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Tag: weakening
Aim Rich Cryptocurrency Investment Information (2021.1.21)
◆Cryptocurrency market conditions <weak>
Bitcoin price, which started to decline right after opening, has once dropped $34,000 during the day, but is rebounding again. As the transaction volume of bitcoin decreases, the momentum of price increase is weakening. In particular, as it becomes uncertain whether the bitcoin price can recover to the $40,000 level, it is struggling to maintain the $35,000 support level. Some point out that if the rebound momentum is not found, it could be threatened with a lead of $30,000.
Major altcoins also fell sharply, and Ethereum (ETH), the second-largest cryptocurrency in the market cap as of 14:00 on the 21st, fell to $1278.99 at a time on the cryptocurrency exchange Binance, then fell to $1,310.50 (-4.82%) and market capitalization. The fourth place Polka Dot (DOT) was trading at $16.8174, down 9.45%. However, Ripple, the fifth place in the market cap, is trading at $0.2971, up 0.65%.
As of 14:00 on the 21st, the price of Bitcoin based on CoinMarket Cap is $36,585.81, the 24-hour trading volume is about 66.2 billion dollars, and the market cap is about 6442 billion dollars. The total cryptocurrency market cap is $829.7 billion, and the Bitcoin market cap share is 64.8%.
The total cryptocurrency market capitalization decreased by 3.01% compared to the previous day, and the market cap excluding bitcoin decreased by 3.77% compared to the previous day, making Bitcoin stronger than Altcoin, and bitcoin’s market cap decreased 2.62% compared to the previous day. The market share of the company increased by 0.41% compared to the previous day, indicating that the number of coins in the market as a whole is falling further than the bitcoin price.
On the other hand, according to the Weiss Crypto Index, the market, which started to decline right after opening, is trying to rebound after forming a trough around 15:00. It was analyzed that the decline of small stocks in particular was large. W50, a cryptocurrency market index including bitcoin, is -2.63%, W50X, a cryptocurrency market index excluding bitcoin, is 3.13%, WLC, a large stock-oriented index, is -2.50%, and WMC, a medium-sized stock-oriented index- 2.97% WSC, an index centered on small stocks, recorded -4.23%.
As of 14 o’clock on the 21st, the ratio of buy:sell cumulative transaction volume for the past 24 hours was 48%:52%, and the sell ratio was high, and as of 14 o’clock, the selling rate was strong in the long/short ratio of each exchange.
At the same time, on the cryptocurrency derivatives exchange BitMEX, the basis of bitcoin futures is around +6.5, and the basis of Ethereum futures is around +1.2. The price of bitcoin futures on the Chicago Merchandise Exchange (CME) is falling. January futures traded at $34,635.0, up $295.0 (-0.84%) compared to the previous day.
◆Main cryptocurrency prices <weak>
As of 14:00 on the 21st, the domestic bitcoin (BTC) price fell 2.11% from the previous day to 3,8492,000 won, Ethereum (ETH) fell 5,28% to 1.453,000 won, and Ripple (XRP) rose 0.31% to 328. Hit the circle. Bitcoin Cash (BCH) fell 3.29% to 534,000 won, Bitcoin SV (BSV) fell 3.55% to 214,350 won, EOS (EOS) fell 0.65% to 3,050 won, and Chainlink (LINK) was compared to the previous day. It is trading at 23,570 won, down 2.40%, Ada (ADA) down 2.17%, 406 won, and Litecoin (LTC) down 3.50% to 16,150 won.
At the same time, the global cryptocurrency market price based on CoinMarket Cap is falling among the top 10 stocks by market capitalization as of the last 24 hours, excluding Tether. The international Bitcoin (BTC) price is $34,587.96, down 2.17% from the same time the day before. Ethereum (ETH) fell 4.00% to $1,310.04, while Polkadot (DOT) rose 5.85% to $16.82. Ripple (XRP) rose 0.44% to $0.2979, Cardano (ADA) rose 1.54% to $0.3644, Litecoin (LTC) fell 5.20% to $143.36, Bitcoin Cash (BCH) fell 4.35% to $480.89, Chainlink (LINK) fell 3.25% to $21.18, while Binance Coin (BNB) fell 0.68% to $41.62.
◆ Analysis of major media and market experts <neutral>
Many experts predict that the resolution of the $38,000 and $40,000 resistance levels beyond the valuation burden and continuing sell-offs will be the inflection point for the Bitcoin rally. In this process, the constant inflow of institutional buying tax is key. In addition, they expect that bitcoin trading volume will not increase much in the short term. However, some analysts pointed out that while the volatility of bitcoin is gradually increasing, unlike in the past, the volatility of bitcoin is eventually leading to an upward trend.
(Positive opinion)
① Cryptocurrency investor Dan Tapiero explained that the current volatility of bitcoin suggests that the uptrend of bitcoin is only beginning. As the current price is close to the lowest of the long-term fluctuation range, it is best to keep it.
