Research

Research: Investors hold Bitcoin, Ethereum over stablecoins in risk-off environment

Published

1 week ago

January 23, 2023

Research: Investors hold Bitcoin, Ethereum over stablecoins in risk-off environment Samuel Wan · 5 hours ago · 2 min read

Despite current risk-off sentiment, investors signal confidence holding BTC and ETH on exchanges over stablecoins.

2 min read

Updated: January 23, 2023 at 9:07 pm

Cover art/illustration via CryptoSlate

Glassnode data analyzed by CryptoSlate suggests that investors are confident holding Bitcoin and Ethereum, over stablecoins, during the current risk-off environment

As previously mentioned, billions in stablecoins have been redeemed for fiat in recent months. A significant factor in this was the Binance insolvency FUD, which sparked a run on the exchange.

However, as the FUD died down, on-chain metrics show Bitcoin and Ethereum’s buying power, relative to stablecoins, is on the up.

BTC & ETH purchasing power on the up

Stablecoins fulfill multiple functions, including facilitating on/off ramping and as a store of value, particularly in Southern Hemisphere countries that typically experience high inflation.

The chart below shows the 30-day change in stablecoin buying power on exchanges. It works by taking into account the supply of the top four stablecoins, USDT, USDC, BUSD, and DAI, then subtracting the USD-denominated change in BTC and ETH exchange flows over the period.

Charting in green denotes an increase in stablecoin volume flowing into exchanges relative to BTC and ETH flows. This suggests there is greater stablecoin-denominated buying power in proportion to BTC and ETH buying power.

By contrast, the red charting signifies a decrease in stablecoin volume relative to BTC and ETH. In other words, BTC and ETH-denominated buying power is greater relative to stablecoin buying power.

The orange bars refer to the 30-day USD volume of BTC and ETH being positive, i.e. when stablecoins are converted to BTC and ETH rather than USD.

Typically, during risk-off sentiment, stablecoins increase in volume as investors move to minimize the impacts of price volatility. Yet the chart below shows investors are acting contrary to expectations by increasing BTC and ETH inflows to exchanges.

The last time this happened was in October, for a brief period. Notably, the current dominance of BTC and ETH exchange volume over stablecoins has extended for approximately seven weeks at this point. This suggests confidence in the top two tokens holding current price levels.

Exchange buying power net position change: (Source: Glassnode)

Bitcoin Stablecoin Supply Ratio

The Stablecoin Supply Ratio (SSR) metric refers to the proportion of Bitcoin supply against stablecoin supply, denoted in BTC.

A high SSR indicates low potential buying pressure and is considered bearish. Conversely, a low SSR means high potential buying pressure making this situation bullish. When the SSR is low, the current stablecoin supply has more “buying power” to purchase BTC.

The chart below shows SSR breaching the upper bound line for the first since Jan 2021, which coincided with BTC’s run to $65,000. The previous instance of breaking the upper bound line was in July 2019, as BTC spiked to $14,000 after the $3,300 market bottom.

Stablecoin Supply Ratio: (Source: Glassnode)

The above indicates bullish tailwinds, despite the current risk-off environment.

Crypto

Switzerland Less Affected By Crypto Industry Crisis, Study Finds

Published

1 week ago

January 21, 2023

Lubomir Tassev

Switzerland Less Affected By Crypto Industry Crisis, Study Finds

While the global industry built around digital assets is losing funds and jobs are dropping off, Switzerland seems to be weathering the storm relatively well, one piece of research claims. In fact, more crypto companies settled in the country during the past turbulent year than those that left it, or the business altogether.

Crypto Valley in Switzerland Maintains Number of Residents Despite Crypto Winter

The market downturn and the collapse of platforms like cryptocurrency exchange FTX and the Terra-luna ecosystem sent shockwaves through the industry. The negative events of 2022 led to losses for investors, customers, and companies while major players like Coinbase and Genesis announced layoffs.

However, data compiled by the venture capital firm CV VC shows that crypto-friendly Switzerland hasn’t witnessed anything too spectacular, Swissinfo reported. According to its ‘Top 50’ report, 183 Swiss blockchain businesses went bust last year, but 190 startups and foreign companies opened new offices.

