The Weekly Recap: Is Crypto Heading Toward Mass Adoption?

Bitcoin

These two weeks saw the Bitcoin market partially recover from the rough start at the beginning of the month. In Week 38, Bitcoin opened at $10,340 and closed at $10,900. Its price briefly broke out above $11k on both Wednesday and Saturday but failed to garner strong support at this level. The price eventually fell back into range, trading just above the $10,000 mark. 

At the start of Week 39, Bitcoin was trading at $10,895 but quickly derailed into a sell-off on Monday — along with the decline in the stock markets. However, BTC’s price soon returned to its former trading range, ending the week at a price of $10,740. 

However, despite only sitting narrowly above its resistance level, Bitcoin has stayed north of the $10,000 mark for the longest time in history, breaking the previous record of 62 days set between December 2017 and January 2018.

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Source: Bybit Insight

The lackluster performance of altcoins in general have refocused traders’ attention back on Bitcoin, whereby it gathered momentum to reclaim market dominance, which bounced back to 58.3% from 56.6% last week. 

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Source: TradingView

BTC deposits at major exchanges have been falling consistently since March this year, and are currently at their lowest level since November 2018. 

In addition, 60,000 bitcoins became illiquid in Week 38, a reflection of a continued trend we’ve been witnessing throughout September. This indicates that the hodler mentality continues to prevail as traders expect the return of a bull run, possibly after the U.S. presidential election. 

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Source: Chainalysis

On-Chain Activities

Bitcoin’s on-chain fundamental has recovered from the slumber of the past weeks. The number of addresses holding at least 1,000 tokens has increased slightly compared to the start of Week 38. 

On the other hand, BTC accounts holding a minimum of 10 tokens dropped to a year-to-date low on September 21, implying that smallholders, who may have been spooked by consecutive rough sell-offs, were dumping. However, this figure also bounced back marginally by 0.7% toward the end of the month.

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Source: Glassnode

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Source: Glassnode

The market also observed a substantial rise in the number of on-chain BTC transactions. Both the trading liquidity and transaction liquidity saw modest increases, possibly due to a surge in stablecoin supply and on-chain transaction counts. 

The gradual recovery has somewhat eased investors’ anxiety over the possibility of a market meltdown. Investor sentiment also rose along with the upwards price movement of Bitcoin. Meanwhile, the rate at which hodlers have been acquiring BTC indicates a level of confidence in Bitcoin’s long-term growth, while exerting an upward pressure on BTC price as the supply of Bitcoin continues to decline. 

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Source: BTCtools

Correlations 

Throughout 2020, we have witnessed a growing correlation between the crypto markets and the traditional financial markets. That correlation has been strengthened after the crypto markets responded to the 2.2% drop in stock markets. Similarly, the correlation between Bitcoin and Gold saw a moderate increase in September, rising from the negative correlation that prevailed in Q2. 

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Source: Coin Metrics

Altcoins

Major altcoins have experienced mixed performances over the past weeks. While ETH, XRP, and BCH gained slightly against the U.S. dollar; LTC, DOT, and LINK lost value in Week 38, but have mostly recovered from the drop. 

Tether’s circulating supply has also been ballooning. Its market cap surpassed $15 billion — more than triple — since the liquidity crunch in March. Tether is not the only stablecoin project seeing incredible growth this year. USDC started the year with a circulating supply of $0.5 billion, which has since grown to reach $2.4 billion, at a growth rate of 358%. 

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Source: CoinGecko

Since August 15, the balance of ETH on centralized exchanges has decreased by 11.6%, with a net withdrawal of 2.2 million ETH. Meanwhile, the amount of ETH in smart contracts has increased by 2.4 million. This shows that the massive amount of ETH poured into the DeFi space not only comes from exchange withdrawals, but also from private wallets. 

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Source: Chainalysis

Currently, the total amount of ETH locked in the DeFi ecosystem amounts to $8 million, as compared to $16 million in ETH on centralized exchanges. Meanwhile, the transaction fees on Ethereum skyrocketed to a new high, owing to the airdrop of the new UNI token. The DeFi frenzy continues to put pressure on the network. 

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Source: DeFi Pulse

News Headlines

Nasdaq-listed MicroStrategy invested another hefty sum of $175 million in Bitcoin, raising its BTC holdings to $425 million after the purchase, and exposing the world’s largest sovereign wealth fund to Bitcoin. 

The New York-based cryptocurrency fund provider Grayscale has acquired an additional 23,000 BTC to its holdings in September. Institutional investors are probably the forces behind Bitcoin’s great price resilience against recent consecutive bad news. 

Institutional investors aside, the crypto space has welcomed more new entrants as the number of non-zero BTC wallet addresses approaches 30 million. Meanwhile, the number of daily active BTC addresses has been growing organically from 67k in January 2020, to 1.12 million as of September 30 — approaching the historic high of 1.26 million established in December 2017. Enthusiasm from both institutional and retail investors is the bedrock of the sustainability and longevity of an asset class, and it will continue to propel Bitcoin to overcome current hurdles to reach higher ground.