Monthly Research Report on Encrypted Digital Assets

Preface

At the macroeconomic level, the statement made by Fed Chairman Powell at the Jackson Hole Global Central Bank Annual Meeting convinced the market that there is a high probability that the Fed will continue to maintain the current policy and that it is impossible to raise interest rates in the short term. As for the reduction in the scale of bond purchases, it is not clear. Time window. The market continues to bet that the United States will continue to release water or maintain its current state, which is conducive to the performance of risky assets.

In August, the exchange BTC reserve balance remained stable overall. The monthly net flow of the exchange was about 10,000 (net recharge). The current exchange BTC reserve balance was about 2.46 million, an increase of about 10,000 from July. The trend of ETH withdrawal is relatively obvious, with 710,000 coins withdrawn in a single month.

The main reason for the increase in BTC this month is that investors, especially the supply shock caused by the increase in investor demand in the previous period, led to a gradual imbalance in supply and demand that triggered a pulse-like rise. The valuation indicators on the BTC chain reflect that the current market is still dominated by strength, and the fundamentals are still healthy.

As the fiery NFT, making Ethernet Square chain on the significant growth in activity, since the hard bifurcation ETH London, Opensea platform to occupy ETH destroy application amount ranked first, this situation has accelerated the exchange of ETH mention coins. In addition, the beacon chain deposit contract also saw a large pledge lock-up this month, which put pressure on the exchange’s ETH stock.

The price of ETH has reached a new high, and the proportion of miners’ fees has gradually increased, indicating that the activity on the chain is in a high boom stage, and the NFT boom has gradually been an important reason for the increase in activity on the Ethereum chain. Some of the current NFT sections, such as Cryptopunks, have continuously raised the floor price of the project through the issuance of tokens that track the NFT project. This can bring high liquidity and value discovery functions to the punks project, but there are already some projects in The overheated hype stage is even a bit silly. This is often a feature of the mid- to mid-to-late stage when the industry has stepped into phased hype. The risks brought by this need to be cautious.

The BTC computing power market has accelerated its recovery, and it has risen from 110EH/ in early July to around 125EH/s. With the recovery of computing power, the difficulty of mining has also ushered in several upward adjustments, which has a positive effect on boosting confidence in the market. Throughout history, every time the difficulty of mining drops sharply, it is a good time to buy bottoms.

Due to the huge on-chain swaps near the 30,000-40,000 USD, there are a large number of giant whales buying bitcoins at this price, and this location has a higher probability of becoming a golden pit in the long run. The price range around USD 42,000 is also the price range that has been continuously tested before. It is the position where the pressure level and the support level before the pull up are swapped. If there is a larger correction, USD 42,000 will be a phased callback support. Price. Overall, we remain optimistic about the market in the next few months.

1. The macro environment

There are signs of debt reduction, but the expected conditions have not yet been met. It’s too early to raise interest rates.

At the Jackson Hole Global Central Bank Annual Meeting, Powell’s speech revealed a “pigeon” argument. He said that since July there has been more progress in employment, and the delta virus needs to be vigilant for further spreading. There is still a lot of room for full employment.

In terms of inflation, he admitted that the current level is a cause for concern. However, considering the epidemic and the employment gap, the temporary inflation action may not pay off. There is insufficient evidence for wage increases and there is no reason to believe that the factors hindering inflation have been reversed. What the market cares about is that Powell did not provide any obvious signs of shrinking the balance sheet. He may want to see more employment reports to confirm that the labor market has made tangible progress.

Therefore, there is no need to worry too much about raising interest rates. At least this year is impossible. Although Powell said it is appropriate to reduce the scale of debt purchases this year, he did not disclose the specific time window. The calm speech made the market believe that the probability of the Federal Reserve continuing to maintain the current policy is extremely high, and there is no big bad news in the short term.

2. Data on the chain

1. Exchange deposit and withdrawal

(1) BTC exchange traffic

The Bitcoin reserve balance of centralized exchanges increased slightly in August. In August, the exchange’s BTC reserve balance fluctuated around 2.45 million. After the coinbase’s brief withdrawal of 30,000 BTC, more than 30,000 BTC flowed into Huobi. As of the end of the month, the exchange’s reserve balance was approximately 2.46 million, which is more than An increase of 10,000 at the beginning of the month.

