VanEck Monthly Bitcoin ChainCheck
26 February 2024
Welcome to the first version of the VanEck Monthly Bitcoin ChainCheck where we present on-chain indicators for investors to directly assess Bitcoin blockchain's health and adoption.
Please note that VanEck has exposure to bitcoin.
Welcome to the first version of the VanEck Monthly Bitcoin ChainCheck where we present on-chain indicators for investors to directly assess Bitcoin blockchain's health and adoption.
Some takeaways for January 2024:
Bitcoin’s Price Action
- Market sentiment: Bitcoin dominance stayed flattish at 51% as BTC’s 30-day average price fell 3% in January.
- Regional trading: US traders stayed more bullish than EU and Asia participants, as the price of BTC rose during US trading hours but was negative in EU and Asia trading. This dynamic represents a continuation of a long-standing trend in which Bitcoin is generally mined and sold in Asia and purchased during US hours.
Source: Glassnode, as of 2/2/24. Past performance is no guarantee of future results.
- Funding rates: Bitcoin futures annualized basis (funding costs) fell sharply to 11% as traders lost their appetite for leverage after the Bitcoin ETFs launched.
Bitcoin’s Network Activity, Adoption, and Fees
- Daily transactions: Daily transactions are down 18% in the last 30 days, but the overall adoption and network activity remain extremely strong, in the 97th percentile of all-time.
- Ordinal inscriptions: Daily inscriptions (aka ordinals) activity fell 34% in the last month.
- Total transfer volume: However, total transfer volume has increased by 10% in the last 30 days, reaching $39.6 billion. This divergence may reflect larger institutional participation in the wake of the spot ETF launches.
- Average transaction fees: Average transaction fees both in USD and BTC, have experienced a significant 70% decrease in the last 30 days as inscription activity has cooled.
Bitcoin Market Health and Profitability
- Percent of addresses in profit: 85% of Bitcoin addresses are currently in profit, although there has been a slight 5% decrease in the last month. Such levels are not typically associated with a very frothy market.
- Net unrealized profit/loss: Likewise, a net unrealized profit/loss ratio (NUPL) of 0.48 suggests that network participants are optimistic about the future but not euphoric.
Bitcoin Miners
Total daily BTC miner revenues: fell by 19%, with heavy competition for hash rate ahead of the Bitcoin halving. Miners’ BTC transfers to exchanges fell somewhat from December’s very high levels but still remain high (87% percentile) vs. history as miner balance sheets must be fortified ahead of the halving. Crypto equities’ market cap fell 14% m/m vs. the avg BTC price -3%.
Chart of the Month: January BTC Transfer Volume Rises Despite 3% Drop in Average Price
Total Transfer Volume (USD)
Source: Glassnode as of 1/31/24. Past performance is no guarantee of future results.
Bitcoin ChainCheck Monthly Dashboard
Source: Glassnode, VanEck research as of 2/2/24. 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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