BTC has stolen the market’s spotlight this week as the number one crypto prices have tried to reclaim the 10000 levels again. BTC’s attempt to break above the psychological barrier came after ETH prices reached the highest levels since early March 2020. With the BTC and ETH hype and chatters continue to circulate among crypto communities,traders and investors could find interesting insights when comparing data from on-chain, off-chain, and derivativestrading. From that,we could have a better understanding of BTC and ETH‘s current situation, helping us to make a better judgment of which one is a better buy now.
Balance on exchanges
The balance on exchanges could provide us somecolor in terms of HODLers’ sentiment, and how many coins/tokens are available to sell. Data from Glassnode shows that BTC balance on exchanges has reduced to BTC 0.32 mln, that’s the lowest level in more than a year. BTC balance on exchanges has been in a downtrend since March, and the trend has been continuing that way.
Figure 1a: BTC Balance on Exchanges (Source: Glassnode)
Figure 1b: ETH Balance on Exchanges(Source: Glassnode)
On the other hand, ETH balance on exchanges has been snowballing. The number has reached ETH 18.7 mln in mid-March this year, which hasn’t seen since late December 2016.
Interestingly, the balance number of the two assets reacted very differently during the massive selloff in March. It seems like the selloff triggered the downtrend on BTC’s balance, while more traders have put their ETH in exchanges after the ETH price correction in the same period.
Why it matters?
We believe that traders and investors withdraw their coins/tokens from exchanges could be a sign of long-term bullishness, as they wanted to store their holdings in cold wallets and expect the potential bull run. From that point of view, it seems that markets have been more bullish on BTC than ETH. However, there could also be other factors to drive the increase and decline of the balances, such as network security.
Addresses with high balance
Whales’ willingness to accumulate coins/tokens could beanother clue that traders and investors should look for when it comes to fundamental analysis. The number of unique addresses with high balance could especially important.
Data from Glassnode suggests that the number of unique addresses with equal/more than ETH 32 has been steadily increasing over the past year, despite the price fluctuations. Meanwhile, the number of unique addresses with no less than BTC 10K has rebounded from the lows in late March. Still, it seems relatively low compared to the number in late June, which is at 120.
Figure 2a: Bitcoin addrs. with bal. ≥ 10KBTC (Source: Glassnode)
Figure 2b: Ethereum addrs. with bal. ≥ 32ETH (Source: Glassnode)
Why it matters?
We believe that hodling power is one of the critical metrics to reflect whales’ sentiment on a given asset, and itseems that ETH is a clear winner from this point of view. However, we also see limitations on this. It’s because ETH 32 is a relatively low barrier to entry, which could lower the significance of the number.
Although the number of BTC addresses with a high balance has been picking up, this data alone is only part of the broader picture. By combining the balance on exchanges number, we may able to see a more comprehensive image.
Transaction fee and gas
Bitcoin’s transaction fee and Ethereum’s gas used have received many conversations among crypto chat groups lately. One of the narratives is that the total ETH gas used has reached a new all-time high, meaning more people have been using the network; thus, the price should go up. ETH prices have touched 250 levels before retracting back to the 230 handles.
However, when we look at the mean number of ETH gas used, we could see another picture. Data from Glassnode shows that the mean of ETH gas used has been lowering on the back of the rally, and formed a downtrend. From that perspective, there may not be as many transactions as we thought.
Figure 3a: Bitcoin transaction fee (Mean)(Source: Glassnode)
Figure 3b: Ethereum gas used (Mean)(Source: Glassnode)
On the other hand, bitcoin’s mean transaction fee has been hovering at relatively high levels despite the recent fluctuation.Generally, a higher transaction fee could suggest that the market has a higher demand for conducting transactions. Therefore users are willing to pay more for faster settlements. That also indicates that more people are using the network.
Why it matters?
We believe that cryptocurrency is a kind of network value asset, which means the more people use and hodl it, the more valuable the asset will be. However, it’s worth noting that there’s no direct correlation between transaction fee/gas to price, and these numbers could be just another two pieces of the whole puzzle.
ETH skew remains in negative, BTC’s rebounded
If analyzing on-chain activities is like fundamental analysis to equities, analyzing derivatives trading activities could be like statistical analysis. It could provide market participants with a glimpse of how real traders have been positioning their trades. We could find valuable information from that.
We noticed that one of the recent conversations in the crypto community is that the options skew of ETH has turned negative, and it could be bullish for the price.
Figure 4a: BTC 25d skew(Source: Skew)
Figure 4b: ETH 25d skew(Source: Skew)
Options skewness is the difference in implied volatility between OTM/ATM/ITMoptions. Traders can use these relative changes as a trading strategy. Data from Skew shows that ETH‘s options skew remained mostlynegative, while BTC’s has been steadily recovered to the positive area.
What does it tell us?
We believe that the IV changes in different options contracts could somewhat suggest the upcoming volatility of the underlying and how traders were anticipating it. However, options skewness isn’t always a useful indicator in price prediction but might be helpful under certain circumstances. We think that traders should consider this alongside with many other factors that could drive the crypto markets.
Market eyes on BTC options with higher strike prices, ETH approach was relatively conservative
The way options traders pick the strike prices seems telling us that market has been takinga more progressive view on BTC prices, while the view on ETH has been relatively moderate.
We can see that most of the BTC options open interestwere in the 10000 strike price area, while the second and the third most popular strike price wear around 12000 and 11000. On the ETH side, 280 strikes have been the most popular, while the second and the third most OI were 220 and 240.
On the ETH side, calls with 280 strikes seem like a typical bullish setup. However, calls with 220 and 240 strikes seem more like a conservative approach, as the contracts were already/soon will be in the money. On the other hand, 220 and 240 puts look more like defensive setups, as ETH has been in a rally since mid-May.
On the BTC side, calls with 10000 strikes also seem like a standard bullish setup, but calls with 12000 and 11000 strike prices seem even more aggressive.From the put writing perspective, puts with 12000, 11000, and 10000 strike price were all in-the-money. If a trader is bearish on BTC, they may consider puts with even lower strike prices than above 10000.
Figure 5a: BTC opt. OI by strike (as of Jun 4)(Source: Skew)
Figure 5b: ETH opt. OI by strike (as of Jun 4)(Source: Skew)
We covered some of the on-chain activities and derivatives trading data from BTC and ETH, and it seems like it’s still not easy to make a simple call onwhich asset is a better buy at this moment. However, it looks like BTC traders have been more long-term bullish on the price, while ETH traders have been more focus on the short-term price actions. Still, traders and investors should be flexible on the trading strategies and adjust their setups according to the market conditions.