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On the whole, the exchange BTC reserve balance is still in a low position, which is related to the intensive accumulation of funds at a low level. The main force in the market deliberately pressured the plate to create panic, and the giant whales were buying intensively at around $30,000. The main driving force for the second round of rising is also the promotion of the spot market, that is, the supply and demand pattern has gradually shifted from oversupply to undersupply, and the gradual imbalance of supply and demand continues to force the currency price to go out of the upward trend in August. The main force driving this trend comes from long-term investors, whose total Bitcoin holdings have reached a record high of 12.7 million.

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(2) ETH exchange traffic

In August, the exchange ETH reserve balance showed an accelerated downward trend, from 19.61 million to 18.9 million, a decrease of 710,000 in a single month. Especially in the second half of August, the trend of exchange ETH withdrawing was significantly accelerated.

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The activity on the Ethereum chain has increased this month, and this trend can be observed in the mining income structure of miners. The current Ethereum miners’ income is worth about 10 million U.S. dollars in legal currency in a single day, of which block rewards account for 70%, and the proportion of transfer fees has increased significantly compared to July. The increase in fees indicates that the chain is active Degree increases.

After the completion of the Ethereum hard fork upgrade in London on August 5, the activity on the chain increased significantly. From the distribution of the destroyed ETH sector, the NFT trading platform occupies the most destroyed application since the London fork, and the NFT sector is active The degree is quite high, which has led to an increase in the activity on the chain, and also reduced the stock of ETH on the exchange to a certain extent. As the panic of the regulatory crackdown gradually dissipates, the NFT sector continues to heat up. It is expected that the on-chain activity of ETH will continue to maintain a high degree of prosperity in the next few months, and the exchange ETH reserve balance is expected to continue to decline.

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 Ethernet Square 2.0 beacon chain deposit pledge contract Ethernet currency in August rose by 690,000, locked in DeFi the ETH gradually rebounded after a brief decline. The growth of DeFi and beacon chain pledges has accelerated the trend of ETH withdrawal from exchanges.

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 2. On-chain indicators

(1) Indicators on the BTC chain

The Stablecoin Supply Ratio (SSR) indicator is also known as the “Stablecoin Supply Index”. This indicator is the ratio of the market value of BTC to the total market value of stablecoins and can be used to reflect the abundance of market funds.

When Bitcoin hovered around $30,000, the value of this indicator fell to 8, which means that the market value of BTC is about 8 times the total market value of stablecoins. This indicator hit a new low in the past year, at the level before the start of the bull market in October last year. The lower the ratio, the larger the market’s stablecoin scale, the higher the BTC’s market capitalization scale, which means that the market “bullet” is more abundant.

Entering August, the SSR indicator has risen, which reflects two possibilities. One is that the increase in the price of BTC leads to an increase in the market value of the SSR indicator, and the other is that the stable currency of the exchange has entered the BTC market to form a purchase action. In any case, it shows that the underestimation caused by the bottoming of the SSR indicator has been confirmed. The current exchange stablecoin balance is still high, SSR is still at a low position, and the market is still abundant.

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The Supply Shock effect refers to the fact that a large amount of coins flows into the hands of the strong (long-term investors). These investors hold the coins for a long time, resulting in fewer and fewer coins in circulation in the market, which intensifies the flow. The sexual crisis has caused a gradual imbalance between supply and demand, leading to price increases.

This trend can be roughly quantified by measuring the supply shock ratio, which is the ratio of the total holdings of long-term investors divided by the total holdings of short-term holders. When the ratio gradually rises, it reflects that long-term investors are constantly “harvesting” bargaining chips from short-term investors, and it shows that long-term investors are dominating the market. As the liquidity supply gradually shrinks, prices are more likely to rise at this time. Otherwise, the opposite is true.

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The destruction of the coin day refers to the product of the holder’s holding amount and the time to complete one holding of the coin. If the holding amount is constant, the longer the holding time, the higher the coin burn value; if the holding time is constant, the holding time The larger the amount of coins, the higher the burn value of coins per day

The current burn value of Bidays is still at a historical low level. Even when Bitcoin was around $64,000 in April this year, the burn value of Bidays did not hit a high in the previous round of bull market, indicating that long-term investors are still unwilling to sell their holdings. Some bitcoins have a bullish outlook.

