Crypto Market And Legacy Report By Onchainlabs (April 28 2022)
We are now heading towards May 3rd and this will be an important date for markets as we will have the Rate Hikes event. Based on recent comments and market expectations is possible to see a 50 basis point rate hike and also FED plans on reducing the balance sheet. In the last weeks we have seen the increase in tension and fear regarding economic activity.; Rusia/Ukraine war has escalated and China is in another COVID-19 lockdown. This both issues will cause greater supply chain shocks that will turn into pushing inflation higher, so it’s possible to see even higher rate hikes on the next months events.
Rising Rate Hikes will only increase the probability of an economical disaster that will lead us into a full scale economic recession; we are already seeing the DXY breaking out above previous monthly highs and the US Dollar strength will cause serious harm to risk on assets and other nations financial stability. All of the above are significant macro concerns and this will likely hurt markets prohibiting them to gain real upside momentum.
Now that we now the macro conditions, let’s take a look at some of the on-chain metrics to asses what’s happening behind scenes on the crypto market.
Metric 1 — Bitcoin — Exchange Net Flow
The Exchange Net Position is basically showing us that there has been increased levels of accumulation on the current Bitcoin macro range. This red Spikes show coins leaving exchanges and flowing into private/cold wallets. This accumulation levels are pretty similar to the ones we saw on June/July of 2021 where we saw the largest number of outflows in Bitcoin History.
Metric 2 — Net Unrealized Profit/Loss
This metric basically indicates that values above “0” are when the majority of investors are more likely to be in profit regarding their holdings. The latest value of this metric is 0.37 which actually means investors are in anxiety phase where they are currently in a state of moderate unrealized profits. This is extremely clear on terms of Bitcoin market structure since we have been in a macro range in between 44.500 and 35.000 since Jan,2022. This are normal range bounds in which predominant investors sentiments are fear and anxiety; summed by macro economic uncertainty, we can say that there’s no clear trend and the most likely scenario is to continue in this range for more weeks/months.
Metric 3 — Large Wallet Inflows & Network Activity
To add some confluence on the Exchange Net Flow metric, this Large Wallet Inflows chart is showing us that despite investors sentiment we have seen large accumulation during this months range bound.
Bitcoin — Network Activity
This second metric show us that Active Addresses are in a general downtrend, although over the last market range period, we can clearly see the same behavior on active address meaning there’s a lot of anxiety and confusion regarding actual prices. When Bitcoin price is bullish we see this metric moving upside as well, but right now is not the case.
After analyzing economic macro conditions and some on chain metrics is clearly that there’s a lot of uncertainty on the market. Investors are currently on a state of moderate unrealized profit/losses which is normal with the current market structure. Heading towards next Rake Hike event, is possible that we don’t see any change to this in the next few weeks. The fact that we are seeing massive accumulation in current prices might give us a heads up on what is currently happening; whales and big players accumulating from retail investors selling their holdings and economic uncertainty playing a big role on what’s next for risk on assets such as Bitcoin. We will need to be patient here until next rate hike event in which the market will define the sentiment for the next few months.