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hand, holders cannot stake Bitcoin nor utilize it in decentralized applications to the same extent as Ethereum, so the withdrawn Bitcoins may have been acquired recently to enter deep storage far away from any exchange.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.
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.
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach
