The state of crypto – March 2023 The state of crypto – March 2023 The state of crypto – March 2023

The state of crypto – March 2023

Mads Eberhardt

Cryptocurrency Analyst

Summary:  The balance of Ether on exchange has decreased, whereas it has stayed stable for Bitcoin, indicating an accumulation of Ether in February. It appears that the love of traditional investors for crypto faded in February, as exchange-traded crypto products experienced a slight outflow, compared to a significant inflow in January.


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.

Short-term

In February, the crypto market was subject to fairly low volatility compared to typical months, causing less on-chain data to stand out. Bitcoin’s price ended the month sideways, whereas Ethereum increased by around 1.8% in February. The modest price increase in Ether coheres with the flow of Ether from exchanges to private wallets, as nearly 0.3% of the Ethereum supply left exchanges in February. This suggests that more Ether has changed hands from short-term to long-term holders, as the latter often keeps them in wallets, indicating an accumulation of Ether in February. The balance of Bitcoins on exchanges has not changed, although it is yet much lower than Ethereum.

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

Long-term

The circulating supply of Bitcoin and Ethereum for the past 5 years continues to decrease, potentially indicating that holders are in control of an ever-decreasing portion of the total supplies. In the past month, the average loss of Bitcoin holders has slightly worsened, whereas the opposite is true for Ethereum holders.

It appears that more traditional investors secured some profit in February, as exchange-traded crypto products were subject to a slight outflow, following a significant inflow in January. In February, Bitcoin and Ethereum experienced an outflow of $16.8mn and $1.6mn, respectively, compared to an inflow of $124.8mn to Bitcoin and $9.1mn to Ethereum in January.

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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