CryptoQuant.com2023-03-15

Where is Bitcoin amid market turbulence (from an on-chain perspective)?

Last week, the prices of Bitcoin and Ethereum dropped by up to 10% and reached their lowest point in two months due to market turbulence. This was caused by the fallout of several US banks connected to the crypto industry, including Silvergate, Silicon Valley Bank, and Signature Bank. The instability of these banks had a knock-on effect on stablecoins like USDC and DAI, which saw their values drop as much as $0.3-0.8 at some exchanges. Depegging of stablecoins led to an increase in exchange reserves for these stablecoins, indicating that users were looking to sell their holdings. However, following the announcement of the Bank Term Funding Program by the Fed, which would make additional funding available to banks, the stablecoins were able to recover their peg to the $1 mark. The recovery plan announced by FDIC, Fed, and the Treasury Department led to a strong bounce in BTC and crypto prices, which coincided with a decrease in 2y and 10y treasury yields (interest rates) in the US. BTC found support at the 1m-3m realized price before rallying toward $26k. Despite the sell-off, large BTC holders did not sell their coins, and demand for buying BTC spiked in the US. Looking at BTC from an On-chain perspective, it appears that its value was supported at the 1m-3m realized price of $19.5k before it started to rally toward $26k. Furthermore, despite a recent temporary sell-off, large BTC holders (BTC whales) did not sell their coins, and their spending remained relatively low. In the US, there was a surge in demand for buying BTC, which was demonstrated by the Coinbase premium reaching its highest level since the Covid-19 crash in March 2020. After the recent rally, bitcoin's MVRV ratio (Market Value to Realized Value ratio) went above its 365-day moving average, which is considered an essential factor in a bull market.