② Lawrence Summers, a Harvard University professor who served as the US Treasury Secretary, predicted in an interview with Bloomberg TV that “the Bitcoin ecosystem will not collapse and will continue to survive.” When asked media questions about whether Bitcoin is a bubble, he said, “I’m not going to talk about Bitcoin’s volatility in the next six months. But some institutions love Bitcoin. I don’t think all of this will collapse. Price fluctuations are bits.” “It makes the coin look more resilient, and it makes people move. People also take into account the finiteness of the bitcoin supply, which in turn causes the price to rise.”
(Neutral opinion)
① Cryptocurrency analyst filbfilb diagnosed, “Bitcoin price could be trapped in consolidation (flooding) between $30,000 and $38,000.” However, he said, “The whale alert, which tracks the movement of bitcoin whales, started a massive influx of bitcoin whale addresses at $29,314. This will be the level of support for bitcoin in the short and long term.” While the volatility of bitcoin is gradually increasing, unlike in the past, the volatility of bitcoin will eventually lead to an upward trend.”
(Negative opinion)
① As a result of a survey conducted by Deutsche Bank, a global investment bank, for global fund managers, more than half of them expected a decline in the price of Bitcoin. According to the media, they predicted that “the bubble of digital assets including Bitcoin and some technology stocks such as Tesla is serious,” and “the price will drop by more than 50% in the next 12 months.”
② Coinnis special analyst’JIn’s Crypto’ diagnosed, “Bitcoin trading activity is low and volatility is not large at this time. Investors’ transaction costs during the adjustment period are on the rise, so it is not very helpful for price stability.” He continued, “The number of large transactions over 100BTC reached 1,077, hitting a short-term high. Big players are still trading frequently. Accordingly, there is a possibility that Bitcoin will be out of the current price range. In the future, at the bottom of $38,000, It is necessary to pay attention to the movement of the person.”
③ John Trading’s chief market strategist Michael O’Rourke warned, “It could be a risk signal to investors for a company to buy financial assets for speculation purposes, regardless of its core business.”
④ Steve Forbes, the founder of the global media outlet’Forbes’, said, “BTC is receiving reflective profits due to distrust of traditional currencies. Global financial institutions’ further movement of BTC investment portfolio is also accelerating.” However, he said, “However, bitcoin is not a currency. It is not stable. It was a high-end’steak’ today, and it can be turned into’dog food’ tomorrow. A limited supply can also meet the growing economy and market demand. It is questionable whether there will be,” he explained.
◆Comprehensive Analysis of Bitcoin Market Price <Weakness>
Bitcoin’s daily market price (see Figure 5), which technically began to drop from the 5th moving average line to resistance shortly after the opening, was intensified as the intraday US CME Bitcoin futures coincided with the downward trend filling the gap on the day. The buying trend that had flowed in during the rising period disappeared, and the price that had initially converged fell below the moving average line on the 20th, and the center of gravity shifted to a decline, so the bitcoin price gradually turned to a short-term weakness even if it did not drop sharply immediately. Is expected to be.
According to the market analysis data of the Institute, 1) the daily technical indicator is actively buying, 2) the market participants’ investment sentiment is very good, based on the crypto fear and greed index, and 3) the kimchi premium index is stable’buy’ Maintaining the level 4) Same-day payment options The high proportion of call options due to the number of outstanding payment options is a positive factor.
However, 1) Bitcoin’s return is gradually decreasing compared to the beginning of the year, 2) On-chain transaction indicators, it is highly likely that the bitcoin price on the same day will close with a volatile movement around $36,000, 3) Close maturity As a result of the analysis of the bitcoin option pending contract, it is expected that the volatility with a considerable amplitude is expected to be significantly greater over time based on $36,000 to 37,000 dollars.
According to the R&D’s market analysis data, it is positive that 1) the kimchi premium index maintains a stable’buy’ level, and 2) the high proportion of call options due to the number of outstanding payment options on the day.
However, 1) the daily technical indicator has turned to’neutral’, 2) the investor sentiment of market participants, seen as a cryptocurrency and greed index, fell below 80 points for the first time since the beginning of November last year, and 3) Bitcoin compared to the beginning of the year There are more negative factors, such as the fact that the rate of return of is gradually lowering, and 4) there is a high possibility of a weakening of the bitcoin price on the day of the on-chain transaction index.
In addition, as a result of the simulation using the bitcoin option data of the near expiration date by the institute, it is predicted that the bitcoin price will move from 35,000 to 36,000 dollars and then decrease to the level of 28,000 dollars as well as increase in price volatility toward the end of the month. It is judged to be necessary.
On the other hand, the intraday variable today is the settlement date of the Bitcoin and Ethereum options on January 21 of the DRBT exchange. Options due today have a lower strike price and less pending contracts than other maturity dates, so the impact on the market is expected to be somewhat less, but as a result of analyzing the proportion of all open contracts of Bitcoin options by Delibit (DBT) by time ( See Figure 16), as the proportion of call option sales accounted for 2/3, the seller’s involvement seems to have been severe.
