Data Analysis

1.Market Performance of the Top 10 Cryptocurrencies in Terms of Market Value in June

Source: Santiment

The market performance for the top ten currencies is similar in June, showing a common rise and fall, there is no significant difference. Notably, USDC is gaining more traction and has grown more than threefold in recent years. In fact, it is expected to substantially challenge USDT’s position. In particular, USDT has rarely been issued in the past six months, and USDT’s share is likely to fall below 50% for the first time in history in the upcoming weeks.

2. Spot Trading Volume on the Centralized Exchange in June

Source: The Block

The figure above shows the spot trading volume data of a centralized cryptocurrency exchange with statutory support, including the largest exchange with a trusted exchange volume indicator report. Legitimate CEX spot trading volumes fell 56% in June.

3. Bitcoin and Ethereum’s Volume of Futures in June

Source: The Block

Source: The Block

BTC futures trading fell just 18.2% to $2.02 trillion in June. ETH futures fell 49.3% to $ 862 billion. Bitcoin’s rapid rebound on June 22nd, after a sharp intraday fall, and witnessed a nearly one and a half month peak in volume, with the day’s total daily trading volume exceeding $125 billion. However, the subsequent two trading days saw a sharp drop in market volume, with only $63 billion traded on June 24, meaning that the futures market is gradually returning to short-term opportunities chasing short-term volatility. Although the market heat picked up slightly in the following trading days, it returned only to about $70 billion, still a big drop from its peak during the week.

4. Bitcoin and Ethereum’s Volume of Options in June

Source: The Block

Source: The Block

Bitcoin options trading volume decline continued in June, while The Deribit single platform still contributed more than 90% of the volume, other major platforms are not currently sufficiently competitive in options products, and the options market trading volume has not emerged from the relative downturn of the past period. Market positions fell sharply from more than $7 billion to less than $5 billion on the day BTC’s quarterly contract expires on June 25, and the last time a similar number occurred was back in December, when the market participation in bitcoin options officially fell to its “freezing point” since the beginning of the year.

5. Bitcoin and Ethereum’s MVRV in June

Source: Glassnode

Market Value – The value of the exchange price and the amount of coin in circulation, the market value of the market.

Realized Value – This calculates the total value of the coin in circulation based on the market price at which the last single UTXO transaction is moved.

MVRV- MV/RV – when the value is low, this generally indicates that the market participants make little or no profit, and the higher MVRV value generally indicates that the asset holder is profitable.

In general, a value below 1.5 for BTC means a lower valuation and a higher valuation for a greater value than 3.5. Historically, BTC’s MVRV value has been below 1 three times, meaning the bottom line is late 2011, early 2015 and early 2019. After all three historic bottoms, BTC has started a cycle of ups and downs. The MVRV value of BTC is currently 1.71 median.

6. DeFi ‘s Gross Value Locked and Net Value Locked

Source: The Block

Value Locked is an indicator to evaluate the adoption scale of a DeFi project by calculating the total value (USD) of all ETH and other ERC-20 tokens locked in the corresponding smart contracts. Net Value Locked excludes assets that are double-counted in multiple protocols.

DeFi’s Value locked down and net worth rose more than 20% at the end of June as DeFi asset prices rose after a near-waist decline. The slow flow of funds is good news for DeFi’s ecology.

7. Decentralization Exchange Volume in June

Source: The Block

Decentralization Exchange (DEX) trading volumes were relatively low in June, down 88.36% from their Peak of $23 billion in May, and daily trading volumes were steady at $2 billion, except for a significant surge in price volatility.

8. Weekly Trade Volume of NFTs in June

Source: The Block

Judging from NFT volume data, June also showed a pick-up trend at the end of the month after a mostly monthly downturn, notably the explosive growth of blockchain game Axie Infinity, which officially won the NFT market turnover crown. AXS prices also hit an all-time high of $16.84, having initially opened at $0.1 when the AXS went live last October.

9. Bitcoin and Ethereum Miner Total Miner Revenue in June

Source: Glassnode

BTC miner’s revenue fell 42% to $839 million in June, while ETH miner’s revenue fell 53% to $1.106 billion.

10. Bitcoin and Ethereum Mean HashRate in June

Source: Glassnode

Because of China’s Mining Crackdown, the average estimated number of hashes per second produced by miners in the network on June 28, was 61 EH/s, down nearly 70% from the historical peak of Bitcoin’s net-wide computing power (197.8 EH/s) on April 15, which come back to mid-2019 levels.

