96
Figure 1
Both Bitcoin and Ethereum saw their lowest prices in recent weeks on June 22 — with the former posting a low of $28.9k, while the latter clocked in at $1,706. And despite both the top cryptos rebounding from these lows, the broader bearish trend remains intact. At the time of writing, BTC is just above $34k and ETH is trading around $2,230.
One of the dominating themes which have kept the pressure on cryptos is the immediate threat of regulatory crackdown from the Chinese authorities. Miners in China are increasingly seeing roadblocks from the regulators in the country. Despite this dynamic, the consequences of such pressure are likely to be on long-term demand rather than immediate changes in liquidity.
According to the recent Chainalysis Market Intel, activity levels have continued to stabilize after declining in May and June. We will come back to the activity later, but first, let’s see at the data (Figure 1) which highlights the fact that Bitcoin investors may be returning to the field.
The chart above shows that investor whales who first acquired bitcoin in 2017 have increased their holdings by 42k bitcoin in the last two weeks. They are still holding 83k bitcoin less than they did at the end of April, but it is positive for the price if investor whales are buying again.
Miners in China are facing restrictions but even then the data suggests Miners who have acquired their bitcoin since the start of 2017 currently hold 187k bitcoin. This is a large amount but around 1% of the total supply. If miners were to liquidate their holdings at one, it could cause a market crash, but nothing is forcing them to sell their BTC apart from covering additional costs of responding to regulation. Also, not all miners from China.
Figure 2
Having said that, there has been a loss of BTC demand from China — exchanges related to the Chinese market have seen net outflows of at least 50k bitcoin since 19 May. A more detailed analysis of this needs to be seen to see where this demand plummeted.
Looking at the crypto activity since April beginning, the chart above (Figure 2) paints a nice snapshot. The chart on the left shows the number of transfers per day in various cryptos. The activity appears to have increased recently, although more data in the coming days would confirm or refute whether the recent trend is sustainable.
Overall, lower prices have led to lower activity, but even lower prices we have experienced recently appear to be enticing activity back. The second chart on the right seems to be indicative of the fact that investors are also returning to the crypto foray — the number of daily active crypto users has picked up.
Disruption out of China remains a big concern for the cryptos, in the long term it could reduce the total addressable market for crypto. It won’t be a fatal blow though — the digital assets may be down right now, but by now means are they out.
Originally Published on Medium
Email ??| Twitter ?? | LinkedIn ??| StockTwits ?? | Telegram ?? | Facebook ??
