TitanSwap Monthly Report December

Market Overview

A growing number of Bitcoin investors are at a loss, with a quarter of their Bitcoin holdings at an unrealized loss. When prices hit new highs, a common behavior is for profitable Bitcoins to be sold off with the help of market forces. Holders who purchased Bitcoins at low prices want to be rewarded for their efforts to wait and take risks, which leads to elevated profit-taking and old coin swarm activity.

The spent volume age band filter shows Bitcoins older than 6 months, showing us what sell volume might look like for older Bitcoins. In the bull market of late 2020, spending on Bitcoins with a coinage of 6 months or older accounted for 7% of on-chain volume. Since then, selling peaks for this group have declined sequentially, accounting for just 3.5% of daily volume at recent highs.

We can also see this dynamic in the realized market cap hoarding wave, which divides the circulating supply by their respective weights in the realized cap and helps highlight recent selling.

A key observation in the realized market cap hoarding wave is the compression of 3- and 6-month-old Bitcoins, which were purchased between mid-June and September — essentially the low point of the year. the squeeze of the 3-month — 6-month wave, along with the extension of the 6-month — 1-year old wave, shows the maturation of Bitcoin — as Bitcoin goes dormant and accumulates age, short-term Bitcoins are gradually being categorized into the older cohorts of coins.

Parallel to the growth in the 6 month-1-year-old cryptocurrency age group, the youngest cryptocurrency age Bitcoin bands saw an uptick at the all-time highs in the market in October and November. This behavior shows the selling of older Bitcoins, which reset their age to zero. Based on the squeeze in the 3 month-6 month band (and to a lesser extent the 1 month-3 month band), most of the recent selling has come from these intermediate holders.

What we take away from the charts above is that most of the selling that is currently taking place appears to be coming from Bitcoins purchased in the last 3–6 months, rather than from long-term holders.

Short-term holders are playing a game of chair grabbing

Newer investors were the first group to be tested by price weakness. In the days following the all-time highs in November and the wave of liquidations on December 4, it was common for the chain to realize losses of $50 million to $100 million per day. Realizing losses after the all-time highs, these sellers must have been the buying group at the top of the price.

Realized net profits/losses are visualized in USD denominated units to show the daily results of on-chain selling. We observe that:

1. As investors continued to profit from selling near the all-time highs, those of their Bitcoins purchased at lower prices were sold to new buyers.

2. In the days that followed, investors realized severe losses as the price retreated by more than 30%. Realizing losses after all-time highs suggests that these investors purchased Bitcoins at the top of the price.

3. The relatively muted activity over the past two weeks suggests that investor interest has reached a point of exhaustion at the current price.

Understanding that selling of older coins is declining and long-term holders are mostly on the sidelines, we can visually see that recent Bitcoin activity has been dominated among the short-term holder group.

Despite the weak market, strong players continue to stockpile

One of the stampeded behaviors in the 2021 Bitcoin market is the firm accumulation of investors with a limited selling history. Liquid supply is the amount of Bitcoin held by on-chain entities relative to the inflows in their book history >= 75%.

The supply held by these liquid entities sold off in May along with the bulk of the market. Since then, they have maintained constant accumulation pressure and are now accumulating coins at a rate of 3.4x the daily mint volume.

In other words, the heavy-handed hoarders are buying up supply at more than three times the rate of new coins mined each day.

Strong Hands isn’t the only investor buying Bitcoin away from potential buyers. After a huge rush to deposit Bitcoin into exchanges in May (more than $300 million in 14 days), Bitcoin was steadily withdrawn and deposited into cold wallets in the months following the summer lows.

One group that doesn’t have a reputation as a strong hand is the miners, who have been a source of selling pressure on the Bitcoin network since its inception. Perhaps their reputation needs to be overhauled.

Over the past two years, there has been a shift in miners’ behavior. Newer, more powerful chips have improved operational efficiency, and the expansion of miners into North America has facilitated many miners’ access to working capital through cheap debt and company equity. the typical miner in 2021 is more resilient than past generations of miners.

Once, miners’ wallets would regularly sell a steady stream of Bitcoin, a situation that has shifted since 2019, with miners now depositing more mining revenue into their wallets than ever before. The chart below shows the 90-day sum of miners’ net flows (in USD) as a percentage of market cap, and the rise over the years is clear.

If miners, a group that naturally has an incentive to sell, evolve into a hoarding party, it could become very difficult to acquire new Bitcoins in the future.

With so many holders accumulating Bitcoins over time, the opportunity to acquire the world’s first absolutely scarce digital asset in the future is becoming increasingly limited.

TitanSwap Delivery

On the Swap side, we continue to optimize the algorithm and supplement the rules in order to provide a more competitive offer in the market, this part is the foundation and the core. At the same time, we have developed a preliminary development plan for the TITAN wallet. As an important bridge and carrier, we believe that this product form will form an important pavement for future development, whether it is chain tour, NFT, or metaverse, the wallet can be used as the entrance and key, now it has started late, but because the technology is relatively mature, stability and security line should do better.