Review of Events and Market Quotations in June’s Cryptocurrency Market

1. China’s Crackdown on the Mining Industry, Chinese Miners Flocking around the World

On May 21st, the Chinese government proposed at the meeting to “severely crackdown on Bitcoin mining.” Since then, Xinjiang, Qinghai, Inner Mongolia and other provinces have issued relevant policies to rectify and clean up mining. Sichuan is the world’s largest concentration of bitcoin miners, with about 8m loads being used for cryptocurrency mining. In June, as the last “hope” of miners——Sichuan is also in a comprehensive clearance of the mine.

On the evening of June 19th, dozens of recorded mines were closed, causing Bitcoin’s hashrate to plummet and a collapse in crypto prices. BIT Mining itself received notice that the power supply to its Ganzi Changhe Data Center in Sichuan would be suspended on June 19, according to its statement. “Sichuan Bitcoin mine collective power failure” also appeared in the hot search list.

So far, China’s main crypto mining provinces have closed their doors to miners whether it is thermal power-based or hydropower-based.  Mining enterprises have been cleaned up, and virtual currency mining out of China’s overall trend has been determined. At present, some cryptocurrency miners have decided to settle in the United States in Texas, Kazakhstan and other places. Chinese Bitcoin mining firm BIT Mining has announced that it has delivered its first batch of 320 mining machines to Kazakhstan. In a release accompanying the announcement, the firm revealed that it expects its machines to be up and running by June 27, bringing a theoretical maximum hash rate capacity of 18.2 PH/s online. A second and third batch of 2,600 machines in total is expected to arrive in Kazakhstan by July 1, with the company’s remaining mining machines going to overseas data centers “over the coming quarters.”

Bitcoin’s Hashrate has Fallen Sharply, Bitcoin Mining Difficulty Retargeting

China has been a dominant figure in the global Bitcoin mining network. According to data released by the University of Cambridge’s Emerging Finance Centre (CCAF), China’s hashrate accounts for 65.08% of the world’s total. And it was followed by the United States, Russia, Kazakhstan, Malaysia, and Iran. Observing the fluctuation of Bitcoin’s hashrate, we can directly see the occurrence of bitcoin’s hashrate migration.

According to Glassnode, Bitcoin’s hashrate continued to decline. On June 28, the average estimated number of hashes per second produced by miners in the network was 61 EH/s, down nearly 70% from the historical peak of Bitcoin’s net-wide computing power (197.8 EH/s) on April 15, which came back to mid-2019 levels. Bitcoin’s hashrate has been rising for nearly two years from around 70 EH/s since June 2019. On the other hand, Bitcoin’s hashrate experienced a difficult retargeting at the block height of 689472, with a 27.94% down to 14.36T, which was the largest reduction in history.

2. The Policy Attitude of Governments around the World on Cryptocurrencies Is Clearly Polarized

Some Countries have Introduced Explicit bans on Cryptocurrency Markets

Most countries in Asia now have relatively clear regulatory frameworks, with China, Thailand, Indonesia, Turkey, Iran, Palestine and South Korea all imposing explicit bans on encrypted markets, and regulatory thinking and government attitudes became clearer. Even if no ban is issued, a full review is underway and South Korea will conduct a full market monitoring and review process, which is expected to continue until mid-July. The government’s policy stance on the crypto market has been elusive, after it proposed banning cryptocurrencies but later said it would lift the ban on cryptocurrencies, and recently reversed its regulatory stance, re-examining regulatory policy to discuss whether to ban cryptocurrency trading in India.

Countries in Africa that have enacted explicit bans are Nigeria and Morocco. Nigeria was once Africa’s most active cryptocurrency market, but the government has not liberalized the cryptocurrency market, having previously banned trading in Bitcoin and other cryptocurrencies, and has not changed its stance in the medium to long term. South Africa’s Financial Conduct Authority is considering cryptocurrencies as a financial product. In addition, Morocco has issued a ban on cryptocurrencies and the use of cryptocurrencies for transactions in Morocco. The countries with a more conciliatory attitude towards crypto markets in Africa are South Africa and Tanzania, where the Financial Conduct Authority considers cryptocurrencies as a financial product.

Some Countries have Opted for Active Cryptocurrency Regulation Policies

El Salvador passed the bill on June 9th by an “absolute majority”, Bitcoin will become the country’s legal tender on September 7th, the dollar will continue to circulate, the country’s goods can be priced using Bitcoin, Bitcoin can be used to pay taxes, and bitcoin transactions will not face capital gains tax. Soon, the country began promoting the use of Bitcoin by its merchants and residents, with some shops emblazoned with bitcoin logos. Although Bitcoin became the Salvadoran currency, El Salvador still needs to address practical issues such as the corresponding currency law, the price fluctuations of Bitcoin, the size of economic transactions and so on. The event in El Salvador will be an important milestone in the field of cryptocurrencies. Under El Salvador’s demonstration effect, several countries have introduced policies in support of Bitcoin. Panama will introduce a bill related to cryptocurrencies in July, and Paraguay plans to introduce a bill to make Bitcoin legal tender.

