The State of Crypto June 2023

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Immediately after interacting with a blockchain, a lot of data becomes publicly available on a public ledger. Analyzing this data can provide crypto traders and investors with useful insight into the current state of the market. In “The State of Crypto”, we look at the most important metrics to watch the market based on transaction and trading activity. Our main focus is the two biggest cryptocurrencies Bitcoin and Ethereum, and we divide the metrics into short-term and long-term indicators. You can find last month’s report here.

Short term

The Ether balance on exchanges is at an all-time low amounting to 9.9% of the total Ethereum supply in circulation. We largely attribute the drop in Ether exchange balances to the Shanghai hard fork in mid-April, which finally offered stakers the opportunity to withdraw Ether. This option caused a rework of staked Ether, as well as an overall increase in the amount of staked Ether. This resulted in more Ether being pulled from exchanges to be staked elsewhere.

One is the direct involvement of the Shanghai hard fork; another is market sentiment. The Shanghai hard fork was a risk event for Ethereum by fully finalizing Ethereum’s transition to proof-of-stake from proof-of-work known as merge, ensuring Ether can be unstaked, some of which have been staked for about 2.5 years. Along with Ethereum’s negative supply growth due to high demand for its block space, it’s likely that the overall view of Ethereum has become more positive, leading many people to accumulate gold. ‘Ether before removing it from exchanges. This is further accentuated by the fact that Ethereum was up 7.6% against Bitcoin in May.

As for Bitcoin, it also saw a drop in exchange balances, but not as big as Ethereum. Both cryptocurrencies saw fewer exchange inflows compared to March and April of this year, months in which price volatility was, however, greater, resulting in more crypto moving steadily from one scholarship to another.

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