Original title: Bitcoin Onchain Data Update

Original author: MICHAEL NADEAU, The DeFi Report

Original compilation: Frank, Foresight News

Bitcoin is up 45% in February. Since the launch of the spot Bitcoin ETF, we have seen more than $6.7 billion in net funds flow into the new ETF product. The current Bitcoin price is also less than 10% away from the all-time high. , but the market feels surprisingly quiet.

My gut feeling is that incremental retail investors have not yet entered the market. Why? Because so far,I have yet to have a random conversation about cryptocurrencies with anyone in my daily life, including Didi/taxi drivers, hairdressers, college students, estate sales, neighbors, friends/family.

The largely muted response made me realize that we are still in the early stages of a new cycle - where native cryptocurrency users make up the majority of market participants and are tentatively aware that we have entered a bull market.

However, when we look at on-chain data, there is no need to rely on intuition and intuition. To be honest, sometimes with the help of on-chain data, I feel as if I have inside information. Of course, I still remind myself that the public chain is transparent... It happens that when it comes to cryptocurrencies and on-chain data, we Its still early days, and the market doesnt quite know what signals to look for yet.

But this certainly wont last forever, so lets enjoy it while it lasts. So in this report, we’ll take a quick look at where we are in the current cycle using purely on-chain signals, including:Market indicators, long-term holder behavior, miner behavior, exchange balance and leverage data, and more.

Ratio of total market capitalization to realized market capitalization

The first is the ratio of total market capitalization to realized market capitalization (MVRV) – as the name suggests,The MVRV ratio measures realized market capitalization (which represents the underlying cost of all Bitcoins in circulation) relative to the current total market value,This is one of the market’s favorite top and bottom signals.

Foresight News notes that the realized market capitalization is calculated based on the price of each Bitcoin at the time of its most recent movement. It takes into account the last price of all on-chain transactions and can be regarded as a more real long-term measure of Bitcoins value. Indicators can more accurately reflect the market value of Bitcoin.

What is the situation now?MVRV has just reached 2, which is consistent with the early stages of the past several bull and bear cycles, indicating that the bull market cycle has just begun,Previously in 2021, we reached a peak value of 7.6 at the peak of the bull market.

When the orange line in the above chart is close to the red horizontal area, it means that the market has reached the expected price high, but it is still far from that level.

What the average retail investor needs to remember is that the only way to make money investing in cryptocurrencies is to buy good cryptocurrencies when everyone wants to get out. And in the chart above, these are the periods when the orange line touches the green horizontal area.

So in the last bear market, everyone had 6 months to accumulate their chips, and those who did did so had 2-4x gains in Bitcoin.

Bitcoin dominance

Historically, Bitcoin has tended to be the first to emerge from the crypto market’s bear market cycle troughs and enter the next bull market. At the beginning of a bull market cycle, Bitcoins dominance will gradually weaken as the wealth effect begins to take effect and long-term holders will turn to other cryptocurrencies to obtain more profits.

So what did we see today? Bitcoin’s dominance is rising, once again leading the market out of the bear market, and now accounts for 51% of the cryptocurrency’s total market capitalization. This once again confirms that the market is in the early stages of a bull market. For reference,In the last cycle, Bitcoin reached 70% dominance before the “altcoin summer” began.The market will certainly not replicate this data exactly, but expect Bitcoin’s dominance to continue to grow as it approaches all-time highs.

Long-term Holder holdings

The current long-term Holder holdings are 14,658,031 Bitcoins, accounting for approximately 74.6% of the circulating supply.To be clear, Glassnode defines long-term holders as Bitcoins in on-chain addresses that have not moved for more than 155 days.

This is the smart money of Bitcoin, those who buy at cycle lows and have a long-term hold belief. We can see in the chart that as each cycle heats up, this group tends to reduce their holdings, as shown in the chart above, where the orange line starts to fall.

Long-term Holder net position changes

Looking at changes in long-term Holder’s net positions, we seeThe first sell-off of long-term holders since the market bottomed in December 2022,Again, this is consistent with the early stages of a bull market.

Lets switch gears and look at what the miners are doing.

Changes in miners’ net positions

What are the miners doing?

They have been selling BTC during the recent rally. In fact,Since early November last year, miners have sold an average of 4,802 Bitcoins per day.

Considering that the entire Bitcoin network can only mine 900 Bitcoins per day, over 4,800 Bitcoins is already considered a considerable amount of selling.

Why is there so much selling pressure? We believe that mining companies are strengthening the companys capital reserves before the halving - after all, halving also means that the revenue of mining companies is halved, so it is undoubtedly a wise move to sell early to make financial preparations.

But what’s even more surprising is that even under such continued selling pressure, the price of Bitcoin is still rising strongly.

The reason behind this is naturally inseparable from new financial products with liquidity such as spot Bitcoin ETF...

Spot Bitcoin ETF net inflows

In general,Spot Bitcoin ETFs have attracted more than $6.7 billion in inflows, and all ETF funds currently hold 753,145 Bitcoins, accounting for 3.8% of the circulating supply.

Exchange balance

Bitcoin seems to be becoming increasingly “illiquid” becauseThe amount available on exchanges currently accounts for just 11.7% of the circulating supply, which is the lowest level since late 2017.

Perpetual Contract Funding Rate

The Bitcoin perpetual contract funding rates on various exchanges have also begun to heat up, but they are certainly far from the peak levels of the previous bull market cycle.

open interest

Bitcoin open interest across exchanges is also beginning to approach peak levels from previous bull cycles – an important figure to watch in the short term.

Stock to Flow, S 2 F

Stock to Flow (S 2) is a classic model. According to its data fitting,In 2 months, Bitcoin will become the scarcest asset on earth - with a stock-to-flow ratio of over 120.

As we can see in the chart, Bitcoin’s cycle times have been very stable since its inception – visualized here with a logarithmic chart, and the colors represent the number of days until the next halving date.

Summarize

Bitcoin has entered a bull market, but we are in the early stages. Increasing retail investors have not yet entered the market on a large scale, and this time, before their FOMO, institutions bought Bitcoin in large quantities.

So how do we determine the large-scale entry of retail investors? The following signs may be details worth paying attention to in the future:

• Media coverage of Bitcoin and cryptocurrencies has been in the press;

• The Coinbase app is ranked #1 (or close to #1) in the App Store, currently ranked 186th;

• Google searches for Bitcoin and cryptocurrencies are growing exponentially;

• YouTubers promoting junk tokens have seen their subscriber numbers surge;

• Celebrities and politicians will support Bitcoin and cryptocurrencies;

• Your friend who knows nothing about cryptocurrencies is bragging about how much money he’s making;

• Your cousin tells you that he bought “Japanese Bitcoin”;

• Didi drivers, village aunts, and barber Tony kept discussing money-making projects in the Cardano ecosystem;

• The founders of Web2, who learned about cryptocurrencies a few months ago, are raising funds for new cryptocurrency projects.

Fortunately, were not there yet.

please remember,Bitcoin leads the market, while the altcoin summer will arrive later and a big correction is expected - there were 6 corrections of more than 30% in the last bull market cycle.

Wish us good luck.