The researchers also found that the Swiss Crypto Valley, centered in the canton of Zug, now has approximately the same number of entities as in 2021 — currently 1,135. They employ 5,766 people, which is only around 4% less than before the crypto winter started.

The most prominent Swiss-registered companies that went under were FTX Europe and the crypto asset manager Covario. “The Swiss branch of U.K.-based crypto lender Nexo is also under the microscope after the company’s Bulgarian offices were searched,” the news portal remarks.

Meanwhile, none of the other big names has admitted to being severely impacted by the ongoing volatility in the sector. One of the reasons for that, the article points out, is the attitude of Swiss authorities regarding potentially corrupt enterprises.

For example, Switzerland’s Financial Market Supervisory Authority blocked an attempt by the FTX subsidiary to acquire the Swiss Neue Privat Bank, citing insufficient regulatory oversight over the group’s other global activities.

The CV VC study also shows that the valuation of the top 24 blockchain companies increased 55% to $9.7 billion despite crypto assets losing significant value. The biggest gainers among them are 21Shares, an issuer of crypto-backed exchange traded certificates, and Gnosis Safe, which manages Ethereum-based assets. Both have been valued at over $1 billion, according to the report.

Tags in this story

Crypto, crypto industry, Crypto Nation, crypto sector, Crypto Valley, Crypto Winter, Cryptocurrencies, Cryptocurrency, CV VC, data, report, Research, study, swiss, Switzerland

Do you think Switzerland can lead the way to a recovery in the crypto space? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

Image Credits: Shutterstock, Pixabay, Wiki Commons, Prath / Shutterstock.com

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Featured

Research: A review of bitcoin mining company holdings in 2022

Published

2 weeks ago

January 17, 2023

Zeynep Geylan

Research: A review of bitcoin mining company holdings in 2022 Zeynep Geylan · 2 hours ago · 3 min read

Marathon, Hut8, and Riot collected the largest amount of Bitcoin while Bit Digital emerged as the one that increased its mining capability the most.

3 min read

Updated: January 17, 2023 at 10:24 pm

Cover art/illustration via CryptoSlate

Glassnode data analyzed by CryptoSlate shows that Marathon, Hut8, and Riot built the top three largest Bitcoin (BTC) pools, while Bit Digital recorded a 134% growth in reserves in nine months.

BTC miners in 2022

BTC miners entered the year 2022 with resources acquired through cheap debt in 2021. The majority of them invested these resources into growing their ASICS, which kept increasing their BTC holdings until May.

Public Mining Company BTC Holdings

However, the bear market started in May introduced immense pressure and led to distribution across miners. The Russian-Ukraine war increased energy costs, the BTC price fell, and the hash rate increased, which heated the competition for block space.

Distribution emerged as the main theme for BTC miners in the second half of 2022. However, the BTC volume in exchanges didn’t grow. Throughout the whole year, less than 60,000 BTC got sent to exchanges.

Year-end reserves

Marathon, Hut8, and Riot became the top three companies with the largest total BTC holdings, with 12,232 BTC, 9,086 BTC, and 6,952 BTC, respectively.

Public BTC Mining Companies – Total Reserves

Marathon’s holdings account for 27.7% of the combined BTC pool of the top nine mining companies, while Hut8 and Riot account for 20.4% and 17.5%, respectively.

Top 9 Companies

CryptoSlate analyzed the top nine BTC mining companies in detail. Marathon, Hut8, HIVE, Riot, and Bit Digital ended the year by growing their holdings.

Top 9 Company Holdings

However, Bit Digital recorded the most impressive growth in mining capabilities throughout the year. Bit Digital started its operations in April and mined 754 BTC in the first month. For the rest of the year, the company recorded a 134% growth in reserves and reached 1,765 in December.

Marathon started the year with 8,595 BTC, recorded a 42% increase, and saw 12,232 BTC in December. The 5,826 BTC Hut8 had in January increased to 9,086 by December, reflecting an almost 56% increase. Finally, HIVE’s January reserves were at 2,043 BTC, which grew by 14.9% throughout the year and reached 2,348 BTC in December.

