VanEck May 2024 Bitcoin ChainCheck
May 31, 2024
Read Time 5 MIN
Please note that VanEck has exposure to bitcoin.
In our May 2024 Bitcoin ChainCheck, we dive deeper into the shifts within the Bitcoin ecosystem following the recent halving event. This month's analysis observes a major pullback in inscriptions (-79%) and Bitcoin mining revenues (-49%). In response to the tougher operating environment, the network’s total hash rate fell 4% in the month, and Bitcoin mining equities fell 9%. Such challenges are leading many miners to either explore AI applications or M&A to achieve diversification or more scale.
- 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 May 2024:
Bitcoin’s Price Action
- Market sentiment: Bitcoin prices displayed a slight decline of 2% over the last 30 days, currently standing at $64,815. Despite this minor setback, BTC is still up 136% y/y.
- Regional trading: Post-halving adjustments and ETF availability have brought distinct changes in regional market behaviors, with Bitcoin exhibiting clear relative strength during U.S. trading hours.
| MoM Change (%) | YoY Change (%) | |
| Asia Hours Price Change MoM ($) | -4 | 8 |
| U.S. hours Price Change | 4 | 82 |
| EU hours Price Change | -2 | 41 |
Source: Glassnode, as of 5/28/24. Past performance is no guarantee of future results.
- Funding rates: The annualized cost on Bitcoin Futures saw a significant reduction to 10%, possibly indicating decreased speculation or lower bullish sentiment in the market.
Bitcoin’s Network Activity, Adoption, and Fees
- Daily transactions: There has been a notable increase of 20% this month in transactions, likely due to ongoing re-adjustments post-halving. Such activity is in the 98th percentile of activity.
- Ordinal inscriptions: A steep 79% reduction in daily inscriptions has occurred, suggesting a strong market shift away from these assets.
- Total transfer volume: Total transfer value across the network decreased by 13% to $44.60 billion, albeit still maintaining robust activity metrics in the 85th percentile of all-time history.
- Average transaction fees: Fees experienced a dramatic downturn of 78%, averaging $3.68, which points to decreased network congestion as inscriptions have dwindled.
Bitcoin Market Health and Profitability
- Percent of addresses in profit: A slight drop was noted, with 93% of addresses remaining in profit. As we have noted, when this number reaches 100% after a multi-year gap, as it did in January, Bitcoin tends to make repeated all-time highs in the subsequent year.
- Net unrealized profit/loss: This ratio decreased to 0.56, interpreting a cautious yet not overly pessimistic sentiment.
Bitcoin Miners
- Total daily BTC miner revenues: Miners faced a sharp revenue drop of 49% to $30.83 million, reflecting the impacts of lower transaction fees and mining rewards post-halving. We have noticed some recent M&A among Bitcoin miners, with U.S.-listed RIOT making a bid for Canadian Bitfarms (BITF) after accumulating a 10% stake in the open market, which follows the closing of Hut8 Mining’s purchase of US Bitcoin late last year.
Chart of the Month: BTC 30-Day Average Fees (USD)
Source: Glassnode, VanEck research as of 5/28/24. Past performance is no guarantee of future results.
| Bitcoin ChainCheck Monthly Dashboard as of May 28th, 2024 | ||||
| 30-day avg | 30 day change (%) | 365 day change (%) | Last 30 days Percentile vs all-time history (%) |
|
| Bitcoin Price | $64,815 | -2 | 136 | 99 |
| Daily Active Addresses | 687,147 | -16 | -18 | 62 |
| Daily New Addresses | 282,394 | -21 | -30 | 54 |
| Daily Transactions | 571,778 | 20 | 8 | 98 |
| Daily Inscriptions | 8,359 | -79 | -97 | 16 |
| Total Transfer Volume (USD) | $44,602,891,094 | -13 | 105 | 85 |
| % Supply Active, last 180 days | 24% | 3 | 21 | 29 |
| % Supply Active, last 3+ years | 46% | 2 | 16 | 100 |
| Avg Fees (USD) | $3.68 | -78 | -51 | 83 |
| Avg Fees (BTC) | 0.00006 | -78 | -79 | 17 |
| Percent of BTC Addresses in profit | 93% | -1 | 37 | 79 |
| Unrealized profit/loss ratio | 0.56 | -3 | 94 | 77 |
| Global Power Consumption (TWh) | 117 | -3 | 69 | 99 |
| Total Daily BTC Miner Revenues (USD) | $30,832,877 | -49 | 4 | 85 |
| Total Crypto Equities' Market Cap (USD) (MM) | $141,047 | -9 | 164 | 91 |
| Transfer volume from Miners to Exchanges (USD) | $2,289,134 | -44 | -42 | 67 |
| Bitcoin Dominance | 53% | 0.38 | 15 | 78 |
| Bitcoin Futures Annualized Basis | 10% | -28 | 270 | 66 |
Source: Glassnode, VanEck research as of 5/28/24. 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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DISCLOSURES
Coin Definitions
Bitcoin (BTC) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Risk Considerations
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Index performance is not representative of fund performance. It is not possible to invest directly in an index.
Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
© Van Eck Associates Corporation.
DISCLOSURES
Coin Definitions
Bitcoin (BTC) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Risk Considerations
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Index performance is not representative of fund performance. It is not possible to invest directly in an index.
Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
© Van Eck Associates Corporation.