The state of crypto – November 2022 The state of crypto – November 2022 The state of crypto – November 2022

The state of crypto – November 2022

Cryptocurrencies 4 minutes to read
Mads Eberhardt

Cryptocurrency Analyst

Summary:  Bitcoin and Ethereum are encountering net outflows from exchanges. For Bitcoin, it suggests that holders most willing to sell have already sold at these prices. Too, the low volatility and high on-chain losses for Bitcoin may imply that we are past peak capitulation.


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

For the past month, there has been a net outflow of Bitcoins and Ether out of exchanges, although more notable for Bitcoin. This indicates that holders more inclined to sell have less Bitcoin and Ether at their disposal to potentially push prices down.

Although Bitcoin witnessed low volatility in October, the cryptocurrency encountered two notable price spikes. At the first spike starting on October 2nd, the price spike is followed by an equal increase in inflow to exchanges, since the higher price has likely triggered greater sell pressure. Interestingly, although the second price spike starting around October 25th was greater than the first spike, it is followed by a much smaller increase in exchange inflow. This indicates that these weak holders have already capitulated upon the first price spike, potentially suggesting that there is less resistance going forward for an additional leg upwards for Bitcoin.

Similar to last month, it appears that wallets with a low balance are accumulating both Bitcoins and Ether, whereas wealthy wallets are cutting their portfolio. In terms of Bitcoin, it may more than anything be because Bitcoin miners, who are normally wealthy, are selling newly mined Bitcoins at a faster pace to keep their heads above water. In that plausible case, it contributes to constant selling pressure, instead of the miners keeping the Bitcoins on the book, which they traditionally do in bull markets.

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

With the price increase in Ether over the past month, the average holder is less underwater than last month. Yet, the more modest price increase in Bitcoin has formed a gap between the average loss of Bitcoin and Ether holders, with the latter being the least underwater. By linking the substantial average on-chain loss and low volatility of Bitcoin, the Bitcoin seller exhaustion constant is derived. According to Glassnode, the Bitcoin seller exhaustion constant has only been this low 6 times before in the history of Bitcoin. The combination of low volatility and large losses has traditionally been coherent with peak capitulation. If this is the case once again, we are potentially near the bottom for Bitcoin for now.

Bitcoin encountered an inflow equal to $41.4 into exchange-traded crypto products e.g., ETPs and mutual funds in October. On the other hand, there was an outflow equal to $10.8 from similar products holding Ether last month. This expresses that Bitcoin is more popular to hold as an exchange-traded product than Ether at these price levels.

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
Daily Active Addresses. This expresses the amount of active Bitcoin and Ethereum addresses daily. It illustrates the utilization of the two blockchains, respectively. It is perceived as valuable with many active addresses.
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.
Bitcoin/USD - Source: Saxo Group
Ethereum/USD - Source: Saxo Group
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