However, since the estimated price of the Delibit Bitcoin option payment (see Figure 17), which is due on the same day as simulated at 14:00, is expected to be around $35,000, there is a possibility that it will rebound to at least $35,000 around 5 pm after confirming the low. It is high, so please refer to this point and check the rebound flow of other coins.
Binance BTC/USDT, calculated by the institute’s quant program, has an important price change on the day of $35,094 (pink line), and the current price is below this, so the price 1) breaks from the previous day’s low and recovers , 2) If it rebounds with the bottom of the pair without breaking from the previous day’s low price, and 2) it can buy if it recovers to $35,094.
However, if it declines while maintaining its weakness, it is necessary to check whether the low price was broken the previous day. For more detailed analysis based on market data, see ‘7. Please refer to the’Quantitative Analysis’ section.
◆Technical analysis <neutral>
As of 14 o’clock on the 21st, the technical analysis of the daily price movement of Bitcoin on Upbit, a domestic cryptocurrency exchange, and Binance, a foreign exchange, were all found to be’neutral’. Looking at the detailed evaluation items, 2 of the oscillator indicators of Upbit came out of’Buy’, 5’Sell’, and 1’Neutral’ opinion and’Strong Buy’ opinion, and the moving average indicator is’Buy’ and 7 It was summarized as a’buy’ opinion with five’sell’.
If you look at the detailed items of Binance, two of the oscillator indicators are’Buy’, 5’Sell’, and 1’Neutral’, sending a’Sell’ signal, and the moving average indicator is’Buy’ with 7 and’Sell’. ‘Sell’ was summarized as’Buy’ with five.
◆Quantitative analysis
◇Crypto Fear & Greed Index <Weakness>
The’Fear and Greed Index’ provided by the cryptocurrency data provider Alternative.me is 75 points, down 3 points from the previous day, and has been down one step from the extreme greed stage of the previous day to the greed stage. Since then, it recorded the lowest level, indicating that investment sentiment has deteriorated. The index closer to 0 indicates extreme fear in the market, and closer to 100 indicates extreme optimism.
◇Comparison of return by asset compared to the beginning of the year (%) (as of 14:00 on January 21) <weak>
Despite the decline in the dollar index over the past two days, the US CME’s Bitcoin futures’ yield compared to the beginning of the year was 11.05%, down 1.87% from the previous Tuesday, while oil futures, which had been on the rise since the beginning of the year, rose 1.13%. It has exceeded the rate of return of the coin.
The previous day, the US stock market ended higher with President Biden taking office. Both the NASDAQ and the S&P 500 recorded all-time highs. As government bond yields fall, the government’s stimulus and low interest rates are expected to remain for some time. It is positive that the number of new coronavirus cases in the United States has decreased to less than 200,000. Meanwhile, gold and oil prices ended higher on the previous day due to a weak dollar and expectations of stimulus measures.
◇Comparison of yield by cryptocurrency compared to the beginning of the year (%) (As of January 21, 14:00) <Weakness>
As the cryptocurrency market enters the adjustment period, the overall rate of return is lowering compared to the beginning of the year. As of 14:00 on the 21st, Stellar (XLM) ranked 1st with 118.79% at the beginning of the year as of 14:00 on the 21st, Cardano (ADA) ranked 2nd with 110.57%, and Polkadot (DOT) ranked 3rd with 108.29%. Ethereum (ETH) ranked 4th with 81.90% and Chainlink (LINK) 5th with 81.42%.
◇Bitcoin on-chain indicator analysis
① Analysis of Bitcoin transaction volume on the day <weak>
Analyzing the trading volume of BTC/USD’s on-chain data on the same day makes it easy to check the direction of the bitcoin market and respond to it. Indicator 1 in Figure 11 shows the spot trading volume of BTCUSD or BTCUSDT on 9 major exchanges (Binance, Bitfinex, PoloniX, Bitex, Coinbase, Bitstamp, Kraken, HitbittyC, Gemini), and number 2. The indicator is by summing the trading volumes of BTCUSD or XBTUSD indefinite futures from 7 derivative exchanges (Binance Futures, OKX Futures, OKX Futures, Huobi Futures, FTX Futures, Kraken Futures, Delibit, BitMEX) in real time. Show.
Bitcoin prices are converging to the lower $35,000. Looking at Index 1 in Figure 13, the spot trading volume continues to decline along with the market price decline, and today’s trading volume is higher than the previous day. However, if you look at the indicator in Figure 14, the total selling quantity is higher than the total buying quantity, so the bitcoin price is falling as of 14:00 on the 21st. In addition, although index 2 in Figure 13 shows that there is not much futures trading volume, daily price volatility is increasing a lot, so it seems to be cautious of the possibility of a sharp fluctuation during the intraday.
