The Crypto Comms #36; On-Chain Data Confluence

4 min readJan 10, 2023

The total cryptocurrency market cap sits at $888 billion. Value has consolidated into Bitcoin, Ethereum and stablecoins. As it happens, a variety of data-points indicate BTC is in an attractive long-term order bloc.

In this issue:

Bitcoin analysis
On-chain data
latest happenings
Listening material

Bitcoin analysis

BTC/USD exchanges hands at $17,250, gaining 3.5% week-on-week so far. A number of positive long-term technical tailwinds provide a base-reason for two potential scenarios: (1) relief rally, (2) sideways chop.

Firstly, the monthly Stochastic Relative Strength Index (RSI-cyclical-derivative) indicates seller exhaustion.

Secondly, the weekly Relative Strength Index has posted a positive divergence, whereby price has traversed lower with weakening momentum.

On-chain data

BTC: All Exchanges Netflow

In December, the total Netflow was largely negative, just like in the prior month. The highest outflows occurred on Dec. 13th (-34,261 BTC), when BTC/USD traded at $18,000. At a glance, there haven’t been major gyrations in January yet, but on the 9th a negative Netflow of -5,756 BTC was registered. Of these outflows, -2,844 came from Binance.

The general trend of coins leaving exchanges remains, adding to Bitcoin’s growing illiquid supply trend.

BTC: Exchange Reserves

The number of BTC held on exchanges was on the decline at the start of December, and registered a new low of 2,140,197 BTC on Dec. 19th. Since then, there’s been a minor uptick, but nothing significant considering the significant drop-off in early November.

BTC: Market-Value-To-Realised-Value Ratio (MVRV Z-score)

The MVRV-Z score has been in the value area since June 2022. Locally, the metric has been rising since November 9th, from -0.37 to -0.19 as of Jan. 9th. Currently, Bitcoin is undervalued according to this metric. Long-winded price consolidation tends to precede positive price swings, historically.

BTC: HODL Wave 1y-2y

The Bitcoin 1–2 year HODL-wave band has been growing since the UST implosion in May. The band swell tends to coincide with long-term accumulation phases. Presently, the 1–2 year band holds 18.4% of the total BTC supply. While there is room for this band to expand further, the figure is significant since values approximating 20% (+/-2%) tend to coincide with cyclical bottoming phases.

All in all, these are positive signs for Bitcoin which have yet to be confirmed by price-movements. Distrust of centralised entities is high and assets on exchanges continue to plummet. Long-term holders are in control of a growing number of BTC, indicating that the pool of entities who won’t sell at these prices is increasing.

As such, I continue to think that a catastrophic event in the ecosystem would be required for another leg down. This is the time to be patient and look up.

Cheers.

Latest happenings

Listening material

Odds of a Soft Landing; Luke Gromen’s Thoughts on Zoltan’s analysis.

Dear readers,

The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Tuesday. I am not perfect and this is not a science — nor is this newsletter analysis a signals service or financial advice. While I cannot promise perfection I do my best to be honest and transparent.

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