BTC Boomerangs Between $60k and $70k Amid Major News Events

It has been a tumultuous week for the digital asset space as BTC boomeranged between $60k and $70k reacting to decade-worthy news events occurring over the past two weeks. Let’s review some major news highlights and how the space has reacted:

• Trump announced his backing of a “Strategic Bitcoin Stockpile” at the Bitcoin Nashville conference. Additionally, he pledged to appoint a bitcoin and crypto advisory council, whose task would be to regulate and guide the industry. The US Federal Reserve currently holds assets such as gold and other foreign currencies, so this strategic stockpile would be akin to those assets. This could have major implications for digital assets, as official recognition by the US would ease institutional fears. Still, it remains to be seen how such a plan would be implemented, and is likely to face legal opposition. 
• ETH ETF failed to pull ETH to meteoric levels as BTC ETF did. ETH continues to flounder in the wake of its ETF hitting markets last Tuesday. Though the BTC ETF was able to pull BTC out of its bear slump, ETH remains in a static price position, hovering between $3000 and  $3500. The demand for ETH simply is not there, which backs the ideology that BTC and ETH are inherently different asset classes, despite both being digital assets. 
• Mt. Gox repayments near their end. A large part of the market instability is due to the Mt. Gox repayment schedule, which is repaying approximately $9 billion worth of BTC. It has put huge downward pressure on the price of BTC over the past few weeks. In a similar way to how BTC ETF demand drew the price up, release of Mt. Gox supply has deflated the market. As the repayments near the end however, it remains to be seen if the market will recover to new highs.

Spot Market

Centralized Exchange (CEX) comparisons from weeks 7/23/2024 and 7/30/2024

Frequently traded tokens percent of volume traded

In line with the expected demand for each digital asset, we see that among the highest traded assets on exchanges, BTC remains a solid chunk of CEX’s pair offerings. ETH follows, making up roughly 20% of CEX volume, while the third highest volume traded is for SOL at nearly 10%. Rumors abound of a SOL ETF, but given how little impact the ETH ETF has had on demand, it is unlikely that an ETF could radically change asset demand. The market has made it clear that BTC is the digital asset of choice for many institutions.

BTC ETF Flows

On the topic of ETFs, we see that Grayscale made a 1.85B change in their ETF holdings. That is due to Grayscale moving off of their trust into their ETF, which is reflected in the ETF holding chart above. It’s important to not immediately react to large values (such as the above) with fear, as large swings like this are usually wallet switches, as is the case here. ETF flows have been suggested as a big driver of BTC price swings, and so it’s always important to understand the context that drives abnormally large swings such as these. 

DeFi DEXs

Decentralized Exchange (DEX) protocol from weeks 7/23/2024 and 7/30/2024

Uniswap V3 trading volume for top pools over last 90 days

As expected, the top pools in trading volume for Uniswap V3 remain unchallenged. WETH_USDT remains the most consistently traded pool on Uniswap V3, while USDC_WETH followed closely behind. Though many political coins have pumped over the past few months, none have the sustained momentum to hurl their way into top traded pools by volume on Uniswap V3. Memecoins are a very dangerous game that requires vigilance and attention to succeed., The market has made it clear that it prefers the consistency and value of the unchallenged top token pairs.

DeFi Borrow/Lend

DeFi Lending protocol comparisons from weeks 7/23/2024 and 7/30/2024

DeFi Borrowed Volume by protocol and network

One perspective that people will often tell you is that most people are moving off the ETH mainnet to do DeFi on L2s. This graph, which shows Defi Borrowed Volume in USD, shows the exact opposite, where mainnet AAVE and MakerDao comprise nearly 80% of the borrowed volume market for lending protocols. We also see that borrow volume has increased consistently over the past few weeks, which is a good indicator for lending networks.

Defi Lending Net Borrowed / Repaid Volume (USD)

We saw this trend in the last snapshot, but DeFi net deposit/withdraw volume continues to remain flat compared to three months ago. This makes sense considering the whiplash in price change the digital asset space has felt over the past month. Too much uncertainty leads lending market participants to rush to repay loans, or else face liquidations. We should expect to see this metric recover over the next few weeks as markets begin to stabilize again.

Networks

Network comparisons from weeks 7/23/2024 and 7/30/2024

BTC Monthly HODL Net Position Change

HODL net position change is a metric that shows us the net change in coins held. A negative change means that more people are moving their BTC - usually a sign of a bullish market, as it means price is increasing so sharply that people want to claim their gains. Sustained periods of net decreases though, do not last long. As you can see above, negative cycles last for a relatively short time compared to positive holding cycles. If we extrapolate from previous holding cycles, this would suggest we are about halfway through this bullish market cycle. Once August hits, check the new monthly net position to see if HODLed coins continue to drop. 

ETH Net Unrealized Profit / Loss (NUPL) score

The Net Unrealized Profit/Loss (NUPL) score is a metric that measures market confidence in an asset, as the score is indicative of relative profit for each holder of the token. Currently, ETH lives on the hope/fear line, which is pretty accurate considering the ETH ETF news. Compared to BTC which is resting firmly on the optimism/anxiety line, ETH users are not feeling the confidence the ETH ETF was supposed to bring. Market sentiment is useful to help measure emotional responses to price changes. When looking at a trading strategy, it may look obvious in retrospect to invest at a certain point. However,  market sentiment could have hit rock bottom in which case there would have been high uncertainty in whether to purchase the asset at the time. NUPL gives us a way to contextualize these decisions. By knowing we are in the hope/fear cycle, we can expect to see articles that revolve around these two beliefs and we can measure our expectations as we read market news.

Links

AmberLens:  intelligence.amberdata.com 

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Spot Market

Spot market charts were built using the following endpoints:

• https://docs.amberdata.io/reference/market-metrics-exchanges-volumes-historical
• https://docs.amberdata.io/reference/market-metrics-exchanges-assets-volumes-historical
• https://docs.amberdata.io/reference/get-market-pairs
• https://docs.amberdata.io/reference/get-historical-ohlc

Futures

Futures/Swaps charts were built using the following endpoints:

• https://docs.amberdata.io/reference/futures-exchanges-pairs
• https://docs.amberdata.io/reference/futures-ohlcv-historical
• https://docs.amberdata.io/reference/futures-funding-rates-historical
• https://docs.amberdata.io/reference/futures-long-short-ratio-historical
• https://docs.amberdata.io/reference/swaps-exchanges-reference
• https://docs.amberdata.io/reference/swaps-ohlcv-historical
• https://docs.amberdata.io/reference/swaps-funding-rates-historical

DeFi DEXs

DeFi DEX charts were built using the following endpoints:

• https://docs.amberdata.io/reference/defi-dex-liquidity
• https://docs.amberdata.io/reference/defi-dex-metrics
• https://docs.amberdata.io/reference/defi-impermanent-loss 

DeFi Borrow/Lend

DeFi lending charts were built using the following endpoints:

• https://docs.amberdata.io/reference/defi-lending-protocol-lens
• https://docs.amberdata.io/reference/defi-lending-asset-lens

Networks

Network charts were built using the following endpoints:

• https://docs.amberdata.io/reference/blockchains-metrics-latest
• https://docs.amberdata.io/reference/transactions-metrics-historical
• https://docs.amberdata.io/reference/get-historical-transaction-volume

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