② Bitcoin price and Korea premium index trend analysis <Neutral>
It is interesting to compare this trend after drawing the difference between the price of bitcoin listed on the domestic and foreign exchanges (hereinafter referred to as Kimchi Premium Index) on the bitcoin price chart. In the period of price increase, the bitcoin price is higher than the kimchi premium index, and in the period of price decline, the bitcoin price is lower than the kimchi premium index.
Although the prices of Bitcoin and Ethereum have fallen, the trend of Ethereum is still rising. However, both prices of kimchi premium indices rose above ‘0’ and the warning lights lit up. It is okay to keep buying, but it is necessary to observe that it does not cross.
◇Analysis of the proportion of non-settled bitcoin options on the day <Neutral>
If you look at the result of analyzing the proportion of all outstanding contracts of Bitcoin options of Delibit (DBT) by hour on the 21st (see Figure 16), comparing the data analyzed at 10:00 and 14:00, calls in the open contract of the option due on the day Although the proportion of options remains at a higher level (approximately 63%) than put options, the share of selling call options is expected to exceed 2/3, resulting in a significant drop in intraday.
However, since the estimated price of the Delibit Bitcoin option payment (see Figure 17), which is due on the same day as simulated at 14:00, is expected to be around $35,000, there is a possibility that it will rebound to at least $35,000 around 5 pm after confirming the low. It is high, so please refer to this point and check the rebound flow of other coins.
◇Bitcoin short-term price forecast according to bitcoin option data <weak>
It is known that in the cryptocurrency option market, the price of the underlying asset for the option’s expiration settlement tends to shift to the price that causes the most options to lose value by moving to the Max Pain Price. In other words, this price refers to the strike price with the largest number of call and put options, and the price that can incur financial losses to the largest number of option buyers at expiration.
As of 14 o’clock on the 21st, the maximum pain price for option buyers for each option is $35,000 on January 21 and $36,000 on January 22, which is not far from the current price range. It is expected to drop sharply to $28,000, and the up and down amplitude is expected to increase as well.
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Copyright © Blockchain Today Unauthorized reproduction and redistribution prohibited
Written by: Karim Helmy, Coin Metrics
Compiler: Perry Wang
Coin Metrics authorized Chain Wen to translate and publish the Chinese version of the article.
Point
- This report uses a new method to examine the addresses in coinbase transactions and quantify the miners’ currency holdings and activities . This method improves on previous studies that tracked miner expenditures, which attempted to inadvertently measure the activities of pool operators rather than the behavior of miners.
- In the year before the halving of Bitcoin production, as the price of the currency recovered from its trough in recent years, the number of Bitcoin accumulated by miners increased by 318,000 BTC.
- As the supply of miners gradually decreases and the net capital flow of their addresses stabilizes, the impact of miners on the Bitcoin network seems to be small.
- The forthcoming release of Coin Metrics Network Data Pro 4.8 will provide indicators for miners’ capital flow and supply .
Miners and the market
In addition to their role in protecting network security, miners also have a profound impact on Bitcoin’s market dynamics. Because they can receive newly issued bitcoins instead of buying bitcoins, miners are naturally net sellers of assets . Miners’ operating expenses (mainly electricity and rent) are mainly denominated in legal currency, while their income is embodied in Bitcoin, further enhancing this impact.
The new feature uses account data (previously unavailable) interacting with these addresses to examine the activities of miners and assess their drivers and spending impact.
The data on the chain shows that the influence of miners on the network is gradually diminishing , but they are still key participants in the Bitcoin ecosystem and possess large amounts of funds. To help our readers understand these influencing factors, Coin Metrics provides extensive data related to miners in the upcoming Network Data Pro 4.8 version. Using this data, the function finds that the supply of bitcoin held by miners generally decreases over time , while the flow of funds into and out of miners and mining pools is suppressed by the continuous halving of the network.
Brief description of Bitcoin supply
To calculate the flow of miners’ funds, we first summarize all transactions from the coinbase (chain note: a coinbase transaction is the first transaction in the block, a unique type of bitcoin transaction that can be created by miners, and miners use it to collect The block reward for its work, and any other transaction fees charged by the miner are also sent in this transaction) to receive the payment address, and mark it as the first transfer (0-hop) address. Then, all the addresses in the group and the addresses that have received payment from an address in the group are marked as second transfer (1-hop) addresses.
Since the usual structure of the mining pool wallet is that the mining pool first obtains the reward in the block and then distributes it to the miners, therefore, the 0-hop address usually represents the mining pool , and the 1-hop address usually represents the miner . It can be seen that the existing system that attempts to infer the behavior of miners from the 0-hop address spending habits is theoretically unsound, and therefore cannot accurately measure the intentions of miners. Instead, they measure the activities of the pool operators .