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(2) Indicators on the ETH chain

The realized price of ETH hit a record high of $1,135.64. The realized price was at a high level during the market decline in the second quarter, and there was no significant drop, indicating that the ETH market has not yet cooled down.

The realized price refers to the price of the most recent token transfer on the chain, which is obtained by the weighted average of the prices of all on-chain activities in the market. It reflects the price that token senders and receivers in the market are willing to accept when using the blockchain and trading tokens on the chain, so the realized price also reflects the fair price of the token to some extent. When the indicator goes up, it indicates that the market is heating up.

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From the perspective of the holder structure of ETH tokens, the proportion of long-term holders (holding time greater than 1 year) is steadily increasing. In the past 12 months, the proportion of long-term holdings has increased from 56.38% to 62.92%. Even in the past two months, the proportion of long-term holdings has increased for two consecutive months.

The increase in the proportion of long-term holders is largely due to the prosperity of DeFi and the prosperity of the DeFi ecosystem, which has spawned demand for pledge/liquidity mining, arbitrage, etc. Even if you do not trade ETH tokens in the secondary market, you can get good results. Stable income, to a certain extent, shows that these investors are optimistic about the Ethereum ecosystem.

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3. Institutional positions

In August, the holdings of various institutions around the world remained stable, with a total holdings of 1,476,500 bitcoins. Among them, quasi-ETF funds held 816,000, national government confiscated and publicly held a total of 259,000, private companies held 174,000, and public companies held 216,000.

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The overall change in fund institutions’ positions in August was not large, and the positions held at the end of August were around 800,000. These fund institutions include: 3iQ CoinShares Bitcoin ETF (BTCQ), 3iQ (QBTC), Grayscale Bitcoin (GBTC), ninepoint (BITC), Osprey (OBTC), Purpose Bitcoin ETF-CAD (BTCC), Purpose Bitcoin ETF-USD (BTCC) .U), Purpose Bitcoin ETF-USD hedged (BTCC.B), WisdomTree Bitcoin ETP (WBTC), 21Shares (ABTC), Bitcoin Tracker Euro (XBTE), Bitcoin Tracker One (XBT), Galaxy Bitcoin ETF (BTCX.B) , Galaxy Bitcoin ETF (BTCX.U), Iconic Funds Physical Bitcoin ETP (XBTI), VanEck Vectors Bitcoin ETN (VBTC), Coinshares Physical Bitcoin (BITC SW). Among them, the total holdings of exchange funds are 120,000+, accounting for about 15% of all fund institutions’ holdings.

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Most of the position data released by public companies have the average position price. From the data distribution point of view, 36 companies have announced their holdings of Bitcoin, of which 26 have announced input costs. Among these 26 companies, 9 companies have an average holding price of less than US$20,000, 7 companies have an average holding price of US$20,000-40,000, and 5 companies have an average holding price of more than US$40,000. Among companies with an average holding price of less than US$20,000, most of the holdings are between 100-1000. Companies with an average position price of USD 2-4 million have the largest holdings. Among them, Microstrategy and Tesla have tens of thousands of holdings, and Square, Marathon Digital Group and other holdings have more than 5,000 holdings.

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4. Computing power market

Affected by China’s regulatory policies, Bitcoin’s entire network computing power plummeted to around 80EH/s in June, a 65% retracement from the historical high.

Nevertheless, due to the existence of the difficulty adjustment mechanism, the Bitcoin network ushered in the biggest difficulty reduction in history on July 3, and the network difficulty was lowered 4 times in a row. Coupled with the gradual deployment of machines in overseas mining markets, the whole Bitcoin network The computing power basically stopped the downward trend in July.

The recovery of computing power in August is obvious. The progress of Chinese miners’ machines going to sea is accelerating. The deployment of foreign mines is gradually reflected in computing power. As of the publication date of this report, the computing power of Bitcoin’s entire network has risen from 125EH/s. The highest is 137EH/s.

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In August, miners sold a wave of more than 10,000 BTC near 50,000 U.S. dollars, and the selling was not strong. Looking at the overall positive growth in the wallet balance of miners in August, miners are still willing to hoard coins.

