Token Fundamentals – Bitcoin & Ethereum


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Looking at on-chain fundamentals, Bitcoin exhibits signs of strength despite poor price performance and a difficult macroeconomic backdrop. Bitcoin’s hash rate, the amount of computational power required for mining, is at an all time high according to data from Glassnode – a sign of strength in the network’s security. Also, miners have been sending fewer coins to exchanges even as the price falls, indicating a long-term preference to hold the asset over immediate revenue.

BTC Fundamentals

Source: Glassnode

While Bitcoin is the largest and most liquid asset in the crypto ecosystem, Ethereum has also emerged as a high quality asset to hold during market volatility. Looking at the drawdown from the all-time highs (ATHs), ETH and BTC are trading on par with each other, down roughly 59% and 58% respectively since ATHs at the time of writing.

YTD Drawdown from ATH

Source: Glassnode

In some cases, Ethereum has even deeper liquidity than Bitcoin when comparing the top five exchange trading pairs. This becomes especially important when markets are in a macro downtrend — deeper liquidity can result in smaller drawdowns and less volatility.


Source: CoinMarketCap as of May 13, 2022

The Ethereum network is currently in the process of transitioning to proof of stake and, as a result, current miners and their hardware will become obsolete in maintaining the security of the network going forward. The first upgrade that will make Ethereum miners obsolete is expected to occur later this year. Despite the upcoming upgrade, the Ethereum hash rate is at an all time high as the network processes over $6B in daily value transferred, indicating strong trust in Ethereum’s network security.

ETH Hash rate and daily value transferrred

Source: Coin Metrics

The Ethereum community also appears highly committed to the future of the network as the total ETH staked in preparation for the transition to proof of stake continues to increase. Over 12.5M ETH (roughly $25B) has been staked as of May 12 and can not be unstaked until the implementation of shard chains expected to occur in 2023.

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Originally Published in May 2022 – MAY NEWSLETTER

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