Of course, it must be admitted that marking miners and pools based solely on the distance in coinbase transactions is an imperfect technology. Applying this methodology to the evaluation of Bitcoin’s early network is very effective. In the early network, personal mining and alternative mining pool models are more popular. Since the first mining pool Slush Pool dug its first block in December 2010, especially the measured values before that date are for reference only. In addition, the addresses of miners who have not received funds from the 0-hop address will not be marked. Nonetheless, this heuristic method represents a major improvement over the current state of the art and should accurately capture a wide range of trends.
Miners, especially those who were active in the early days of the network, control large amounts of Bitcoin . In the historical record of the entire Bitcoin network, the total number of Bitcoins owned by 0-hop and 1-hop addresses has generally been on a downward trend. In the second half of 2019 and the first half of 2020 (the year before the production halved), this trend has undergone a major reversal, with miners accumulating 383,000 BTC from the bottom to the peak. This effect is mainly limited to 1-hop addresses, while the 0-hop supply remains roughly unchanged. Therefore, most of this accumulation will not be detected by previous estimation techniques.
As can be seen in the figure, there have been several jumps in the supply held by miners. These spikes are usually caused by the first block mined by an address with a large balance or the first interaction with a previously marked 0-hop address. The most prominent of these spikes occurred on August 16, 2012, when the giant whale holding more than 500,000 BTC received part of the coinbase reward of block 194,256. Before the halving this year, new entrants were also one of the reasons for the higher supply controlled by miners.
Due to inflation, from the perspective of total supply, the gradual decrease in supply owned by miners and pools is even more significant. This decline is consistent with the overall increase in Bitcoin supply dispersion. This is also consistent with the popularization trend of the mining pool model, which means that non-mining addresses are increasingly unlikely to be marked as 1-hop addresses too much.
Despite this trend, even today, miners and mining pools still control a large part of the total Bitcoin supply.
Analysis of mining pools and transfers
The exchange of funds between these groups is another powerful signal on the chain. Because mining pools are usually the direct recipients of coinbase rewards, the 0-hop address capital flow is a useful indicator to measure mining pool activity. Especially the several peak times represented by the activities of the aforementioned giant whales. In addition, since the early days of the Bitcoin network, the inflow and outflow of 0-hop addresses in BTC has shown a downward trend .
Miner income or large reward income accounted for the bulk of the inflow of 0-hop addresses. Although the income of miners will change in the short term due to fluctuations in fees and the number of mined blocks, it is relatively stable in various periods.
Although the inflow and outflow are highly correlated, the outflow is more volatile because it is not supported by the agreement and miners can choose when to withdraw funds from the mining pool’s wallet. The reduction in the two capital flows clearly reflects the impact of the halving of production in 2016 and 2020. Since the 2020 halving, the value of inflows has usually exceeded the value of outflows, which is a reversal of historical normality.
Analyze miner funds
Although 0-hop addresses are useful for tracking payments from mining pool operators, they do not represent transfers made by miners themselves in today’s standard wallet architecture. In most mining pools, block rewards are received by an address controlled by the mining pool operator, who will escrow the funds until the miner is paid at a predetermined time interval or chooses to withdraw tokens.
In the mining pool mining mode, the flow of funds from the 0-hop address of the coinbase transaction is closer to the miner’s expenditure . This report is one of the first studies that attempted to analyze the capital flow of 1-hop addresses. Due to the larger number of research object addresses, lack of underlying support, and fast capital flow, these capital flows are much larger than those corresponding to 0-hop addresses and are more volatile.
In order to analyze the initial capital flow of the Bitcoin network (the mining pool has not yet become the mainstream mining mode), the 0-hop address capital flow may be a more suitable tool. Even today, the 1-hop address capital flow is only an approximation of the miner’s activity , because the wallet structure of the mining pool is different, and these capital flows may incorrectly include the exchange address. But in general, this research model represents a more comprehensive observation of miner expenditures under today’s network conditions.
Like the capital flow of the 0-hop address, the inflow and outflow of the 1-hop address are also closely related. Since the block reward only represents a small part of the inflow of the 1-hop address, the inflow and outflow are very unstable, so the impact of the halving of Bitcoin production on this type of capital flow is not obvious .
In the past year or so, the inflow and outflow of miner addresses has increased slightly, indicating an increase in activity. Because the net capital flow has remained generally stable and the overall volatility has declined, the increase in activity will not be reflected as an increase in the impact on the network.
The close connection between inflow and outflow shows that miners generally tend to move their bitcoins out of their addresses immediately. Given that the derivatives market and legal currency lenders usually require token custody, these capital flows do not exclude miners from using financial instruments to hedge their exposure to bitcoin prices. However, the survey data of the Third Global Encrypted Asset Benchmark Study by the University of Cambridge shows that the adoption rate of these financial instruments is very low , and miners mainly rely on holding and selling Bitcoin to control their risk level to the desired level. Such a high transaction volume seems to indicate that miners are active market participants, habitually selling most of the newly received bitcoins.