Bitfarms entered the year with 4,600 BTC and recorded a 91% decrease by falling to 405 BTC in December. Similarly, Argo held 2,748 BTC in January, which fell to 141 BTC in December, marking a 94.8% decrease. CleanSpark’s BTC reserves fell by 51%, falling from January’s 471 to December’s 228. Finally, Core Scientific couldn’t survive the winter. The company entered the year with 6,373 BTC and went bankrupt in December.

First two weeks of 2023

The year 2023 started with the least amount of selling pressure of the past three years. The chart below represents the flow of BTC from miner wallets to exchanges.

BTC flow from miners to exchanges

According to the data, only 88 BTC got sent to exchanges in the last two weeks.

Read Our Latest Market Report

Investments

Shift toward Liquid Staking Derivatives expected after ETH Shanghai upgrade

Published

2 weeks ago

January 15, 2023

Josh OSullivan

Shift toward Liquid Staking Derivatives expected after ETH Shanghai upgrade Josh O’Sullivan · 12 hours ago · 3 min read

Ethereum’s Shanghai upgrade in March will enable withdrawals from the beacon chain by granting ETH validators the ability to unstake.

3 min read

Updated: January 15, 2023 at 7:29 pm

Cover art/illustration via CryptoSlate

The Ethereum (ETH) Shanghai upgrade is due to release March, enabling withdrawals from beacon chain and allowing ETH currently staked in ETH 2.0 validators to be unstaked.

With over 70% of ETH stakers currently at a loss with their ETH inaccessible, the Shanghai upgrade will enable stakers access to their ETH and decide whether to sell at a loss or hold long-term until back in profit.

Ethereum: Mean and Median Block Interval – (Source: Glassnode.com)

Post-ETH merge

Back in September 2022, the ETH merge took place in the Bellatrix upgrade. In the process, block validation was taken over by the beacon chain completing the transition from Proof of Work (POW) to Proof of Stake (POS).

The beacon chain is organized by validators who have deposited 32 ETH before being able to begin operations. Currently, the number of beacon chain validators has reached 500,000 — with a recent burst in new active validators — with a total of over 16 million ETH staked in the ETH 2.0 deposit contract.

Ethereum: Proof-of-Stake Change in Active Validators – (Source: Glassnode.com)

New ETH credentials format

Validators who wish to withdraw their staking rewards must ensure their withdrawal credentials are updated to the new “0x01” standardized format. The same prerequisite exists for validators who wish to stop validating or exit their full balance.

Currently, roughly 300,000 validators have yet to update their credentials from “0x00” while roughly 200,000 validators have already updated on the beacon chain.

Of the 500,000 total validators, the over 16 million ETH they have staked represents roughly 13% of the total ETH supply — which will change as time goes on as the result of:

Slashing — in the event of malicious behavior.
Revenue earned from issuance and fees.
Inactivity leak — if validators will block or attestations.
New deposits and, eventually, withdrawals.

Ethereum: Proof-of-Stake Total and Effective Balance – (Source: Glassnode.com)

Liquid Staking Derivatives

Due to the nature of staked ETH, it is an untradeable asset once staked. As such, numerous providers emerged that allowed ETH to be staked in return for a tradeable asset representing a share of the staked ETH — known as Liquid Staking Derivatives (LSD).

To date, Lido is by far the largest LSD provider, with a market holdings amount of around 5 million ETH. However, currently staking providers such as Lido, Coinbase and Binance control large segments of the ETH market — revealing issues with centralization.

Ethereum: ETH 2.0 Total Value Staked by Provider [ETH] – Source: CryptoSlate.com

As an asset geared towards decentralization, ETH holdings amassed by the aforementioned ETH staking providers lend to the narrative that ETH is becoming too centralized — and ultimately controlled by companies with the largest holdings.

With the integration of the upcoming Shanghai upgrade, ETH investors and validators alike will be gearing up to withdraw staked ETH in favor of positions that allow the share and value of their staked ETH to be returned in the form of LSDs.