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Bitcoin On-Chain Analysis: Retail Investors Aren’t Here Yet

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Bitcoin On-Chain Analysis: Retail Investors Aren’t Here Yet

Today’s on-chain analysis from BeInCrypto attempts to estimate the market stage based on an analysis of the number of new Bitcoin addresses and the percent of entities in profit. The on-chain data indicates that individual “retail” investors are not yet the dominant force in the market.

The decline in the number of new addresses and the decreasing number of entities in profit are strong signals that the market is far from the FOMO typically seen at the end of a bull market. At the same time, both indicators are providing bullish divergences to suggest that the uptrend in the crypto market may soon continue.

Bitcoin Google searches falling

One of the easiest ways to measure the hype around the cryptocurrency market, and Bitcoin, in particular, is the Google Trends tool. It can measure the search rate for the phrase “Bitcoin” in a set region and time period. The end of the bull market from the previous cycle coincided with a record level of searches for the phrase “Bitcoin” worldwide, which reached a maximum value of 100 (yellow circle) in December 2017.

During the current bull market, the Google Trends chart peaked in May 2021 at a value of 79 (green circle). Since the beginning of July, the indicator has been moving back to the range of 24-36, and this week it points to a value of 26.

Source: Google Trends

Retail is waiting for its turn: New BTC addresses

Google Trends is not an indicator of on-chain data but remains consistent. At the beginning of 2016, the graph of the number of new BTC addresses shows a picture that coincides with the aforementioned data. New BTC addresses are the number of unique addresses that appeared for the first time in a Bitcoin network transaction. The indicator is a good approximation of the network’s growth dynamics and the influx of new users.

On the five-year chart, we can see that the peak of new addresses came at the end of the bull market in December 2017 (green arrow). A sharp correction was followed by a long and slow consolidation, which also had local lows and peaks.

The last peak was reached in early January 2021 (blue arrow) after Bitcoin completed a rally from around $10,000 to the then all-time high at $42,000. Since then, a correction has been underway on the new addresses chart (red arrow), despite the BTC price reaching higher levels.

Bitcoin New Address Chart by Glassnode

Cryptocurrency market analyst @OnChainCollege found an interesting pattern in this chart. In a recent tweet, he compared the fractals of new addresses from 2017 and 2021. The chart shows that the number of new addresses is lower than when the cycle peak was reached.

He then divided the two graphs into upward and downward sequences. Their similarity suggests that the large influx of new users in this cycle is still to come. Here is how he commented on his interpretation:

“We know this. Retail isn’t here. Nothing new.”

Source: Twitter

However, in opposition to this claim, well-known on-chain analyst @woonomic tweeted a different chart. It seems to contradict earlier insights about the passive role of individual investors.

In his view:

“The last time retail bought the dip this hard was at the bottom of the COVID crash.”

Source: Twitter

Decrease in the number of entities in profit

Another on-chain indicator, suggesting that retail is far from FOMO stages is the percentage of entities in profit. The indicator takes into account all entities whose funds were on average bought at prices lower than the current price.

Counting from the all-time high of $69,000 to the current price of Bitcoin, the indicator has seen a decline of around 25%. The intensity of this decline can be compared to the crash that occurred in May.

The percentage of entities in profit nearly reached a bottom at the end of the summer BTC correction (dashed line).

Source: Twitter

The significant difference is the price of Bitcoin, which fell to $29,000 at its July low. Today, trading in the $46,000 – $49,000 range, it appears that the same percentage of traders are reporting losses.

This divergence was highlighted by analyst @Parabolic_Matt, who compared it to a similar situation in 2020-2021. Bitcoin’s price is rising while the number of entities in profit is falling (yellow lines). When this kind of bullish divergence has occurred in the past, BTC has seen dynamic upside.

Source: Twitter

Another way to interpret this divergence is that retail is joining the market. New entities buy the top with hopes, to then capitulate at the bottom and sell at a loss. This leads to another accumulation opportunity for the so-called “smart money” and the start of another wave of upside, where cheap BTC is sold more expensively to the next wave of new market participants.

