Cash flow shifting from BTC to ETH

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2021-07-24 07:32:58

Ethereum is the 2nd largest cryptocurrency by market capitalization in the Crypto market and has a huge influence on the DeFi market, just behind Bitcoin. Therefore, on-chain analysis for ETH to forecast the market is very important.

With the recent quietness of the Ethereum network and ecosystem as well as the unstable market, the price of ETH is also quite negative. Therefore, in this On-chain Microscope I will continue to analyze and make projections for ETH based on recent On-chain data. Is the trend of cash flow shifting from BTC to ETH happening?

Data from exchanges

Amount of ETH on the exchange

If in the analysis On-chain Ethereum data First, you can see an uptrend in the amount of ETH on the exchange, the recent data has shown the opposite.

The amount of ETH on the exchange continues to decrease

Accordingly, the number of ETH on the exchange decreased sharply after a slight increase at the end of June 2021. Specifically, the amount of ETH on the exchange from the beginning of the month to now has decreased by about 6.5%, equivalent to 1.35 million ETH lost on the exchange (about $2.6 billion at the price of $1900/ETH).

Compared to the entire time during the previous bull run, now the number of ETH on the exchange has officially dropped to the All Time Low level within the past 1 year.

The amount of ETH on the ATL exchange.

In terms of the amount of ETH on the exchange that can be seen, this is very positive news that will greatly support the price in the next bull run.

ETH Exchanges Inflow

In terms of the amount of ETH deposited on the exchange, we see the current sideways trend.

The amount of ETH deposited on the exchange tends to have less impact on the price.

There are only a few days when we see more ETH deposited on the exchange than other days. And as you can see in these days, the more recent the degree of influence on the price decreases.

Compare with the trend of uploading to the exchange of ETH during the period from the end of May 2021 to the end of June 2021. Recently, the amount of ETH deposited on the exchange has tended to decrease and is less volatile and more stable.

In summary, when observing the data on the amount of ETH deposited on the exchange, we can see that there is a trend in the selling force is decreasing. Combined with the data on the amount of ETH on the exchange, it reinforces this point.

ETH 2.0 Staking

Next, I will analyze for you the data about the Staking situation ETH 2.0 to see how community trust in Ethereum is going?

Staking Ratio

This is the metric of the ratio of ETH Staking in Smart Contract ETH 2.0 to the total supply of Ethereum.

Staking Ratio ETH 2.0 continues to grow

Other positive news for ETH Hodlers is that, despite the negative price movement, the amount of ETH being staked into ETH 2.0 continues to increase. Since the beginning of July 2021, this has increased from 4.49% to 5.46% (equivalent to 1.13 million ETH – about $2.15B at a price of $1,900).

This further proves that the number of people who believe in the future of ETH is still increasing. Moreover, having an amount of ETH of more than 2 billion USD being staking will reduce the Sell Pressure for ETH.

Staking Inflow Total

This metric will tell you the amount of ETH participating in Staking in a specific time period.

The amount of ETH participating in new staking tends to decrease

Although the amount of ETH participating in Staking continues to increase, we see that the growth rate seems to be on a downward trend. The proof as you can see in the picture above is that recently the amount of ETH deposited into the ETH 2.0 contract is on a downward trend.

However, if you look at it from another perspective, this is not necessarily a negative sign.

The amount of ETH participating in Staking is different in different stages

It can be seen that, during the growth phase, the amount of ETH participating in new staking is generally lower than during the period when the price has a sideway or goes down like the recent strong correction. We can get another perspective from this data:

  • During the growth period, the need to use ETH as a transaction fee on the network is very large, so the need to participate in Staking is less.
  • With the recent drop in the amount of ETH participating in staking, it could be a sign that the demand for ETH and transaction fees is increasing again.

We also need to further analyze the indicators on the ETH network to see if this thesis is highly reliable.

Ethereum Network Metrics

Number of Transactions on the network

The number of Transactions on the network has generally been flat lately.

The amount of transactions on the network is flat

Specifically, the 7-day average number of transactions is currently around 1.2 million (about 25% down from when it peaked around mid-May).

Therefore, considering the data on the number of Transactions on the network, it is still not possible to confirm the point I made above.

Number of active wallet addresses

The number of Active wallet addresses on the network is also moving in sync with the number of Transactions as the trend is still sideways and shows no signs of growth.

The number of active wallets also tends to decrease

Even compared to the beginning of the month, the number of Active wallet addresses decreased significantly by 12% (From 537,000 to only 473,000).

In terms of the number of new wallet addresses, the data is similar.

