When the supply and demand balance of BTC and ETH is broken, the market rhythm may change dramatically

(Grapes, lemons, pears, apples, Van Gogh)

Original title: When the supply and demand balance of BTC and ETH is broken

The trend of the entire crypto market mainly depends on the direction of BTC and ETH. As BTC and ETH continue to flow out of exchanges, the balance between supply and demand may be broken at some point in time, resulting in a situation where supply exceeds demand, leading to sudden and rapid changes in prices.

(As the Bitcoin halving effect becomes apparent, fewer and fewer BTC are willing to be sold in the market, MoonCapital)

BTC price rises but exchange balances fall

In the bull market of 2017, when the price of BTC rose, the amount of BTC flowing into the exchange also showed an upward trend, indicating that as the price rose, the willingness of BTC holders to sell increased. However, this round of trends showed a completely different trend. When the price of BTC rose, the balance of BTC in the exchange actually decreased.

After experiencing the baptism of the previous cycle, holders have a deeper understanding of the value of BTC, and strong hands are stronger. This is an unprecedented situation.

(BTC balance in exchanges continues to decline, holders are not willing to sell, Glassnode)

(BTC holders are not willing to sell, Glassnode)

BTC accumulation addresses are still increasing

According to statistics from glassnode, addresses accumulating BTC are still increasing despite rising prices.

(Trend of BTC accumulation addresses, Glassnode)

Miners are less willing to sell in the near future

BTC is newly added by 900 every day, but miners are less willing to sell after entering April. As shown in the following figure:

(Since April, miners’ willingness to sell has declined, Glassnode)

(Miners’ willingness to sell is not high for the time being, Glassnode)

(The trend of miners transferring BTC to exchanges, Glassnode)

ETH locked in DeFi is rising

The amount of ETH locked in DeFi exceeds 10 million, which is approximately close to 10% of the total amount of ETH. With the development of DeFi, the total amount of ETH locked will increase.

(The amount of ETH locked in DeFi has exceeded 10 million, DEFIPLSE)

ETH2.0 storage contract deposits are increasing

The ETH2.0 storage contract currently has more than 3.7 million staked ETH, and it is still growing.

(ETH deposited in ETH 2.0 storage contracts has been growing, Beconcha.in)

ETH balances on exchanges have been declining

(ETH balances in exchanges continue to decline, Glassnode)

The continued outflow of ETH from exchanges is partly due to the development of DeFi, but it also indirectly reflects the holders' lack of willingness to sell.

Institutional interest in ETH

With the advent of ETH2.0, institutions have become interested in the staking income of ETH2.0. Some ETH trust services provide services for qualified investors and institutions to enter the staking field of ETH2.0. Qualified investors only need to purchase their shares to gain exposure to the staked ETH, without having to directly purchase, hold or stake these ETH.

Grayscale manages over $7 billion worth of ETH assets:

(Grayscale manages ETH assets of up to $7 billion, GRAYSCALE)

In addition, CME launched ETH futures on February 8 this year, giving institutions and qualified investors the opportunity to hedge their spot market positions and leverage.

The unreasonable year of 2021

As the balance between supply and demand is disrupted, the rhythm of the market may change suddenly.

The appearance of each bull market is unlikely to be the same. To those who were bullish in 2013, 2017 was incomprehensible; to those who were bullish in 2017, 2021 is also incomprehensible.

There are many factors that have contributed to this situation, including the halving effect of BTC, the development of DeFi, and huge changes in the macroeconomic environment.

For more information, please refer to the article "The Halving Effect of Bitcoin and the Staking Effect of ETH2.0" published by Blue Fox Notes half a year ago.

Finally, it is important to remind you that the market is affected by various factors and fluctuates greatly. No trend is inevitable, and risks must be controlled.

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Risk Warning: All articles in Blue Fox Notes cannot be used as investment advice or recommendations. Investment involves risks. Investment should consider personal risk tolerance. It is recommended to conduct in-depth research on the project and make your own investment decisions carefully.