The moment when the growth of new addresses becomes parabolic and the vast majority of entities are in profit will likely be a strong signal for the peak of this bull market. On-chain data indicates that this is not yet the time.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Fed report finds most Americans who own crypto tend to be high income hodlers

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Fed report finds most Americans who own crypto tend to be high income hodlers

Only 12% of American adults used crypto in 2021, and the demographic gap between those who invested in it and those who used it in transactions was enormous.

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Fed report finds most Americans who own crypto tend to be high income hodlers

The United States Federal Reserve Board has included data on cryptocurrency in its new Economic Well-Being of U.S. Households in the 2021 report. The Fed’s ninth annual report looked at survey results from 11,000 people questioned in October and November 2021. 

The report indicated financial wellbeing is the highest it has been since reporting began, with 78% of U.S. adults “doing okay or living comfortably financially.” That is an increase of 3% over the last three years. As a diagnostic of financial fitness, the report cites the 68% of Americans who say they could cover a $400 emergency expense using cash or its equivalent alone.

The report looked at cryptocurrency usage for the first time. It found that 12% of U.S. adults held or used crypto in 2020, with 11% holding it as an investment, 2% using it for a purchase or payment and 1% sending it to friends or family. Investors holding crypto “were disproportionately high-income, almost always had a traditional banking relationship, and typically had other retirement savings.” Forty-six percent had annual incomes of $100,000 or more and 89% of those who were not retired had retirement savings. Twenty-nine percent had incomes under $50,000.

Related: Rising global adoption positions crypto perfectly for use in retail

The profile of the typical user making transactions with crypto differs starkly from investors. The report claimed that almost 60% of these users had incomes below $50,000, with 20% having incomes under $25,000. Only 24% had incomes above $100,000. Thirteen percent did not have a bank account. That compares with the 6% of adult Americans who lack bank accounts. Twenty-seven percent of those who used crypto for transactions did not have credit cards, compared to 17% of the total population.

Those who used crypto for transactions faced other disadvantages as well. Almost a quarter did not have a high school diploma, according to the results of the report.

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WEF 2022: Bankers at WEF see the need for caution and speed on central bank digital currencies

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WEF 2022: Bankers at WEF see the need for caution and speed on central bank digital currencies

Experts point out sticking points as well as greatest needs in the creation of central bank digital currencies for domestic and cross-border, wholesale and retail, uses.

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WEF 2022: Bankers at WEF see the need for caution and speed on central bank digital currencies

The process of introducing a central bank digital currency (CBDC) is fraught with unknowns, some of which were elucidated in a panel of experts gathered Monday at the World Economic Forum in Davos, Switzerland. The panel concluded that good design is key to a successful CBDC, and there are fewer challenges for wholesale CBDC introduction.

Bank of Thailand governor Sethaput Suthiwartnarueput said that although many central banks are considering a CBDC, there is little practical experience with them. The Thai National Bank began proof-of-concept programs in 2018. Its mBridge project began as an experiment in establishing a cross-border wholesale payment corridor with the Hong Kong Monetary Authority and has grown to include the Bank of China, the United Arab Emirates and the Bank for International Settlements. Cross-border transactions using traditional banking technology can take days to complete, while CBDC transactions are much faster.

Suthiwartnarueput said the use of blockchain technology can have unintended consequences. It is good for transparency, he said, but anonymity affects scalability. There is risk in a CBDC’s design because smart contracts require that the handling of every situation be specified ahead of time. He cited the current sanctions on Russia as an example of a potential challenge to CBDC design. The Thai central bank is looking at a “limited pilot” for a retail CBDC in the fourth quarter of this year.

International transactions between persons, especially remittances from workers located in other countries, which make up a market of $48 billion per year, are one of the most pressing use cases for CBDCs. Suthiwartnarueput said CBDCs can carry out such transactions at 50% less expensive and 68% faster than current money transfer technology. Currently, the average fee for a transfer of this type is 6.3% of the transaction sum.

Related: WEF 2022: Crypto remittances must have allure of cash without regulatory constraints — Jeremy Allaire

Credit Suisse chairman Axel Lehmann pointed out the rapid progress being made by non-blockchain fast payment technologies and raised questions for domestic retail CBDCs, such as whether accounts with central banks would pay interest. Privacy and intermediation are other thorny issues for retail CBDCs. International Monetary Fund managing director Kristalina Georgieva said, “We feel a little behind the curve” in the creation of retail CBDCs, and Bank of France governor François Villeroy de Galhau agreed, saying a “CBDC is not the monopoly on progress,” and central banks should not waste time in introducing it.

