Bitcoin Address Metrics Are Looking Terrible; Regulated vs Unregulated Spread Tightening

Bitcoin’s mere 13% YTD gain is still beating gold’s -4.70% performance; however, S&P 500 is now leading benign up 16.32% so far this year.

Though Bitcoin’s price dropped to $31,600, it simply remains within its range of $30k-$40k with no end in sight to this dull crab market.

Retail isn't involved in the market anymore, with volatility and volume in the crypto market at their lowest levels. Daily active addresses halved, and new address growth is currently as low as it was immediately after the 2018 crash, said Charles Edwards of Capriole Investments.

Not to mention, the whales with over 1,000 BTC that dumped on the market at the top are still not buying. This, according to on-chain analyst Willy Woo,

“Could mean exchanges depleting inventory, or whale population is reducing, or just wallet consolidation. Nothing is definitive.”

However, Edwards noted that while Bitcoin addresses metrics look terrible, they can change quickly.

This lack of retail has the gap between the basis on the regulated futures market and the unregulated futures market now closing as well.

At one point, Bitcoin annualized daily basis on leading crypto and derivatives platform Binance was 41.4% in mid-April, around the time the crypto asset was near its all-time high of nearly $65,000.

When it comes to the 3-month annualized basis, throughout Q4, 2020, the CME futures traded at a slight premium to the unregulated market suggesting a high institutional appetite for the leading cryptocurrency, noted Arcane Research.

But as Bitcoin surpassed the previous ATH $20k, a significant gap occurred between the unregulated and regulated market.

This, however, wasn’t caused by a diminishing contango on CME but by the rapid growth in the contango in the unregulated markets where traders had a solid long bias.

This regulated vs. unregulated spread reached its peak on April 14th at 33% on the day BTC price reached its current global peak. But since then, several massive liquidation events occurred, and the appetite for upside exposure calmed, leading the spread to tighten towards a more sustainable level.


The good thing is that with the price range getting tighter and tighter with Bollinger bands coiling around the price, volatility is expected to pick up. But it is to be seen just in which direction the price will move.

Not to mention, China FUD never seems to stop. This week, Anhui province in the country was the latest one to crack down on Bitcoin mining. The region, located close to Shanghai, plans to shut down all crypto mining projects within the next three years due to a power supply shortage.

Meanwhile, in this ongoing weakness, Bitcoin’s YTD gains have come down to 13%, and while it was beating S&P 500’s gains by several times, the traditional index is currently up 16.32% this year so far.

However, the digital gold is still beating the precious metal, which is down 4.70% YTD while recording positive returns of 2.50% this month, unlike Bitcoin’s 7.87% losses in July. This has the rolling 60-day correlation between Bitcoin and bullion tuning negative.

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