VanEck Mid-September 2024 Bitcoin ChainCheck: 1-Year Review Edition

 Bitcoin's (BTC) YTD (+36% as of 9/16) performance surpasses nearly every other major asset class (again),1 but some investors have been spooked by the recent drawdown, a ~21% correction from the March peak. In this note, we examine the current state of the Bitcoin blockchain, including its recent fundamentals, correlation with other assets, volatility, ETP traction, our take on the likely impact of the U.S. election, and express our more global view on the role of decentralized networks in increasingly censored digital landscapes.

Bitcoin YoY Fundamentals

Bitcoin Fundamentals

As of September 16th, 20247-day Average365 day change (%)Last 30 days Percentile
vs all-time history (%)
Bitcoin Price$58,58412496
Bitcoin Dominance56%1581
Unrealized profit/loss ration0.4610667
Bitcoin Daily Trading Volumes (USD)$28,897,783,504173n/a
Daily Inscriptions23,170-9341
Daily Active Addresses725,109-3496
Avg Fees (USD)$0.77-5255
Total Transfer Volume (USD)57,892,857,78120284
Total Crypto Equities' Market Cap* (USD) (MM)$112,0408767
Transfer Volume from Miners to Exchanges (USD)$1,802,327-6068

Sources: Glassnode, Artemis.xyzs of 9/16/2024. Past performance is no guarantee of future results.

Regional TradingYTD Average ($)2023 Average ($)2022 Average ($)2020 - 2021 Average $)
Asia Hours Price Change MoM ($)-192494-988-418
US hours Price Change MoM ($)1,0801,158-9301,299
EU hours Price Change MoM ($)1,005462-721-834

Sources: Glassnode, Artemis.xyzs of 9/16/2024. Past performance is no guarantee of future results.

We begin our analysis with the tables above, which reveal how Bitcoin’s key fundamentals have changed over the past year. Twelve months to date, bitcoin’s price is up 124%, outperforming nearly every major asset class. Even within crypto, BTC has outperformed. Bitcoin dominance, a measure of Bitcoin’s market cap versus crypto’s total market cap, is up 15% YoY to 56%.

There is clearly much more interest in Bitcoin and digital assets today than one year ago. Bitcoin trading volumes have grown 173% YoY, significantly outpacing equity trading volumes, up ~18% YoY. Although price returns for equities have been great, capital formation has been dismal. Capital raised from global equity IPOs is on a $68B pace for 2024, a 31% decline vs. 2023. The number of IPOs is on pace to fall by 42%. (For context, $748B was raised in 4,000 IPOs in the debt-fueled 2021 bonanza). Among private transactions, U.S. Venture Capital invested is up 9% y/y, while Crypto VC flows are up 87% over the same period.

Bitcoin’s adoption as an investment vehicle isn’t driven by the same forces today as in 2023 when it rose 155%. Then, Bitcoin inscriptions were a viral innovation enabling users to store media files directly on the Bitcoin blockchain. Inscriptions ushered in a viral new wave of blockchain-based art, notably bringing retail liquidity and trading fees to the Bitcoin blockchain, which was previously left out of the NFT craze of the last market cycle. Like previous NFTs, however, the trend ended in a crash, reflected by the 93% YoY drawdown in daily inscriptions transactions. The decline in inscriptions undoubtedly explains the 34% and 52% YoY declines in daily active addresses and transaction fees, respectively. With Bitcoin’s on-chain activity diminished, bitcoin’s price appreciation this year is better explained by growing adoption as money: a vehicle for storing and transferring value.

Despite fewer on-chain retail transactions, USD-denominated on-chain Bitcoin transfer volumes are up 202% YoY, implying larger overall ticket sizes. In parallel, despite lower fees, Bitcoin-related equities are capturing value by facilitating the growth of its monetary network’s adoption, with their collective market cap up 87% YoY.

Based on month-over-month (MoM) price changes by region, the long-term trend of Asia selling BTC to North America continued in 2024, with investors enjoying outsized benefits during US trading hours

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