The impact of dollar pricing
Due to expenses, profits and losses miners are dollar-denominated, so in order to measure the dollar value of cash flow miners useful. Since the capital flow of the 0-hop address is mainly composed of block rewards, its dollar value curve is very similar to the miner income curve .
Since it is also linked to the price of Bitcoin, the flow of miners’ funds denominated in USD is similar to the flow of funds from mining pools (the latter is larger). Different from the fund flow of mining pools, the fund flow of miners has been on an upward trend , and at the end of 2019 even briefly exceeded the level of Bitcoin’s historical high in 2017. This shows that, in dollar terms, the coverage of miner activities in the entire network is wider.
Comprehensive consideration
Individually, the inflow and outflow of address funds is useful for measuring the amount of economic activity that miners participate in.
In the historical record of the Bitcoin network for most of the time, the net flow of funds from 0-hop addresses has been slightly negative, and spending on these addresses is usually higher than income. Although the net capital flow at the beginning of the network fluctuates greatly, its volatility has gradually decreased over time, which may be due to the halving of Bitcoin production .
In recent years, the fluctuations in the net capital flow of 0-hop addresses have continued to decrease. In the past few months, the historical negative value of net capital flows has reversed, with inflows being slightly larger than outflows since the last halving.
The net capital flow of 1-hop addresses fluctuates more than the capital flow of 0-hop. Like the net fund flow of the 0-hop address, the net fund flow of the 1-hop address is usually negative. These capital flows have also experienced a gradual decrease in volatility, indicating that the impact of miners on liquidity is gradually diminishing .
Another tool for us to analyze the flow of funds is the change in the Bitcoin inventory level held by miners or MRI, which is the ratio of miner outflow to miner inflow. The 0-hop address MRI can be used to measure whether miners deposit funds in the mining pool wallet (less than 100%) or withdraw funds (higher than 100%).
Since the capital flow of the 0-hop address is closely related to the income of the miners, the MRI has remained at a level close to 100% in most historical periods of the Bitcoin network. The volatility of this indicator has gradually decreased as the volatility of the 0-hop address outflow weakened.
Compared with the 0-hop address MRI, the 1-hop address MRI can more accurately understand the relationship between the miners’ spending habits and income. In the entire historical record of the Bitcoin network, the flow of funds from 1-hop addresses has remained relatively stable, and two consecutive halvings have reduced the issuance. 1-hop address MRI has shown a rapid increase. Since the expenditure of the 1-hop address is about an order of magnitude higher than the income of the miners, the 1-hop address MRI has reached the level of thousands of percentage points for many times in the entire network history.
Next thoughts and actions
On- chain indicators such as miner holdings and net transfers show that the influence of miners on the Bitcoin network is gradually weakening. Despite this, they still contribute a lot of activity and control a large part of the total Bitcoin supply. Some indicators, such as total capital flow , also imply an increase in miner activity denominated in U.S. dollars and Bitcoin.
As the only direct recipients of Bitcoin issuance, miners and pools have an impact on the network that is not easy to quantify. The indicators outlined in this article can only touch the surface of the behavior of miners . In the future, we hope to analyze the flow of Bitcoin funds from miners to exchanges, which can more directly measure its impact on the market. We also hope to evaluate the active supply maintained by the miner’s address, which will help filter out the bitcoins lost in the initial stage of the bitcoin network, and take into account the different wallet structures of each mining pool, so as to finally make a more detailed view of the behavior of the miners. Assessment.
Thanks to Celia Wan for his suggestions and editing work.
On-chain indicators such as miner holdings and net transfers show that although miners still control a large part of the bitcoin supply, their impact on the bitcoin network is gradually weakening.
Written by: Karim Helmy and the team of cryptocurrency data provider Coin Metrics Compilation: Perry Wang
Coin Metrics authorized Chain Wen to translate and publish the Chinese version of the article.
Point
-
This report uses a new method for examining address coinbase transaction, hold out to quantify the amount and activity of miners. This method improves on previous studies that tracked miner expenditures, which attempted to inadvertently measure the activities of pool operators rather than the behavior of miners.
-
In the year before Bitcoin production was halved, as the price of the currency recovered from its trough in recent years, the number of Bitcoin accumulated by miners increased by 318,000 BTC.
-
As the supply of miners gradually decreases and the net capital flow of their addresses stabilizes, the impact of miners on the Bitcoin network seems to be small.
-
Upcoming Coin Metrics Network Data Pro 4.8 version will provide miners capital flow and supply indicators.
Miners and the market
In addition to their role in protecting network security, miners also have a profound impact on Bitcoin’s market dynamics. Bitcoin because they can receive new releases rather than buying bitcoins, so naturally the miners net seller of assets. Miners’ operating expenses (mainly electricity and rent) are mainly denominated in legal currency, while their income is embodied in Bitcoin, further enhancing this impact.