The number of new wallet addresses is also decreasing

Compared to the beginning of July, the number of new wallet addresses opened on average 7 days has a sharp decrease of 20% (From 99,000 to only 79,000).

In general, the Ethereum network is still quite bleak, and the demand for buying ETH as a transaction fee is generally not growing, even trending down.

Gas Fee

Data about Gas Fee on Ethereum does not show much difference compared to the two indicators above.

Although the performance is more positive than the above two indicators, the average Transaction Fee is still around $5 (no growth).

One thing you need to keep in mind is updating EIP-1559 The Ethereum network has yet to be officially implemented, the stable Gas Fee at this low is simply due to the relatively low level of activity on the Ethereum network at the moment.

Thus, considering some important indicators above, it has negated the argument that the decrease in Staking 2.0 Inflow is due to the increased demand for ETH for trading on the network.

So where is the point that makes Buy Demand increase in the near future?

  • In my personal opinion, in the context of sidechains like BSC or Polygon As strong as it is now, the demand from using ETH as a transaction fee will not tend to increase sharply.
  • Buy Demand will therefore come from the EIP-1559 update making ETH more scarce.

Institutional Highlights

In this section, I will analyze some investment highlights from institutional investors in the traditional financial market.

In general, I am currently seeing signs of a trend in which institutional investors prefer to invest in Ethereum over BTC. However, there are only a few very small signs, these signs are found by me through the signs below.

Digital Asset Fund Flow

These data are collected by me from Medium of Coinshare Blog.

In terms of recent overview, the cash flow from investment funds in the traditional financial market into the market is almost nonexistent (Even a slight sign of withdrawal).

The above data shows that currently the cash inflow and outflow seem to be equal. Thus, we will consider which Assets are currently being poured in as well as withdrawn.

According to data from Bloomberg & Coinshare (updated on July 16, 2021), you can see investment funds are withdrawing their money out of BTC but into ETH.

Specifically, since the beginning of the month, funds have net withdrawn from BTC is 15 million USD and net deposited into ETH is 14.4 million USD.

While 14 or 15 million USD is not a large number, it is a sign that there is a shift in money flow from BTC to ETH coming from institutional investors in the traditional financial market.

Grayscale Premium

Another factor that is evidence for the thesis that there is money flowing from BTC to ETH is that we consider the Grayscale Premium factor.

For those of you who are not sure how Grayscale works as well as Grayscale Premium, you can read about how to optimize profits when investing with Grayscale.

In terms of Grayscale Premium for ETHE, the Premium number remains negative (general condition of Funds in Grayscale when the market declines). The number remained in the range of 3.5% to -11% (the time I counted since the market plummeted with the 50% correction of BTC).

Compare with GBTC Grayscale Premium.

The volatility of Premium ranges from -4% to -14% (sometimes even reaching -20%).

Therefore, it seems that investors in the traditional financial markets are more interested in ETH. Accordingly, the Buy Demand for ETHE is more than GBTC leading to the Discount of ETHE being lower than that of GBTC.

Some other signs

Another sign you can watch is the comparison of the amount of BTC on the exchange with ETH.

As you can see, the trend of the amount of BTC on the exchange is sideways (there are even signs of a slight increase in recent times), in stark contrast to the trend of the ETH I analyzed above, which is down. .

In addition, another piece of information is that in July, Rothschild Investment – an investment company bought more ETHE and GBTC (roughly buying ETH and BTC indirectly through Grayscale).

The source: Coindesk

Accordingly, the amount of ETH this company is holding is more than BTC ($ 6.2 million compared to $ 4.2 million of BTC).

In general, the current signs are not clear, but it is also showing a trend in the shift of money flow from BTC to ETH coming from investors in the traditional financial market.

summary

So, after analyzing the On-chain data about ETH, I can give you some conclusions as follows:

  • Based on On-chain data from exchanges, selling pressure on ETH will continue to decrease in the near future, helping to reduce sell pressure and provide a good foundation for future growth.
  • The number of ETH participating in Staking into Smart Contract ETH 2.0 continues to increase, but the amount of ETH participating in staking shows that the decrease is not a positive sign.
  • Activity on the ETH network is still quite bleak and tends to continue to decline.
  • Therefore, the upcoming Buy Demand for ETH is most likely not stemming from the demand for ETH as a transaction fee but rather the fact that ETH is a more attractive investment asset with the EIP-1559 update rolling out.
  • There are currently (albeit very small) signs that there is a shift in money flow from investors in the traditional financial markets from BTC to ETH.

Hopefully the article has provided more perspectives on ETH On-chain data. I hope this will be a useful reference source in your investment.

See you guys in the next On-chain ETH analysis numbers!

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#Cash #flow #shifting #BTC #ETH

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