After experiencing a surge in the first quarter, Bitcoin (BTC) has been relatively quiet in the second quarter so far , even when Ethereum (ETH), Dogecoin (DOGE) and other crypto assets exploded.
In 2020 and early 2021, changing macroeconomic conditions helped drive the rise of BTC and brought a new wave of institutional investors. Now, the macroeconomic conditions may once again turn in favor of BTC .
After the dollar (DXY) strengthened during March, it weakened during April and fell again last week. Many investors now expect monetary easing to last longer than previously thought, because there are signs that the economy is still recovering . Historically, BTC will rise when the US dollar weakens. In the short term, this may be good news for BTC.
In addition, data shows that the condition of the BTC market is healthier than a few months ago. The open interest of the BTC perpetual contract has reached its lowest level in several months, which indicates that the leverage ratio is decreasing from the system . This has laid a healthier foundation for the next rise in the BTC market.
Bitcoin’s computing power surged in early May and reached a record high . Prior to this, a regional power outage in China in April forced some mining machines to go offline, and Bitcoin’s computing power fell sharply. This decline frightened some investors, who were worried that there might be a greater decline and sold. But within a month, the computing power has fully recovered and returned to a higher level than before the decline .
The increase in computing power is a healthy sign of Bitcoin’s continued growth. In addition, the rebound shows that Bitcoin is resilient and able to recover quickly after an accident.
Although retail investors have been pouring into DOGE and other small-market value crypto assets, the number of retail investors in BTC is still growing. Since the beginning of this year, the number of addresses holding a relatively small amount, that is, between 0.01 and 1 BTC, has increased by 710,000, and there has been a big increase in April. In 2020, the number of addresses held between 0.01 and 1 BTC has increased by 610,000 in total.
Another sign is that the value of on-chain transfers soared to an all-time high in April . In April, there was a total transfer value of US$447 billion, compared with US$366 billion in March and US$319 billion in February.
Despite the relatively sluggish price trend, the Bitcoin ecosystem can continue to expand. On May 5, NYDIG announced that BTC will enter hundreds of U.S. banks later this year . Bank customers are expected to be able to buy, sell and hold BTC through their existing accounts, which may bring in many new investors. Another sign of growth is that Square recently shared that BTC accounted for 15% of Cash App’s gross profit in the first quarter, up from 8% a year ago.
And Bitcoin technology is also undergoing a major upgrade. The activation of Taproot has officially started, because the miners have begun to signal support . Taproot is expected to go live later this year, and it will bring many major improvements to the way Bitcoin transactions work, including reduced fees and increased privacy. It will also lay the foundation for enhancing smart contract functions and improving the Lightning Network.
With so many things happening in the cryptocurrency space, it is easy to forget that Bitcoin is still growing rapidly. Given the positive momentum in most aspects, Bitcoin may surge again in the second half of this year .
Ethereum (ETH) has continued to break through historical highs in the past week, and the on-chain indicators have also risen across the board. The adjusted transfer value increased by 149% from week to week, with an average of 31.9 billion U.S. dollars per day, which is more than double the BTC’s daily average of 14 billion U.S. dollars. Expenses also resumed their rise, increasing to $29.1 million per day. The daily active addresses increased to more than 803,000, an increase of 6.3% within a week.
Below we delve into some new indicators. Moreover, you can continue to use our free chart tool and formula generator to explore and download our community data.
The BTC age distribution band, also known as the “HODL wave”, shows the supply of BTC, grouped by the time since it last moved on the chain. The HODL wave gives a macro view of the changes in BTC supply over the years.
Looking up from the bottom of the chart, the red band shows the percentage of recently active supply, ranging from less than one day to 90-180 days. The “1-7 days” band refers to the percentage of the total supply held for at least 1 day but less than 7 days, and the “7-30 days” refers to the percentage of the total supply held for at least 7 days but less than 30 days, etc. .
In addition to the traditional market value, we have also added several new market value versions. Realized cap was launched in 2018 and it gives a longer-term, slow-moving measure of the total valuation of Bitcoin. Realized cap is calculated by separately valuing each unit of Bitcoin at the price of its last transaction on the chain. Free-floating market value is calculated by more accurate measurement of the freely circulated supply in the market.
The ratio of market value to realised market value (MVRV) has historically been a relatively accurate indicator of local market cycles . We have now added a freely circulated MVRV to the community indicators, and it has adjusted the MVRV to take into account illiquid supply.
Finally, we added a set of supply distribution indicators. The chart below shows the percentage of the total supply of BTC held by addresses in different ranges. Looking up from the bottom of the chart, the first interval shows the percentage controlled by addresses holding 0 to 1 BTC, and the next interval shows the supply controlled by addresses holding 1 to 10 BTC.