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13th December 2022 > > Glassnode Analytics.

Updated: Dec 14, 2022

tl;dr

A summary of the end-of-year report from Glassnode Analytics.


Market Snap








Market Wrap

US stocks had a nice day yesterday, but cryptos remain tightly range bound. For more insight see commentary below.


Occasional Series – Sam Bankman-Fried, ex-CEO of FTX, has been arrested

“A Statement from the Royal Bahamas Police Force on the arrest of Samual (sic) Benjamin Bankman Fried. Police wish to inform that 30-year-old SAMUEL BENJAMIN BANKMAN-FRIED of California, U.S.A, has been arrested.”


This is great news.


The collapse of FTX was due to fraudulent behaviour by Bankman-Fried and his cronies, not because of cryptos. They are all likely to go to jail for ever more, or at least those that don’t plea bargain to give up the others.


Bankman-Fried was very public about the political donations he lavished on certain people. One would hope that those donations are now returned to be refunded to the claimants to the bankruptcy. (*)


Curious Cryptos’ Commentary — Glassnode

Glassnode, an on-chain analytics company that produces weekly reviews and commentary of a wide variety of on-chain indicators, have produced their final report for 2022:



By my calculations that’s two weeks of holidays coming up. Nice work if you can get it, but the CCC would never consider abandoning you like that. Meanwhile, here is a summary of their views about crypto markets as we rush headlong into Christmas illiquidity.

Actual volatility for BTC is at multi-year lows for 1-week and 2-weeks, something which comes as no surprise to regular readers of the CCC with BTC range bound in a very tight range seemingly floored at just below $17k.


This has been accompanied by a dramatic reduction in (leveraged) futures volumes, which is sweet music to all our ears. Volumes in the spot market and the futures markets now match at around $10bn per day. Glassnode explains:


“This shows the massive impact of tightening liquidity, widespread deleveraging, and the impairment of many lending and trading desks in the space. “


We like that conclusion as a base for 2023.


Sticking with the futures theme, calendar futures (i.e. those with an expiry date) and perpetual swaps are both in a state of backwardation. As perpetual futures funding rates have been less than a bp (basis point) for what feels like months now, this comes as no surprise, but again it suggests that downside risk is dampened, with so many market participants hedged that way.


This is probably the most interesting and easiest graph to understand in the whole report– supply held by long-term holders:


There are two ways, in my opinion, of interpreting this graph.


The first and most obvious is that crypto supporters remain unwavering in their belief regardless of market moves in the price of BTC. This cohort does not sell into weakness but does the opposite – they view depressed prices as a buying opportunity. I certainly count myself in that category.


The alternative interpretation is that there are significant numbers of weak hands, who got involved during the bull run of 2022, and who are now regretting that decision. Though many of these people have since sold (allowing the rest of us to accumulate at their expense) I believe that some are simply waiting to exit at their entry price. Whilst they wait, they give the impression of being a long-term holder, but patently they are not.


The truth is probably a mix of these two reasons. Their relative strength, in the absence of the leveraged children, may be a strong determining factor in the recovery or otherwise of crypto markets in 2023.


DeFi (decentralised finance) has taken a huge hit in terms of volumes:


DeFi is most definitely the western frontier of the crypto world, and despite my personal enthusiasm for its myriad opportunities, one must admit that there are problems.


Scams abound, in the form of rug-pulls and old-fashioned Ponzi schemes. Most dApps (decentralised applications) are complex, and difficult to understand fully. Some of the inherent risks, especially impermanent loss – which is almost always permanent – remain clouded in secrecy and confusion to many participants.


Make no mistake, DeFi is going to be a wonderful tool for humankind’s development, but this is a multi-year, or even multi-decade, project.


(*) Fat chance.

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