Crypto Market Bullish Despite Declining Active Addresses, CryptoQuant Says
CryptoQuant, a leading provider of blockchain analytics and data, has released a report that shows signs of increasing participation by institutional capital and other large investors in the crypto market. The report analyzes two key indicators: the number of active addresses and the average amount of tokens transferred.
Active Addresses Decline, but Not a Bad Sign
The number of active addresses, which represents the number of addresses that have been activated through transactions and other activities, is used to gauge how active the market is. According to CryptoQuant, active addresses have been consistently declining since November, despite the ongoing debate over the Bitcoin exchange-traded fund (ETF) issue.
However, this may not necessarily be seen as a negative signal. CryptoQuant explains that the decline in active addresses could be due to the fact that many investors are holding their coins in cold wallets or custodial services, rather than transacting on the blockchain. This could indicate a long-term bullish sentiment and a reduced selling pressure.
Average Amount of Tokens Transferred Skyrockets
The average amount of tokens transferred🟡, on the other hand, has shown a significant increase since mid-December and continues to do so. This substantial increase in the number of tokens transferred per address can be seen as evidence of the presence of significant institutional capital and other large investors entering the market in response to the ETF approval issue.
CryptoQuant notes that the average amount of tokens transferred has reached levels that were only seen during the peak of the 2017 bull market, when Bitcoin reached its all-time high of nearly $20,000. This suggests that the current market is driven by large-scale transactions, rather than retail investors.
Miner Reserves Fall to Lowest Level Since July 2021
In another data, CryptoQuant reveals that miner reserves, which measure the amount of coins that miners hold in their wallets, have fallen to the lowest level since July 2021.🚨
Selling pressure from miners may be a response to the expected halving event, which is expected to take place in April this year. The halving event will reduce the block reward for miners from 6.25 BTC to 3.125 BTC, making it more difficult and less profitable for them to mine new coins.
In the last two days, miner reserves have fallen by more than 14 thousand BTC, approximately $600 million in reduction. This indicates that miners are selling their coins at the current market price, rather than holding them for future gains.
Interaction on Exchanges by Miners Increases
CryptoQuant also observes that the interaction on exchanges by miners has grown in recent weeks, especially after the start of spot ETF trading. Spot ETFs are products that track the price of Bitcoin directly, rather than through futures contracts or other derivatives.
CryptoQuant suggests that miners may be using spot ETFs as a hedging tool, to protect themselves from the volatility and risk of the crypto market. By selling their coins on the spot market and buying ETFs, miners can lock in their profits and reduce their exposure to price fluctuations.
CryptoQuant’s report shows that the crypto market is undergoing a major shift, as institutional capital and large investors are becoming more dominant and influential. The report also highlights the impact of the ETF issue and the halving event on the behavior and sentiment of miners, who play a crucial role in the security and stability of the network.
CryptoQuant concludes that the crypto market is still in a bullish phase, despite the decline in active addresses. The report states that the increase in the average amount of tokens transferred and the decrease in miner reserves are positive signs that indicate a strong demand and a low supply of coins. CryptoQuant expects that the crypto market will continue to grow and attract more investors, as the ETF issue and the halving event unfold.
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