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Due to the drop in computing power, the short-term hash difficulty band of Bitcoin has crossed the long-term hash difficulty band, which is usually accompanied by a price drop in history. The core logic is that price drops or external force majeure causes miners to shut down their computing power. The former is due to reduced profits and miners choose to clear out actively, and the latter is usually accompanied by supervision, and supervision will also cause market panic, and panic will collapse the market. price.

Regardless of the reason, the final result is reflected in the price. The decline in the price has led to an increase in the attractiveness of Bitcoin’s valuation, which also means that the decline in the hash difficulty zone usually heralds the arrival of a phased bottom area. By observing the relationship between the historical hash difficulty zone and the price, every time the short-term hash difficulty zone crosses the long-term hash difficulty zone, it is the bottom area.

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3. Outlook

Due to the huge on-chain swaps near the 30,000-40,000 USD, there are a large number of giant whales buying bitcoins at this price, and this location has a higher probability of becoming a golden pit in the long run. The price range near USD 42,000 is also the price range that has been continuously tested before. It belongs to the position where the pressure level and the support level before the capital increase are swapped. If there is a larger correction, USD 42,000 will be a phased callback. Support price.

At present, BTC has risen for 5 consecutive weeks, and it has not risen more than 5 weeks in a row in history. As time goes by, the probability of a callback has increased. However, due to the strong fundamentals on the chain, there is huge buying support when entering the range below 40,000, so if the market outlook is corrected, the amplitude will not be particularly large. If there is a callback, it will be an opportunity to increase positions. Overall, we remain optimistic about the market in the next few months.

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4. Report conclusion

At the macroeconomic level, the statement made by Fed Chairman Powell at the Jackson Hole Global Central Bank Annual Meeting convinced the market that there is a high probability that the Fed will continue to maintain the current policy and that it is impossible to raise interest rates in the short term. As for the reduction in the scale of bond purchases, it is not clear. Time window. The market continues to bet that the United States will continue to release water or maintain its current state, which is conducive to the performance of risky assets.

In August, the exchange BTC reserve balance remained stable overall. The monthly net flow of the exchange was about 10,000 (net recharge). The current exchange BTC reserve balance was about 2.46 million, an increase of about 10,000 from July. The trend of ETH withdrawal is relatively obvious, with 710,000 coins withdrawn in a single month.

The main reason for the increase in BTC this month is that investors, especially the supply shock caused by the increase in investor demand in the previous period, led to a gradual imbalance in supply and demand that triggered a pulse-like rise. The valuation indicators on the BTC chain reflect that the current market is still dominated by strength, and the fundamentals are still healthy.

Due to the popularity of NFTs, the activity on the Ethereum chain has increased significantly. Since the ETH London hard fork, the Opensea platform has dominated the number one application in ETH burn volume. This situation has accelerated the withdrawal of ETH on the exchange. In addition, the beacon chain deposit contract also saw a large pledge lockup this month, which put pressure on the exchange’s ETH stock.

The realized price of ETH has reached a new high, and the proportion of miner fees has gradually increased, indicating that the activity on the chain is in a high boom stage, and the NFT boom is gradually an important reason for the increase in activity on the Ethereum chain. Some of the current NFT sections, such as Cryptopunks, have continuously raised the floor price of the project through the issuance of tokens that track the NFT project. This can bring high liquidity and value discovery functions to the punks project, but there are already some projects in The overheated hype stage is even a bit silly. This is often a feature of the mid- to mid-to-late stage when the industry has stepped into phased hype. The risks brought by this need to be cautious.

The BTC computing power market has accelerated its recovery, and it has risen from 110EH/ in early July to around 125EH/s. With the recovery of computing power, the difficulty of mining has also ushered in several upward adjustments, which has a positive effect on boosting confidence in the market. Throughout history, every time the difficulty of mining drops sharply, it is a good time to buy bottoms.

Due to the huge on-chain swaps near the 30,000-40,000 USD, there are a large number of giant whales buying bitcoins at this price, and this location has a higher probability of becoming a golden pit in the long run. The price range around USD 42,000 is also the price range that has been continuously tested before. It is the position where the pressure level and the support level before the pull up are swapped. If there is a larger correction, USD 42,000 will be a phased callback support. Price. Overall, we remain optimistic about the market in the next few months.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/monthly-research-report-on-encrypted-digital-assets/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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