Normalcy returning to crypto markets, on-chain data shows

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Over the past few months, the crypto market has been largely quiet. Bitcoin had been in a crabby motion around $20,000 for some time as it moved along while waiting for broader macro conditions to make a move.

I wrote in late October to be cautious about this price action, and that bitcoin could a recession away From an aggressive bottom wick. What I didn’t do, except in the event that FTX, one of the blue-chip companies in the space, inexplicably shook crypto to its bones. went into bankruptcy,

This obviously spooked the market. Last week I assessed how bitcoin flows out of exchange has become dire, as people’s trust in these central institutions to deposit their coins was at an all-time low.

really, i saw yesterday That 200,000 bitcoins have left the exchange since the FTX explosion. But now, the data suggests that the market is calming down a bit. And again, it looks like we could be entering crab mode unless the macro provides inspiration one way or another – or an unexpected crypto-specific development comes out of the woodwork.

The first way to demonstrate that the dust is starting to settle is by looking at bitcoin’s volatility. This apparently spiked as Sam Bankman-Fried’s “Games” were revealed to the public. But after rising higher over the past few weeks, it has pulled back to more standard levels over the past few days.

Another way of looking at it is the decline in large transactions. These transactions (defined as those over $100,000) spiked in the few days around the bankruptcy, but have gradually fallen, returning to the same levels we’ve seen through most of 2022.

Another useful metric to track is the net gain or loss of coins transferred. It tends to rise sharply in times of crisis as the price drops suddenly, usually before recovering back towards the $0 mark before the market calms down.

The chart below illustrates this well with the trades on 9th Novemberth An ugly $2 billion deficit before November 18th then topped with a loss of $4.3 billion. This marks the worst post-Celsius crash (loss of $4.2 billion) and well short of Luna (loss of $2.5 billion).

This shows the continued downward pressure on the bitcoin price, but the trend is again approaching zero.

FTX was a central part of the ecosystem, and its bankruptcy shook the market. As I wrote recently, this contagion not finished yet,

Yet last week’s data suggests that normalcy is returning to the crypto markets. Going forward, it can again flow in the water for some time. With China opening up post-lockdown, the latest inflation numbers looming and the EU banning Russian crude imports, the macro certainly has a lot going on.

Crypto investors will only need to hope that crypto-native scams are out of the way for the time being.

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