Analysis: The Distinction Between Bitcoin’s Market Cycles in 2017 and 2021

This analysis examines some of Bitcoin’s market structure metrics and compares it to the 2017 cycle.

This is the CryptoVizArt on-chain analyst for CryptoPotato.

Bitcoin’s NVT

NVT uses its on-chain investor volume to estimate the network’s value. This model was first introduced by Willy Woo, a crypto analyst. It is calculated by multiplying the on-chain volume with the 2-year median NVT-Ratio value (Market cap / Total transfer volume).

After touching the top of the cycle in 2018, both the 30-day and 90-day MAs of NVT-price declined steadily for nearly 12 months. These moving averages have been rising since the May 2021 50% drop. They are now at levels higher than their former peak of 64K.

This variation in NVT-based pricing could translate to higher institutional activity levels than retailers.

Chart by Glassnode

Analyse Categorical of On-Chain Activity

In all previous crypto market cycles, the 7-day MA of onchain transfer volume Mean & Median has risen to more than 4X their 360 day MA level, and then fell below 1X their 360 day MA.

Median and Mean on-chain transaction volume are proxies for smaller and larger transactions. If the Mean value increases, this means that high-volume transactions are occurring more often. The median size is an indicator of small transactions that can be attributed to retailers.

Surprisingly there hasn’t been a 4X increase. The Median has been correlated with the Mean value, which means that the activity level of both large entities as well as minor retailers was increasing with price rise to the new ATH, up to more 4X their 360-day MA.

Surprisingly, the Median and Mean values have diverged significantly. This divergence also highlights the presence of larger entities in this ecosystem, each with a different conviction or vision.

Chart by Glassnode

The Fund Flow Ratio for Bitcoin: Are Insitions Here?

To evaluate the assumption of large entities having an apparent footprint, you can also study Fund Flow Ratio.

Majority of institutional players transfer their assets to the exchanges (on chain). We can therefore track the weight of the category by measuring the Fund flow ratio (on-chain volume not sent to/withdrawn form exchanges divided by total transfer volume on-chain). This ratio’s historical trend shows that it has decreased since reaching the ATH and entering into the bear market.

However, this ratio has increased since Jan 2021, despite a 50% market correction in May. Nearly 96% of all on-chain transactions cannot be attributed to withdraws/deposits from exchanges. It is clear that institutional involvement in crypto markets has been increasing.

Chart by Glassnode

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Marla Brooks

Marla Brooks – Financial Analysis My name is Marla Brooks, and I am the mainstream behind the””  for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.

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