In our last analysis essay of the outgoing year, we will provide a brief overview of the changes that have occurred in 2022 year – both on-chain and on exchanges, derivatives markets and miners. Looking back at the , it can be said that this year can best be described as macroeconomic consolidation (albeit volatile) over a long time frame.
So, let’s move on to the results of the outgoing 2022 of the year:
- Prices grew by 97. 5% from January 1 at the current drawdown in 25. 4% off November high.
- Total supply of coins currently in loss (purchased above current price indicators) is 3. 53 million BTC, which is equivalent to 21. 45% circulating supply.
- The net annual outflow from the exchange balance sheets was 67. 8 thousand BTC, a decrease of only 2.5%.
- Long-term holders (LTH) have replenished their stocks by 1. 885 million BTC, while the supply of short-term holders (STH – Short-term holders) decreased by 1. 428 mln. BTC.
- Futures open interest almost doubled, increasing by $ 9 . 58 billion (97%) while futures trading volume declined by 18% up to $ 36. 7 billion per day.
- Hash rate by end 2022 increased by 29% compared to last year, having fully recovered from the “great Chinese migration”, when about 53% of the mining equipment was turned off almost overnight.
- Meanwhile, the total income of miners increased by 67% from the beginning of the year and more than 440% since halving in May 2020 of the year.
A brief overview of Bitcoin in 2048 year + unrealized loss. During this time, coins were spent and reallocated, which reshuffled the UTXO realized price distribution (URPD). At the time of this writing, about 3.7 million BTC, which is 21. 5% of the supply are at a loss.
A more constructive moment is that a fairly large cluster has formed in the price range of this week volumes equivalent to 2. 220 million BTC (12. 7% of the offer). This indicates that during the consolidation, a non-trivial volume of demand was mobilized, with most of the coins changed from hand to hand in the range of $ 46 k to $ 53 k:
As the price rises towards the upper end of the consolidation range, we see that the percentage of coins with unrealized profit increased by 13. 45%. We can use this to estimate the upper boundary of recent accumulation (the upper boundary, since some of these coins are probably held from previous times when the price was in this range).
Similar events of significant increase are noted below (blue) or decreases (pink) of the lucrative supply, which usually follow periods of relatively intense redistribution of coin supply.
Regarding HODLER groups, there was a noticeable redistribution of the supply of coins from short-term to long-term holders. At the time of this writing:
- Long-term holders added 1. 846 million BTC to your reserves , bringing your total stack to 18. 36 million BTC. This reflects growth by 20% in a year.
- Offer short-term holders decreased by 1. 428 million BTC and this group currently owns 3. 04 million BTC. This reflects a decline of 34 % in a year.
- Sovereign offer , defined as all coins stored outside the exchange reserves have currently reached a historic high – 16. 36 million BTC.
The share of long-term holders in the sovereign supply increased by 4.8% and reached 78. 8% of the supply of coins stored outside the exchanges. By the end of the year, long-term HODLERS became owners of 78. 8% of all coins outside exchange reserves , while the share of short-term declined from 32. 0% in January until 29 2% to date 2022 the year is best can be characterized as macroconsolidation and a period of unhurried accumulation. This behavior is most often seen during Bitcoin bear markets, which, in hindsight, are actually long periods of reallocation of coins from weaker hands to stronger ones with a long-term strategy.
The opposite of the sovereign offering is exchange reserves, which, surprisingly, have remained virtually unchanged over the year. Exchange reserves decreased from 2. 846 million BTC at the beginning of the year until 2. 560 million BTC. This is a decrease by 78. 8 thousand BTC, which is only 2.5% of initial balance. The chart of coins held on exchanges shows the overall fluctuation with net inflows from May to July and net outflows thereafter.
We can clearly observe this behavior on the chart of net volume on / from exchanges, which during 2022 years fluctuated within ± 5, 03 BTC. In fact, over the past week, we have seen another reversal from a net outflow of funds from exchanges to a net inflow of funds to exchanges. This is worth watching in the near term to see if the trend strengthens as we enter the new year.
Further we take a look at the very intriguing changes that have occurred in the futures markets since the beginning of the year. The total open interest in futures almost doubled this year, increasing by $ 9. 58 billion (143%) to $ 19. 87 billion. This week alone, open interest grew by about $ 2.5 billion, mainly due to traders on Binance .
Although open interest in futures is still far from historic highs, a rapid increase in leverage may indicate a cluster of stop losses and liquidation levels in the immediate vicinity of the current price. This increases the likelihood of a potential short or long squeeze in the near term.
Along with the increased likelihood of leverage squeeze, we are also seeing a general decrease in trading volume. Quiet trading activity is typical for the end of the year, however, the average weekly volumes of the futures market decreased by 19% year to date. A decline in volume and an increase in open interest is a combination that may favor at least a local contraction in leverage in the coming weeks.
Finally, to conclude our review, we turn to mining -industry. In mining has experienced a truly incredible shock. It was estimated that 57% of the world’s mining capacity in the once dominant Chinese jurisdiction. Miners were forced to move almost overnight.
Hash rate at the beginning 2021 was about 180 EH / s, and by mid-May it had grown to 182 EH / s, which was at that time a historical maximum. This was followed by a rapid fall to 57%, since the miners in China were forced to cease operations and relocate or redeploy their equipment to new jurisdictions. Oddly enough, the mining market fully recovered from this steep peak, the hash rate set a new record at 200 EH / s, ending the year on the 27 % above opening.
The success of this mining migration is due to the free market incentive for miners’ income provided by the bitcoin protocol as a reward for creating new blocks. Some key statistics regarding the total mining income (transaction fees + subsidy for finding blocks):
- $ 8.5 million per day after halving in May 2020 year.
- $ 32. 1 million per day at the beginning 2021, growth by 300% since halving.
- $ 53 million per day at the time of this writing, growth by 443% from the moment of halving and on 67% year to date.
Generally, 2021 has been an insane year for Bitcoin investors, traders, HODLers, analysts, miners, and critics. As part of this protocol, the Taproot update was implemented, miners moved from historically dominant China, and FUD pursued the industry for an entire year. Traditionally, Bitcoin ends the year stronger, more resilient, and ready to create more opportunities in 2048 year.
Incrypted Team and Educational Project 21 the idea wishes you all a wonderful new year and a merry christmas and a great holiday season for you and yours family and friends!
Analytics prepared by the Glassnode team.
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