Daily Transactions: Daily transactions fell by 18% in the last 30 days, but overall adoption and network activity remained strong, ranking in the 97th percentile of all-time.
- Increase in Total Transfer Volume: Despite a decrease in daily transactions, total transfer volume increased by 10% in the last 30 days, reaching $39.6 billion. This suggests larger institutional participation following the launch of spot ETFs.
Bitcoin’s Market Health and Profitability
- Profitable Bitcoin Addresses: 85% of Bitcoin addresses were in profit, despite a slight 5% decrease in the last month. This level is not typically associated with a very frothy market.
- Net Unrealized Profit/Loss Ratio: The net unrealized profit/loss ratio (NUPL) of 0.48 indicates that network participants are optimistic about the future but not euphoric.
Bitcoin Miners
- Miner Revenues: Total daily BTC miner revenues fell by 19%, indicating heavy competition for hash rate ahead of the Bitcoin halving. Miners’ BTC transfers to exchanges remained high, suggesting the need to strengthen balance sheets before the halving.
Actionable Insights
- Monitor Regional Trading Patterns: The report highlights the importance of understanding regional trading dynamics in the Bitcoin market. Investors should keep an eye on these patterns as they can significantly impact Bitcoin’s price.
- Assess Network Activity and Adoption: Despite a decrease in daily transactions, overall network activity and adoption remain strong. This suggests that Bitcoin’s network health is robust, which investors should consider when evaluating Bitcoin’s long-term prospects.
- Consider Profitability Indicators: The high percentage of profitable Bitcoin addresses and the NUPL ratio indicate a healthy market. Investors should consider these indicators when assessing the market’s overall health and potential future performance.
- Understand Mining Dynamics: The decrease in miner revenues and the high level of BTC transfers to exchanges suggest intense competition and preparation for the upcoming Bitcoin halving. Investors should understand these dynamics as they can impact Bitcoin’s supply and, consequently, its price.