Suthiwartnarueput and the French central banker agreed that cross-border wholesale CBDC settlements may become a reality within five years.

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fUSD stablecoin launch and rumors of Cronje’s return send Fantom (FTM) price higher

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fUSD stablecoin launch and rumors of Cronje’s return send Fantom (FTM) price higher

After a strong 2,000% rally in early 2021, Fantom (FTM) price collapsed alongside multiple altcoins and even though the blockchain has an impressive capability, it has yet to find mass adoption due to the lack of a compelling use case. FTM price hit an all-time high at $3.46, only to collapse to its pre-bull market lows under $0.25 after the failure of the Solidly DeFi project and the departure of developer Andre Cronje.  

Data from Cointelegraph Markets Pro and TradingView shows that since dropping to $0.238, FTM has rallied 119.23% to $0.5216 on May 23.

FTM/USDT 4-hour chart. Source: TradingView

Three reasons for the uptrend in FTM price are the launch of the first native stablecoin on the Fantom network, new protocol upgrades and partnership announcements, which bring new functionality to the network, and speculation that Andre Cronje is working with decentralized finance (DeFi) protocols on Fantom.

Fantom launches its first native stablecoin

The most notable development to occur in the Fantom ecosystem in the past few weeks was the release of fUSD, the first native stablecoin on the network.

The launch of fUSD comes on the heels of the collapse of TerraUSD and looks to capture some of the capital flight from algorithmic stablecoin by offering an over-collateralized alternative.

On May 20, the Fantom Foundation released an update outlining the maximum collateral factor and minting cap for each supported form of collateral. The foundation also set the fUSD staking reward at 11.3%

The update also included details on Fantom liquid staking, setting a global cap of 150 million staked Fantom (sFTM), removing validators for the list of those eligible to mint sFTM and setting a loan-to-value (LTV) ratio of FTM at 90% for the purposes of minting sFTM.

New partnerships improve sentiment for FTM

A handful of recent protocol updates and new partnerships have also helped to bring a boost in momentum to Fantom, including the launch of Snapsync, which allows new nodes to quickly join the network.

With the integration of Snapsync, the time it takes for new nodes to synch could be reduced from 24 to seven hours, helping to enhance network reliability, improve scalability and create a greater degree of decentralization.

Fantom has also announced that it is currently in the process of launching Gitcoin on the Fantom network to simplify the process of obtaining grants to develop in the Fantom ecosystem.

Fantom also partnered with Unmarshal and XP.Network. Unmarshal is a Web3 infrastructure provider that will integrate its indexing services with the Fantom protocol to give developers easy access to organized and granular on-chain data.

Through the partnership with XP.Network, Fantom users will be able to bridge nonfungible tokens (NFTs) between Ethereum (ETH), BNB Smart Chain (BNB), Elrond (EGLD), Aurora (AURORA), Tron (TRX), Avalanche (AVAX) and Velas (VLX).

Related: Crypto remittances must have allure of cash without regulatory constraints — Jeremy Allaire

Did Andre Cronje return?

Another factor, albeit speculative, bringing a boost FTM price is speculation that well-known DeFi developer Andre Cronje could be contributing toward DeFi development on the Fantom network.

Amid rumors about the return of lead DeFi developer Andre Cronje, the price of the native FTM token has risen by almost 40%. Cronje proposed a number of measures aimed at stabilizing the situation and increasing the sustainability of the Fantom ecosystem as a whole.

— Ashley Torres (@torresamba) May 23, 2022

The speculation started when Cronje submitted an fUSD optimization proposal that designed to solve a major depegging issue with the stablecoin on May 20 . A Fantom wallet that is believed to belong to Cronje has also added more than 100 million FTM over the past two weeks.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for FTM on May 20, prior to the recent price rise.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. FTM price. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score for FTM spiked to a high of 89 on May 20 at the same time as its price began to increase 62.3% over the next three days.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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