After cryptoasset prices crashed in early May, with BTC falling nearly -32% from $39,500 to $27,000 within a week, prices continued lower in June as BTC dropped to a 1.5-year low of $17,600.
BTC was down more than -57% year-to-date as of June 30, 2022, capping off its worst first-half year in history. It is clear that we have entered a crypto winter. However, it is tough to determine the severity of the situation without analyzing on-chain metrics.
In Kraken Intelligence’s latest report, Ticking Lower, the team investigates key on-chain data points to explore where the crypto market stands today and what may lie ahead.
State of the market
Over the last month, cryptoassets slumped as inflation rates rose around the world. The Federal Reserve hiked the Fed rate by 0.75% in June, its sharpest single-month raise since 1994. Russia continued its ongoing military occupation in Ukraine.
The crypto space met headwinds again, as prices tumbled lower, causing prominent crypto lenders including Celsius, BlockFi, Voyager and Vauld to take drastic measures due to “extreme market conditions.”
BTC/USD continued its year-to-date downward trend in June, but altcoins performed even worse, leading the crypto market lower across almost all assets. Overall, altcoin dominance (the ratio between the market capitalization of a cryptoasset to the total market capitalization of the entire crypto market) also fell year-to-date. However, ADA, SOL and ALGO dominance rose month-over-month in June. AVAX saw the smallest dominance decline, followed by NEAR and ETH.
Indicators such as the MVRV z-score (a data point that suggests if BTC is over or undervalued) shows that BTC remains deep in oversold territory, which has historically served as a strong level of support.
Although BTC’s MVRV z-score still has room to fall before reaching the lows recorded during the bear markets of 2015, 2018 and 2020, its current reading is rapidly approaching the lows recorded in March 2020 when BTC fell to $3,900 during the initial phases of the COVID-19 pandemic.
Network transaction volume suggests that with the exception of ADA, cryptoassets have seen declining demand in 2022. Since January, on-chain volume for ADA has seen a strong upward trend, while BTC, ETH, DOGE and ALGO saw on-chain volume fall.
Active addresses also suggest declining network demand for most cryptoassets in 2022, except for BTC and ADA. However, BTC was the only cryptoasset in the cohort to see active addresses increase month-over-month.
Want to learn more about on-chain activity in June and what’s ahead? Read the Kraken Intelligence report, Ticking Lower, in which the team explores the crypto fundamentals and on-chain data that shaped the market in June.
These materials are for general information purposes only and are not investment advice or a recommendation or solicitation to buy, sell, or hold any digital asset or to engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the cryptoasset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your crypto assets and you should seek independent advice on your taxation position.
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