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The state of crypto – July 2023

Mads Eberhardt 400x400
Mads Eberhardt

Cryptocurrency Analyst

Summary:  Bitcoin hit a 1-year high in June, but both its exchange balance and its 5-year circulating supply declined, indicating that long-term holders are not interested in selling Bitcoins at this price. The exchange balance of Ethereum slipped too, so fewer Ether is to be sold at short notice. However, an increasing amount of Ether is turning active, so the effective circulating supply must be adjusted higher.

Immediately upon interacting with a blockchain, much data becomes publicly available on a public ledger. Analyzing this data may provide crypto traders and investors with helpful insight into the present state of the market. In “The state of crypto”, we take a look at the most important metrics to observe the market based on transaction and trading activity. Our main focus is the two largest cryptocurrencies Bitcoin and Ethereum, and we divide the metrics into short-term and long-term indicators. You find the report for the last month here.


The exchange balance of Bitcoin decreased substantially in June. The exchange balance of Ether is nowhere near the one of Bitcoin but was likewise net negative in June, so it once again shows a new all-time low. At present, 9.1% of the Ether supply is on exchanges, down from about 11.3% at the start of the year. The lower exchange balances highlight that fewer Bitcoins and Ether are promptly available to hit the market, potentially hinting at greater market sentiment.

The drop in Ether on exchanges is chiefly attributed to the staking of Ether, as there has been a significant inflow to stake Ether after the Shanghai hard fork in April. These Ether may have been intended to be staked for years but only stored on exchanges until post-Shanghai. On the other hand, holders cannot stake Bitcoin nor utilize it in decentralized applications to the same extent as Ethereum, so the withdrawn Bitcoins may have been acquired recently to enter deep storage far away from any exchange. Although the Bitcoin exchange balance tumbled, both the 30-day moving average of exchange inflow and dormant circulation spiked, indicating that at least some found the 1-year high Bitcoin price of $31,400 in June attractive as exit liquidity. This price surge was mainly driven by the Bitcoin ETF filing by BlackRock.

Exchange Balance in Percent. During times when crypto investors are more inclined to sell crypto, they often store their cryptocurrencies directly on an exchange to prepare to sell their holdings. On the contrary, they often move the funds to private wallets when they are less likely to liquidate them. In other words, low exchange balances on exchanges are often perceived as valuable for a potential upward trajectory. Source: Santiment
Exchange Inflow. This metric solely concerns the total deposit of Bitcoin and Ether to exchanges without considering the withdrawal of funds. By only considering deposits, we may better interpret what leads to sell pressure. Source: Santiment
Dormant Circulation. Shows how many Bitcoins and Ether were moved after not being moved for at least 365 days prior to that – accumulated on a daily basis. A high number may express eagerness from long-term holders to liquidate their portfolios. Source: Santiment
Supply Distribution for BTC. This illustrates the supply distribution in percent of Bitcoin and Ethereum based on the amount addresses hold. This may indicate which groups are buying or selling, for instance, whether whales are selling or buying. Source: Santiment
Supply Distribution for ETH. Source: Santiment


June was another month in which the circulating supply of Bitcoin of the past five years dropped slightly, whereas the circulating supply of Ethereum surged by about 800,000 Ether. The latter is a fairly significant uptick, particularly in the view that it occurred in the span of only one month. We mainly see the rise as a result of more holders staking Ether, but, nonetheless, it is not strictly positive for existing holders, as it increases the effective circulating supply.

On another matter, Bitcoin was subject to one more positive trend, contrary to Ethereum. In June, exchange-traded products saw a net inflow equal to 255.1mn, merely driven by an inflow of 284.2mn to Bitcoin, presumably because of the Bitcoin ETF filing by BlackRock. Ethereum, on the other hand, experienced a net outflow of 29.7mn in the same month, so it appears that more traditional investors are presently keener on Bitcoin than Ethereum.

Circulating Supply (5 years). For Bitcoin and Ethereum, there are continuously issued new Bitcoins and Ether to the supply, respectively. However, it may be the case that someone is permanently unable to access their wallet, which means the supply technically is lower. By looking at Bitcoin’s and Ethereum’s supply that has moved in the past 5 years, we might better interpret the authentic supply and whether large inactive wallets suddenly turn active. Source: Santiment
Market Value to Realized Value (MVRV) Ratio (5 years). The market value to realized value ratio (MVRV) calculates the average profit or loss of all holders based on when each token last moved over the past 5 years. For example, if the MVRV ratio is 1.5, holders are on average estimated to be up by 50%. Source: Santiment
Inflow and Outflow in ETPs, mutual funds, and OTC trusts. CoinShares publishes a weekly report on inflow or outflow into crypto ETPs, mutual funds, and OTC trusts. Since these products are particularly popular among more traditional investors, an inflow or outflow may describe the sentiment among this group of crypto investors.
Source: Saxo Group
Source: Saxo Group


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