Crypto’s vital signs stay strong

Financial macro outlook can be dim, but crypto’s vital signs and its diamond hands stay strong.

? Financial and crypto markets are not correlated per se, but sometimes they share common macroeconomic fears.
Right now, investors all over the world are bracing themselves for the Fed increasing interest rates in March, as well as the possibility of an escalating conflict at the Ukrainian border.
As always, this kind of fears tend to send risk-on asset prices down, and main stock markets’ indexes have been falling since the beginning of the year.

Bitcoin and the rest of crypto fluctuate according to their own logic, but being a risk-on asset to the ever increasing share of traditional financial actors who step into the crypto space, they too cannot escape the general mood.

It is important to remember, though, that price is only a reflection of the market players’ feelings at any given moment – it does not necessarily reflect the underlying value of an asset.

⚒️ In case of Bitcoin, the main measure of its security and robustness – the hashrate – is now at its all-time high of 214M TH/s.
What’s interesting is that miners, who are natural Bitcoin sellers, have been accumulating coins, with their overall crypto balances increasing (mostly for those associated with Binance Pool), as noted by the the on-chain analytics firm Glassnode.

?Other crypto actors who have been holding their coins for at least a year are not willing to separate from them neither. Glassnode’s chart shows that only 175k BTC were net spent from the top coin accumulation period in October. This means that hodlers keep hodling, and an increasing number of investors can call themselves diamond hands.

? On the centralized exchanges net outflow of coins continue. Across most exchanges, BTC flows to investors’ wallets at a rate of almost 43 BTC per month (cf. Glassnode) – a trend sustained for 3 consecutive weeks already. This shows that more and more people do not intend to sell their coins, preferring to keep them safely in their wallets.

Markets are tricky, and almost impossible to forecast precisely. The biggest bull runs happen in the midst of a despair, and the craziest crashes cut short the preceding euphoria.
Crypto derivatives – the most price sensitive category – are being massively deleveraged now, with traders showing a strong preference for put protection. The tendency is for de-risking… but there is always a possibility of an unexpected reversal ?