What will happen when the supply and demand balance of BTC and ETH is broken

Original title: When the supply and demand balance of BTC and ETH is broken

The entire crypto market trend mainly depends on the direction of BTC and ETH. As BTC and ETH continue to flow out of exchanges, the supply and demand balance may be broken at some point, creating a situation where supply exceeds demand, resulting in sudden and rapid price changes.

(As the Bitcoin halving effect appears, there are fewer and fewer BTCs willing to sell in the market, MoonCapital)

BTC price rises but balances on exchanges fall

In the bull market in 2017, when the price of BTC rose, the BTC inflow from exchanges also showed an upward trend, indicating that as the price rose, BTC holders increased their willingness to sell. However, this round of trends showed a completely different trend. When the price of BTC rose, the balance of BTC in the exchange decreased instead.

L2 solution Milkomeda completes $3.1 million in financing: On October 21, Milkomeda, a layer-2 network protocol that provides EVM functions for non-EVM compatible chains, completed $3.1 million in financing, led by Archetype, with participation from Sora Ventures and the Algorand Foundation , Arrington Capital, SOSV, Circle Ventures, Borderless Capital, and Coinbase Ventures. At present, Milkomeda has deployed an EVM-compatible layer-2 network for Cardano and Algorand. [2022/10/21 16:34:52]

After experiencing the baptism of the previous cycle, holders have a deeper understanding of the value of BTC, and strong players are stronger. This is an unprecedented situation.

The Litecoin Foundation and Antpool cooperated to establish LTC Labs: On April 6th, the Litecoin Foundation announced on its official blog that it has established a digital currency research laboratory "LTC Labs" in cooperation with Antpool. ". The organization will focus on research and information on anonymous transactions, decentralized applications, digital currency evolution, wallets and other projects focused on growing the Litecoin ecosystem. As part of the partnership, AntPool will donate half of its Litecoin pool mining revenue each month to fund LTC Labs and directly support development initiatives. The Litecoin Foundation said it plans to launch a DAO in the future to manage these initiatives. [2022/4/6 14:06:52]

(The balance of BTC in the exchange continues to decrease, and holders are not willing to sell, Glassnode)

Twitter will appoint Musk as a member of the board of directors: Golden Finance reported that Twitter will appoint Musk as a member of the board of directors. Affected by this, Twitter (TWTR. Previously, Jinse Finance reported that Musk already holds a 9.2% stake in Twitter. Twitter CEO said: Musk is both a fanatical believer and a strong critic of Twitter, which is exactly what we need on Twitter. [2022/4/5 14:05:43]

(BTC holders are not willing to sell, Glassnode)

The addresses accumulated by BTC are still increasing

According to statistics from glassnode, addresses accumulating BTC are still increasing despite rising prices.

(Trend of BTC accumulating addresses, Glassnode)

NYDIG Raises $50M for Seventh Cryptocurrency Fund: Bitcoin investment firm NYDIG has raised $50 million for its seventh fund investing in cryptocurrencies, according to a regulatory filing, Golden Finance reports. NYDIG opened the fund on Nov. 16, fully funded by a single investor. The company plans to keep the fund open indefinitely. [2021/12/1 12:42:14]

Miners' willingness to sell has decreased in the near future

There are 900 new BTCs every day, but after miners entered April, their willingness to sell decreased. As shown below:

(Since April, miners’ willingness to sell has declined, Glassnode)

(The willingness of miners to sell is not high for the time being, Glassnode)

(The trend of miners transferring BTC to exchanges, Glassnode)

ETH locked in DeFi is on the rise

The locked amount of ETH in DeFi exceeds 10 million, which is about 10% of the total amount of ETH. With the development of DeFi, the total amount of locked ETH will increase.

(The locked amount of ETH in DeFi has exceeded 10 million, DEFIPLSE)

ETH2.0 storage contract deposits are on the rise

The ETH2.0 storage contract currently has more than 3.7 million staked ETH, and it has been growing.

(ETH deposited in ETH 2.0 storage contract keeps growing, Beconcha.in)

ETH balances on exchanges have been dropping

(ETH balances on exchanges continue to drop, Glassnode)

On the one hand, the continuous outflow of ETH from the exchange is affected by the development of DeFi, but it also indirectly reflects that the holders are not willing to sell.

Institutional interest in ETH

With the arrival of ETH2.0, institutions are interested in the pledge income of ETH2.0. Some ETH trust services provide services for qualified investors and institutions to enter the ETH2.0 pledge field. Qualified investors only need to purchase their shares, that is, gain exposure to pledged ETH, and do not need to directly purchase, hold or pledge these ETHs.

Grayscale manages ETH assets worth over $7 billion:

(Grayscale managed ETH assets of up to $7 billion, GRAYSCALE)

In addition, CME launched ETH futures on February 8 this year, and institutional and qualified investors have the opportunity to hedge their positions in the spot market, as well as leverage opportunities.

Unreasonable 2021

As the balance of supply and demand is disrupted, the rhythm of the market can experience sudden upheavals.

Every bull market is unlikely to look the same. In the eyes of those who were in the bull market in 2013, 2017 is unreasonable; in the eyes of those in the bull market in 2017, 2021 is also unreasonable.

There are many factors causing this situation, including the halving effect of BTC, the development of DeFi, and the huge changes in the macroeconomic environment.

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