Cryptobase Market Summary 2021

I can congratulate you if you’re still here! We’ve made huge progress since the beginning of this year: play-to-earn games increased usage of DeFi platforms, automation of farming pools, and of course so much news about NFTs.

Let’s summarize:

• Since BTC crossed a record level of $69,000 in November 2021, the leading cryptoasset fell roughly -52% to 6-month lows of $33,000 on January 24, 2022, and is down nearly -21% year- to-date.

• On-chain data, like BTC’s HODL Waves, shows that long-term holding accumulation slowed briefly when prices began falling in November 2021, but have since resumed trend. Specifically, the number of coins held less than six months has dropped to all-time lows of 23.66%, suggesting that long-term holding sentiment remains strong despite recent price performance.

• Bitcoin and Ethereum are seeing less on-chain activity, evidenced by a -8.4% and -16.2% drop in active addresses, respectively, from local highs in November 2021. This decrease in network activity supports the strong holding sentiment represented in BTC’s HODL Waves.

• Despite a slowdown in BTC’s network activity, on-chain indicators such as BTC’s spent output profit ratio (SOPR) and ETH’s market value to realized value (MVRV) Z-score suggest that the multi-year bull run isn’t necessarily over yet. Though BTC’s SOPR shows that market participants are mainly trading BTC at a loss, the situation was much worse during Bitcoin’s latest bull run retracement from $65,000 to $30,000 from May 2021 to July 2021 before its rebound to new all-time highs. Moreover, ETH’s MVRV Z-score shows that the cryptoasset is now in “oversold” territory, where it historically has struggled to remain for long periods before a bounce in prices.

And lastly for people who love data here is a great Cryptoasset Infrastructure Matrix:

Crypto is here to stay. We’re still bullish on crypto! Watching what projects continue to build and deliver during these market declines only increased our confidence in the space.

Well, we're still feeling the effect of the FED's decision and before the end of Feb, we're unlikely to see changes in their stance since there's no meeting before then IIRC.

Market-wise, there's been so much pain and panic that you can almost literally smell it if you go on Twitter. We expected $1.75T to hold (coincides with $37,000/$2,800) but looks like we'll be seeing $1.35T since the former broke already. There's a silver lining to crashes: it flushes out the paper hands/scammers etc which leaves a pretty clear picture for those that stick around about who's really building and time to really read/research in quiet times - all while USD value goes down which let's face it sucks but it is part of the game. To give a rough projection on this market, we think the remainder of Q1 is relatively boring with a bottom getting set anywhere between [$1.35T-$1.75T] in which we're buyers and then Q2 may be quite interesting especially for the Ethereum ecosystem & co (L2s) with The Merge incoming.