Blockchain Headline Observation: Data Analysis on the Bitcoin and Ethereum Chains

Trend Analysis of Large Wallets

On February 24th, a piece of news that "giant whales dumped 140,000 bitcoins" affected the nerves of cryptocurrency investors. As the price of Bitcoin has been rising all the way, there have been some changes in the wallet address data of large households recently. This article will provide some reference for the Bitcoin market trend through data analysis.

Since March 2020, the number of holdings of wallet addresses with 1000 to 10000 BTC has been on a strong upward trend, and as of February 5, 2021, the data has increased by 14.18%. This is a prime time for Bitcoin whales to hoard coins.

However, the whale wallet appears to be "decreasing its holdings" over the past two weeks. The market is experiencing new selling pressure? Will institutions get spooked or take profits? The data changes on the chain listed in the chart below can help us understand this problem.

Since November 2020, the total number of coins held by wallet addresses holding 10-100 BTC (red line) has been on a downward trend, with a total drop of about 128,000 BTC. This trend continues.

Wallet addresses holding 100-1000 BTC have been accumulating coins since 2020, but their total holdings (purple line) dropped by 95,000 BTC from January 2, 2021 to February 5, 2021. However, since February 5, its total holdings have increased by 117,000 BTC, setting a new high.

The total number of coins held by wallet addresses holding 1,000-10,000 BTC (green line) showed a continuous upward trend until February 5. Its total currency holdings increased by about 80,000 BTC in January, but decreased by 140,000 BTC in February .

What needs to be noted is the change in the total amount of currency held by ordinary large investors (purple line) and giant whales (green line). The total amount of currency held by these two types of wallet addresses is inversely proportional. If one of them increases its holdings, the other will decrease its holdings. This change is usually caused by the transfer of chips by some large entities (such as exchanges, whales, or miners) .

This phenomenon shows that a large part of these chips were not sold, but were reorganized in escrow wallets. In January, wallets holding 1000-10000 BTC are transitioning to UTXOs (unspent outputs) between 100-1000 BTC. It is possible that BTC is being put into a multi-signature scheme, or that the custodian is undergoing an internal reshuffle to meet customer requirements.

We can provide more support for the above theory by observing the number of coins held by wallet addresses that maintain an upward trend. The hoarding wallet address refers to the wallet that holds the currency for a long time and has at least two transfers and no expenditures (except exchanges and early miners’ wallets that have not changed for more than 7 years).

In addition, the latest data released by Unchained Capital, a cryptocurrency financial services company, shows that in 2017, Bitcoin buyers controlled an increasing amount of Bitcoin supply. Since the Bitcoin price crash in March 2020, the percentage of Bitcoin supply purchased by buyers between February 2016 and February 2018 has risen from 5.57% to 13.38%. That is, the upward trend of Bitcoin in 2019, most of 2020, and 2021 did not allow investors to choose to sell Bitcoin bought during the bull market in 2017.

Analysis of the income of Ethereum miners

As we all know, Ethereum fees have been rising recently. This can be understood as users are willing to pay a fee premium for transfers. In the face of the high profits of DeFi, some users are still willing to pay high transfer fees.

It is worth noting that during the "DeFi boom" from August 2020 to October 2020 and most of 2021, the fee income of Ethereum miners has maintained a share of more than 50% of the overall block reward.

This means that the transfer fee income is equivalent to the block reward of Ethereum itself, which greatly increases the profit of mining in Ethereum. The current daily mining income of Ethereum is about 25,000 to 30,000 ETH (the purple part in the figure), which encourages miners to bring more hash rate (orange part in the figure) into the Ethereum network, thus forming safe energy and hardware Assure. On February 19, Ethereum’s hash rate hit an all-time high of 431.7 TH/s, nearly 60% higher than its market cycle peak of 292.1TH/s in July 2018.