The new feature uses account data (previously unavailable) interacting with these addresses to examine the activities of miners and assess their drivers and spending impact.
EU data show that the impact of the miners network is gradually decreased, but they are still a key player in Bitcoin ecosystem, with a lot of money. To help our readers understand these influencing factors, Coin Metrics provides extensive data related to miners in the upcoming Network Data Pro 4.8 version. Using this data, the function held by the miners found Bitcoin supply is usually reduced over time, and out of miners and mining pools of capital flow due to the continuous network of halving suppressed.
Brief description of Bitcoin supply
To calculate the flow of miners’ funds, we first aggregate all transactions from the coinbase (chain note: a coinbase transaction is the first transaction in the block, a unique type of bitcoin transaction that can be created by miners, and miners use it to collect block rewards of their work, any other transaction fees charged by miners also sent this transaction address) in payment is received, and marked as the first transfer (0-hop) address. Then, all the addresses in the group, and a group address from the received address labeled secondary transfer payments (1-hop) address.
Since the mine pool wallet architecture is usually the first to get mine pool block reward before assigning it to the miners, therefore, 0-hop address usually represents mining pools, and 1-hop address is usually on behalf of the miners. It can be seen that the existing system that attempts to infer the behavior of miners from the 0-hop address spending habits is theoretically unsound, and therefore cannot accurately measure the intentions of miners. Instead, they measure mineral pool operator activities.
Of course, it must be admitted that marking miners and pools based solely on the distance in coinbase transactions is an imperfect technology. Applying this methodology to the evaluation of Bitcoin’s early network is very effective. In the early network, personal mining and alternative mining pool models are more popular. Since the first mining pool Slush Pool dug its first block in December 2010, especially the measured values before that date are for reference only. In addition, the addresses of miners who have not received funds from the 0-hop address will not be marked. Nevertheless, this heuristic method represents a significant improvement over the current level of the latest technology, we should be able to accurately capture the broad trend.
Miners, especially those in the early stages of network active miners, control the majority of Bitcoin. In the historical record of the entire Bitcoin network, the total number of Bitcoins owned by 0-hop and 1-hop addresses has generally been on a downward trend. In the second half of 2019 and the first half of 2020 (the year before the production halved), this trend has undergone a major reversal, with miners accumulating 383,000 BTC from the bottom to the peak. This effect is mainly limited to 1-hop addresses, while the 0-hop supply remains roughly unchanged. Therefore, most of this accumulation will not be detected by previous estimation techniques.
As can be seen in the figure, there have been several jumps in the supply held by miners. These spikes are usually caused by the first block mined by an address with a large balance or the first interaction with a previously marked 0-hop address. The most prominent of these spikes occurred in 2012 August 16, was held more than 500,000 whales BTC acquired 194 256 blocks part coinbase reward. Before the halving this year, new entrants were also one of the reasons for the higher supply controlled by miners.
Due to reasons of inflation, from the perspective of the total supply, miners and mining pools have gradually reduced the supply of even greater significance. This decline is consistent with the overall increase in Bitcoin supply dispersion. This is also consistent with the popularization trend of the mining pool model, which means that non-mining addresses are increasingly unlikely to be marked as 1-hop addresses too much.
Despite this trend, even today, miners and mining pools still control a large part of the total Bitcoin supply.
Analysis of mining pools and transfers
The exchange of funds between these groups is another powerful signal on the chain. Because mining pools are usually the direct recipients of coinbase rewards, the 0-hop address capital flow is a useful indicator to measure mining pool activity. Especially the several peak times represented by the activities of the aforementioned giant whales. In addition, since the initial bits of the network credits to the meter BTC 0-hop address into and out tended to decrease.
Miner income or large reward income accounted for the bulk of the inflow of 0-hop addresses. Although the income of miners will change in the short term due to fluctuations in fees and the number of mined blocks, it is relatively stable in various periods.
Although the inflow and outflow are highly correlated, the outflow is more volatile because it is not supported by the agreement and miners can choose when to withdraw funds from the mining pool’s wallet. The reduction in the two capital flows clearly reflects the impact of the halving of production in 2016 and 2020. Since the 2020 halving, the value of inflows has usually exceeded the value of outflows, which is a reversal of historical normality.
Analyze miner funds
Although 0-hop address capital flows are useful for tracking payments from mining pool operators, they do not represent transfers made by miners themselves in today’s standard wallet architecture. In most mineral pool, the block reward is controlled by the mine operator received address pool, the operators will custodian of funds, until a predetermined time interval payment or choose to raise money to replace the miners.
In ore mining pool model, cash flow 0-hop address from coinbase trading closer to spending miners. This report is one of the first studies that attempted to analyze the capital flow of 1-hop addresses. Due to the larger number of research object addresses, lack of underlying support, and fast capital flow, these capital flows are much larger than those corresponding to 0-hop addresses and are more volatile.
