VanEck Monthly Bitcoin ChainCheck
February 27, 2024
Read Time 4 MIN
Please note that VanEck has exposure to bitcoin.
We noticed some divergence between prices and on-chain activity in February, indicating that speculative forces drove Bitcoin’s action this month.
- Bitcoin’s Price Action
- Bitcoin’s Network Activity, Adoption, and Fees
- Bitcoin Market Health and Profitability
- Bitcoin Miners
- Bitcoin ChainCheck Monthly Dashboard
Some takeaways for February 2024:
Bitcoin’s Price Action
- Market sentiment: Bitcoin dominance rose slightly in February from 51% to 52%. For perspective, Bitcoin dominance rose from 52% to 62% in the 1-year prior to the 2020 halving before bottoming out at 39% at the end of the 2021 bull market.
- Regional trading: U.S. traders continued to dominate bullish price action, but the gap narrowed in February as the Chinese New Year brought out typically constructive seasonal patterns.
Source: Glassnode, VanEck research as of 2/26/24. Past performance is no guarantee of future results.
- Funding rates: Bitcoin futures annualized basis (funding costs) rose sharply to 12% as traders re-gained some appetite for leverage. ETF flows absorbed more than the Bitcoin network’s daily issuance for all of February.
Bitcoin’s Network Activity, Adoption, and Fees
- Daily transactions: in a divergence from price action, on-chain activity fell 7% in February and is now flat y/y. Tough comps arrive in May as we lap the first Ordinals (NFT) wave.
- New addresses fell 25% m/m and 7% y/y. It is fair to say that February was driven by ETF flows rather than on-chain activity.
- Ordinal inscriptions: Daily inscriptions plummeted 62% m/m. As a percentage of total transactions, inscriptions represent 40%.
- Total transfer volume: $40B in value was transferred across the Bitcoin network daily, up 3% m/m and +118% y/y. Such activity puts February in the 85th percentile of all time.
- Average transaction fees: The average user paid $6.13 in fees to send a Bitcoin transaction in February, down 26% m/m but still in the 90th percentile of recorded history.
- % Supply last active, last 180 days: Only 18% of Bitcoin has moved in the last 180 days, in the 3rd percentile of all-time inactive short-term supply.
- % Supply last active, last 3+ years: 44% of Bitcoin has not moved in 3+ years. This reading has never been higher.
Bitcoin Market Health and Profitability
- Percent of addresses in profit: 90% of Bitcoin addresses are now in profit. Historically, this metric approaches 100% once it has hit 90% and can linger for a year or more.
- Net unrealized profit/loss: The net unrealized profit/loss ratio reached 0.52 in February, a level characterized as optimistic but not euphoric. Above 0.70 generally marks peaks.
Bitcoin Miners
- Total daily BTC miner revenues: Bitcoin miners rallied sharply (+27%) in February as the spot price exceeded many miners’ post-halving costs. Total miner revenues reached $46M per day, in the 95% percentile of recorded history.
- Transfers from miners to exchanges: Miners sent an average of $5M a day in Bitcoin to exchanges, likely for sale. Such activity represents a 2% increase m/m. Miners may be better prepared for the halving than in previous cycles if BTC can sustain these levels.
Chart of the Month: Percent of Bitcoin addresses in profit. Once this number hits 90%, it tends to hit 100%.
Source: Glassnode, VanEck research as of 2/26/24. Past performance is no guarantee of future results.
Bitcoin ChainCheck Monthly Dashboard
Source: Glassnode, VanEck research as of 2/25/24. Past performance is no guarantee of future results.
Notes:
Net unrealized profit/loss ratio (NUPL) can be calculated by subtracting the realized market cap from the market cap and dividing the result by the market cap. When a high percentage of Bitcoin’s market cap consists of unrealized profits, it can be interpreted that investors are greedy. Background reading here.
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Disclosures
Coin Definitions
Bitcoin (BTC) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Risk Considerations
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Index performance is not representative of fund performance. It is not possible to invest directly in an index.
The information, valuation scenarios and price targets presented on any digital assets in this commentary are not intended as financial advice, a recommendation to buy or sell these digital assets, or any call to action. There may be risks or other factors not accounted for in these scenarios that may impede the performance these digital assets; their actual future performance is unknown, and may differ significantly from any valuation scenarios or projections/forecasts herein. Any projections, forecasts or forward-looking statements included herein are the results of a simulation based on our research, are valid as of the date of this communication and subject to change without notice, and are for illustrative purposes only. Please conduct your own research and draw your own conclusions.
Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
© Van Eck Associates Corporation.
Disclosures
Coin Definitions
Bitcoin (BTC) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Risk Considerations
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Index performance is not representative of fund performance. It is not possible to invest directly in an index.
The information, valuation scenarios and price targets presented on any digital assets in this commentary are not intended as financial advice, a recommendation to buy or sell these digital assets, or any call to action. There may be risks or other factors not accounted for in these scenarios that may impede the performance these digital assets; their actual future performance is unknown, and may differ significantly from any valuation scenarios or projections/forecasts herein. Any projections, forecasts or forward-looking statements included herein are the results of a simulation based on our research, are valid as of the date of this communication and subject to change without notice, and are for illustrative purposes only. Please conduct your own research and draw your own conclusions.
Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
© Van Eck Associates Corporation.