On-Chain Metrics Suggest Long-Term Holders Dominate

GB Market Commentary 04/04/2022

by Marcus Sotiriou

After a tremendous week for crypto and risk-on assets, Bitcoin has now stalled just above $46,000. The key FOMC meeting on March 16th where the Federal Reserve raised rates, it was clearly a ‘buy the news’ event as risk-on assets have rallied since. Talk of war was also priced in at that point too. The next key event for investors to watch out for is the US Consumer Price Index (CPI) data print for March being released on April 10th. Due to the invasion of Ukraine which caused oil prices to soar, this reading will likely be the largest inflation print over the last 40 years. It is estimated that CPI increases by 2% for every $10 increase for the price of oil per barrel alone. This data will reinforce the need for tighter monetary policy in 2022. However, Powell has conceded the whole first half of the year to have very high inflation, so I think it will require higher than expected inflation data for the Federal Reserve to act more aggressively than planned.

On-chain metrics suggests long term holders dominate the market. This is because Glassnode data shows the outflow of Bitcoin from exchanges in the past 30 days is nearly 100,000. We can see that when this has happened in the past, it has often resulted in tremendous rallies.

Mainstream adoption continues as the Australian petrol and convenience giant OTR will accept Bitcoin as payment. OTR will be the largest bricks and mortar retailer to accept Bitcoin and other cryptocurrencies. This adds more weight to the idea of Bitcoin becoming a Petro-asset, after Putin recently allowed ‘friendly’ countries to pay for oil in Bitcoin.