VanEck April 2024 Bitcoin ChainCheck

Please note that VanEck has exposure to bitcoin.

In our April 2024 Bitcoin ChainCheck, we analyze the shifts occurring after the April 19 halving. We're beginning to observe key metrics that highlight the resilience and evolving dynamics of the Bitcoin blockchain.

• Bitcoin’s Price Action
• Bitcoin’s Network Activity, Adoption, and Fees
• Bitcoin Market Health and Profitability
• Bitcoin Miners
• Bitcoin ChainCheck Monthly Dashboard

Some takeaways for April 2024:

Bitcoin’s Price Action

• Market sentiment: The immediate aftermath of the bitcoin halving has seen a slight dip in price by 2% over the last 30 days, settling at $66,472. Despite this short-term pullback, the year-over-year increase stands at an impressive 130%.
• Regional trading: Post-halving adjustments have brought distinct changes in regional market behaviors:
• Asia hours: Prices dipped by 7% month-over-month, showing market caution in Asian trading sessions. Let’s see if the new Hong Kong spot bitcoin and ethereum ETFs reverse this trend.
• Unlike Asia, U.S. trading hours saw a 4% increase, indicating stronger confidence or possible accumulation phases during these hours.
• EU hours: European trading showed modest growth with a 1% increase, reflecting steady but cautious participation.

Source: Glassnode, as of 4/28/24. Past performance is no guarantee of future results.

• Funding rates: The annualized cost to roll Bitcoin Futures decreased 31% to 15%, indicating a significant reduction in market leverage and bullish sentiment post-halving.

Bitcoin’s Network Activity, Adoption, and Fees

• Daily transactions: Transaction count surged by 27% this month, a robust rebound that puts the heightened network usage post-halving in the 97th percentile of all-time activity.
• Ordinal inscriptions: Post-halving adjustments saw a sharp 60% decrease in daily inscriptions, landing in the 30th percentile historically. This significant reduction may reflect a shift in priorities or valuation of Ordinals after the release of "Runes,” a new fungible token protocol recently launched on the Bitcoin blockchain. Unlike Ordinals, which inscribe unique data onto individual Satoshis creating NFTs, Runes utilize the existing UTXO model to issue fungible tokens with minimal blockchain impact. This could explain why the drop in inscriptions hasn't captured any growth from Runes, as they fundamentally differ in their blockchain usage and purpose. Despite Runes’ minimal impact on data load, their transactions still accrue fees, contributing to the high transaction fees observed this month. Runes, focusing on fungibility, offer streamlined integration with Bitcoin's infrastructure, potentially setting a new direction for token usage on the network. However, it's important to note that despite the robust monthly averages for transaction fees, we observed a significant decline in these fees at the end of the month, indicating a possible easing of network congestion.
• Total transfer volume: Despite a 26% month-over-month decrease, the $51.16 billion transferred across the Bitcoin network keeps it in the 87th percentile for historical activity. This indicates the enduring use of Bitcoin for value transfers amidst broader market adjustments.
• Average transaction fees: With the increase in network activity, average transaction fees in USD soared by 126%, reaching an average of $16.77. This uptick places the current fee structure in the 95th percentile historically, reflecting the higher cost of transacting on an increasingly busy network.

Bitcoin Market Health and Profitability

• Percent of addresses in profit: 94% of Bitcoin addresses remain in profit despite a slight decline of 4% over the month. We have noted before that when this figure hits 100%, as it did in March, Bitcoin tends to make repeated all-time highs over the subsequent year, albeit with a frequent 20% corrections.
• Net unrealized profit/loss: The unrealized profit/loss ratio is 0.58, indicating a healthy but not overly euphoric market sentiment.

Bitcoin Miners

• Total daily BTC miner revenues: Miners' daily revenues slightly declined by 5% to $61.9 million but remain extraordinarily high historically in the 99th percentile, thanks to the elevated Bitcoin prices and transaction fees.

Chart of the Month: BTC 30-Day Average Fees (USD)

Source: Glassnode, VanEck research as of 4/28/24. Past performance is no guarantee of future results.

Source: Glassnode, VanEck research as of 4/28/24. Past performance is no guarantee of future results.

Notes:

Net unrealized profit/loss ratio (NUPL) can be calculated by subtracting the realized market cap from the market cap and dividing the result by the market cap. When a high percentage of Bitcoin’s market cap consists of unrealized profits, it can be interpreted that investors are greedy. Background reading here.

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