In order to analyze the initial capital flow of the Bitcoin network (the mining pool has not yet become the mainstream mining mode), the 0-hop address capital flow may be a more suitable tool. Even today, 1-hop address cash flow is only an approximation of the activities of miners, mine pool because the purse structure varies, and these capital flows may incorrectly contain the Exchange address. But in general, this research model represents a more comprehensive observation of miner expenditures under today’s network conditions.
Like the capital flow of the 0-hop address, the inflow and outflow of the 1-hop address are also closely related. Since the block award represents only 1-hop address a small part inflows, inflows and outflows are therefore very unstable, therefore Bitcoin production halved impact on the flow of such funds is not obvious.
In the past year or so, the inflow and outflow of miner addresses has increased slightly, indicating an increase in activity. Because the net capital flow has remained generally stable and the overall volatility has declined, the increase in activity will not be reflected as an increase in the impact on the network.
The close connection between inflow and outflow shows that miners generally tend to move their bitcoins out of their addresses immediately. In view of the derivatives market and legal tender lenders usually require tokens hosting, so these miners cash flow does not preclude the use of financial instruments to hedge its exposure to the price of Bitcoin. However, the University of Cambridge the third survey data encryption benchmark study of global assets show that the rate of adoption of these financial instruments is very low, miners rely mainly on hold and sell bitcoins to control the level of risk in a desired degree. Such a high transaction volume seems to indicate that miners are active market participants, habitually selling most of the newly received bitcoins.
The impact of dollar pricing
Due to expenses, profits and losses miners are dollar-denominated, so in order to measure the dollar value of cash flow miners useful. Since the 0-hop address cash flow is mainly composed of blocks of reward, so the dollar value of the income curve and the curve is very similar to the miners.
Since it is also linked to the price of Bitcoin, the flow of miners’ funds denominated in USD is similar to the flow of funds from mining pools (the latter is larger). And pool cash flow difference is mine, miners capital flow has been an upward trend, even short end of 2019 exceeded the record high level of Bitcoin period of 2017. This shows that, in dollar terms, the coverage of miner activities in the entire network is wider.
Comprehensive consideration
Individually, the inflow and outflow of address funds is useful for measuring the amount of economic activity that miners participate in.
In the historical record of the Bitcoin network for most of the time, the net flow of funds from 0-hop addresses has been slightly negative, and spending on these addresses is usually higher than income. Although the initial net capital flow of network fluctuations, but over time, has gradually reduced its volatility, this may be due to the bitcoin production by half.
In recent years, the fluctuation of the net capital flow of 0-hop address has continued to decrease. In the past few months, the historical negative value of net capital flows has reversed, with inflows being slightly larger than outflows since the last halving.
The net capital flow of 1-hop addresses fluctuates more than the capital flow of 0-hop. Like the net fund flow of the 0-hop address, the net fund flow of the 1-hop address is usually negative. These capital flows have experienced a waning volatility, suggesting that the impact on the liquidity of the miners gradually reduced.
Another tool we analyze cash flow is held Bitcoin miner changes in inventory levels or MRI, it is the ratio of the miners outflow and inflow of miners. The 0-hop address MRI can be used to measure whether miners deposit funds in the mining pool wallet (less than 100%) or withdraw funds (higher than 100%).
Since the 0-hop address is closely related to cash flow and miners income, so in most historical periods Bitcoin network, MRI are maintained at a level close to 100%. The volatility of this indicator has gradually decreased as the volatility of the 0-hop address outflow weakened.
Compared with the 0-hop address MRI, the 1-hop address MRI can more accurately understand the relationship between the miners’ spending habits and income. In the entire historical record of the Bitcoin network, the flow of funds from 1-hop addresses has remained relatively stable, and two consecutive halvings have reduced the issuance. 1-hop address MRI has shown a rapid increase. Since the expenditure of about 1-hop address is higher than the income of the miners an order of magnitude, so the 1-hop throughout the network address of MRI in the history of a lot of time to reach the level of thousands of percentage points.
Next thoughts and actions
Miners holding money amount and the net amount of chain transfer indicators, bits credits miner influence network is waning. Despite this, they still contribute a lot of activity and control a large part of the total Bitcoin supply. Some indicators, such as total cash flow, also suggests dollars and Bitcoin miners denominated activities are increasing.
Bitcoin issue as the only direct recipients, miners and mining pools it is not easy to quantify the impact on the network as well as the indicators outlined in this article only touches the surface miners behavior. In the future, we hope to analyze the flow of Bitcoin funds from miners to exchanges, which can more directly measure its impact on the market. We also wanted to evaluate the supply of active miners address maintained, which will help filter out the Bitcoin network early loss of Bitcoin wallet and taking into account the different structure of each mineral pools, and ultimately the behavior of the miners more detailed Assessment.
Thanks to Celia Wan for his suggestions and editing work.
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