3 Metrics To Watch As Bitcoin Cracks $35K
Hey LinkedIn,
It's remarkable what 7 days can do for market sentiment. Bitcoin hit 17-month highs earlier this week, taking its year-to-date returns beyond 100%.
With all the excitement over this week's price rally, I cover the 3 metrics you should be paying attention to. 👇
Bitcoin surged to $35,000
It’s a high not seen since May 2022, shortly after Terra and Luna's collapse.
Feels like a lifetime ago, doesn’t it?
The price jump was driven by heightened anticipation over BlackRock's spot bitcoin ETF application, the cause of which was:
After the price soared, the DTCC clarified that the proposed ETF had been listed since August. It was just that the market only noticed it this week. Oops!
For more, see Matt’s breakdown for members!
3 metrics to pay attention to
With all the excitement of a potential ETF approval fuelling markets, separating the noise from the signal is crucial.
Here are our 3 simple high-signal Bitcoin metrics to watch as we head into next year.
#1. Bitcoin dominance (BTC.D)
BTC.D represents the market cap of BTC as a percentage of the combined market cap of all cryptocurrencies.
This week, BTC.D climbed to 54% for the first time in 2.5 years.
BTC.D is one the most important metrics to watch because, historically, BTC tends to hit all-time highs before any serious flows start entering altcoins.
#2. Bitcoin on exchanges
As BTC.D rises, watch the amount of BTC on exchanges.
The total amount of BTC on exchanges continues to slide, and is now at its lowest level since June 2018.
The less BTC on exchanges, the less supply there is for new market participants wanting to buy. This trend may also suggest that there is a growing contingent of price-insensitive long-term holders.
#3. Bitcoin’s illiquid supply and holder patterns
A report by Coin Metrics and Bitcoin Suisse found bitcoin’s illiquid supply (i.e BTC that hadn't moved in at least 5 years) hit 6M, ~30% of the total supply.
Total supply held by long-term holders (i.e. BTC held for at least 155 days) also recently hit an all-time high of 76%.
It shows long-term holder confidence remains at record levels.
These are key metrics to watch as they help indicate when new money is arriving and when holders may turn to sellers, adding sell-side pressure.
Honourable mention: Bitcoin ETF watch
With all the ETF talk, one metric I’m using to gauge interest in these products is the amount of BTC held in exchange-traded products (ETPs).
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Currently, this is ~3.9% of the total supply of BTC, but includes the Grayscale Bitcoin Trust (GBTC).
We may have had a glimpse earlier this week. On Monday (the day of BTC's surge higher), more than $43M flowed into the various bitcoin ETFs and ETPs that are listed worldwide, nearly 10% of the year-to-date total.
Place your bets; how high will it be by the end of 2025?
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What happened? Certain U.S. lawmakers proposed a bill (citing a Wall Street Journal article) to respond to ~$82M of cryptocurrency raised by terrorism group Hamas. Later, blockchain analytics firms Chainalysis and Elliptic, demonstrated how this figure was greatly misrepresented, and in fact 99% less than reported, at ~$450,000
Why does it matter to you? It shows the continued misconceptions around crypto, as terrorist group Hamas stopped accepting cryptocurrency donations due to how easily traceable they were. It is also another reminder of the ongoing anti-crypto campaigning in the U.S.
What happened? Crypto addresses connected to FTX transferred at ~170,000 SOL ($5.5M) to centralised exchanges. It comes as the exchange is considering three proposals for its relaunch—a final decision is expected by mid-December.
Why does it matter to you? The move is crucial for refunding customers who lost money during its shutdown. Concerns around sell-side pressure, especially cryptocurrencies such as SOL, remain likely overblown as a majority of tokens remain locked as per token vesting schedules.
What happened? The NYAG alleged Gemini misrepresented the risks of its ‘Earn’ program and knew of troubles with its lenders while alleging Genesis and DCG misrepresented its solvency.
Why does it matter to you? If allegations against DCG prove true, it could face intense scrutiny and even shut down. With DCG no longer having such a dominant status in the industry, any fallout likely would not have the same market impact as other failed crypto companies.
Thanks for reading the Weekly Shift. We hope you've enjoyed it, and look forward to seeing you next week!
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1yGreat commentary Ben Simpson . Who do you follow the most after your own research?
Brilliant summary mate 👏