- Weekly Onchain Insights: Bitcoin heats up
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Following the recent FUD-bath that led to one of its worst price draw-dawns in Bitcoin history and its worst monthly performance since September 2011, looks like we finally received the catalyst we were waiting for.
With 62 favorable votes, the Legislative Assembly of El Salvador approved a bill to recognize Bitcoin as legal tender in the country.
With this passed legislation, El Salvador will now be able to accept crypto for all forms of monetary debt and makes several proposals on how the country should adopt Bitcoin, including exceptions from capital gains taxes for the cryptocurrency holders, the creation of a trust in the Development Bank of El Salvador to enable the conversion of Bitcoin into USD and even the creation of volcano-powered crypto miners.
Certainly, this announcement made quite the nice around the world, as the number of Google searches for “legal tender” hit a new high following El Salvador’s Bitcoin Law
After the announcement from El Salvador President, the flagship cryptocurrency surged by 11%, currently trading at $37,573. With this announcement, 1.5 million addresses returned to a state of unrealized profits or “in the money”.
As of June 10 using IntoTheBlock’s Bitcoin financial analytics
The Historical In/Out of the Money indicator provides the variation of holders’ profits over time. It shows the percentage of addresses that would have made money or lost money if they had sold at a particular point in time.
What this analysis shows is that roughly 8% of the Bitcoin circulating supply have an on-chain cost basis between $31,700 and $37,000. Currently, 13,07m BTC are in a state of profit.
And while El Salvador’s milestone opens a new step into the legitimization of Bitcoin as a store-of-value, looks like it failed, at least for the moment, to change the reigning bearish sentiment surrounding the futures markets over the past few weeks.
By analyzing the derivatives markets, which experienced a massive deleverage over the past month, have failed to return to April levels. Perpetual Swaps Open Interest is still down 57% from the ATH while the volume of these futures is still range bounding below $100 billion.
As of June 11 using IntoTheBlock’s Bitcoin derivatives analytics
While is true that these metrics have slowed down recently, deleveraging markets alongside less disproportionate speculation is good for Bitcoin in the long road, as the markets reset and money flows back into spot trading, reducing risk for new investors.
The IntoTheBlock’s Time-Held Indicators show that the number of active new addresses holding BTC for less than 1 month has declined steadily while the number of addresses holding BTC between 1–12 months have increased. This is a sign that speculation in the market is declining due to the recent correction.
Overall, El Salvador made the first step for the legitimization of Bitcoin that may be followed by other countries soon. While this is extremely bullish for the market overall, looks like the smart money has not come back to the futures market yet, and a few on-chain indicators such as the number of daily active addresses or on-chain transactions greater than $100k has not shown signs of recovery yet. As Bitcoin pushes back to the $37,000 again, key on-chain indicators may follow soon enough.
- Date of publication:
- Fri, 06/11/2021 - 07:43
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