In fact, a growing number of countries recognize the asset attributes of cryptocurrencies. Japan is already actively promoting the compliance of cryptocurrency exchanges, which currently have more than 30 licensed exchanges in Japan. Europe’s attitude towards cryptocurrencies markets has been more conciliatory, with no clearer bans, some countries holding a positive attitude. Ukraine’s revised draft virtual assets bill to treat virtual assets as valuable intangible assets legally held by citizens, and some countries are still waiting to see. As an important market for cryptocurrencies, the U.S. public’s acceptance and popularity of cryptocurrencies is relatively high, so despite government control considerations, regulatory measures remain relatively modest.

3. The Construction of the Global Central Bank’s Digital Currency (CBDC) Is in Full Swing

According to the International Bank for Clearing (BIS) 2021 Global Central Bank Digital Currency Survey, central banks in various countries and regions have been increasing their participation in CBDC work over the past four years, with the main focus on retail applications. In 2020, 86% of the central banks surveyed will actively participate in various forms of CBDC work, and the countries and regions where these central banks are located will have high mobile phone usage, internet penetration and innovation capabilities. Central banks that do not participate actively are more attributable to smaller jurisdictions and can be generally understood as countries with smaller population densities. On the other hand, 60% of the central banks surveyed have entered the POC testing phase of the CBDC project, and 14% of the central banks have entered the pilot phase. CBDC has attracted a lot of attention from central banks around the world.

China: Development of DCEP has Accelerated

China is at the forefront of the world in the layout of digital currencies. The People’s Bank of China as one of the first to launch the central bank’s digital currency from 2014 to accelerate progress, and in 2020 into the closed interval testing phase, has basically completed the top-level design, standard development, functional research and development, joint testing and other work, in the global leading position. On June 30, Beijing Rail Transit announced that it would start the test of the ride experience through the digital RMB payment channel of the whole road network.

France: Develop the European Central Bank’s Digital Currency with Switzerland 

On June 10, the Central Bank of France officially announced the successful completion of the CBDC experiment with SEBA, Switzerland’s main cryptocurrency bank. The experiment, conducted in collaboration with SEBA, Luxembourg International Bank and LuxCSD, Luxembourg’s central securities depository, used CBDC to simulate the settlement and delivery of listed securities on target2-Securities (T25), the European securities clearing engine.

Sweden: The Central Bank has Released a CBDC Study Discussing the Four Models of the Swedish Krona’s Electronic Version

Sweden’s central bank has studied the feasibility of the central bank’s digital currency (CBDC) in its home market, and in its June 18 economic report, it proposed four models for providing an electronic version of the Swedish krona, outlining how the different models fit into its policy objectives. These objectives include promoting stable value storage and billing positions, becoming lenders of last resort (LOLRs), providing secure payment and settlement instruments, and providing tools to maintain financial stability.

Korea: Establishment of the Central Bank’s Committee of Legal Advisers on Digital Currency

On June 13th, the Bank of Korea (BOK) set up a legal advisory group on the central bank’s digital currency (CBDC) to help review legal issues relating to the possible future issuance of such currency. The six-person panel, composed of law professors and legal practitioners, including lawyers, will provide legal advice on the issue.

4. Cryptocurrency Market Volatility Down: Short-term Holders Leave, Retail Investors out, Bitcoin Whales Increase Holdings

The Overall Market for Cryptocurrencies Shows a “V” Trend

In the past June, the cryptocurrency market as a whole showed a flat market, mainstream currency prices under the influence of the above-mentioned negative news continued to fluctuate downwards, the market for Lido news response to the expectations, is still in a quarterly panic, capital rate table data show that still favour short behavior. On the price side, ETH fell to 1700 on June 22nd and BTC fell below $29,000 at one point.

Until June 27th, the market stabilized and then came out of the rally. BTC recovered to 35,000 and ETH returned to $2,250. Although the market has picked up in recent days, the market bull market call re-emerged, but market sentiment has not been able to get out of the lowest situation of extreme panic, in the mood-dominated cryptocurrency market, which in itself means that the decline crisis has not been lifted, no matter what the short-term rise and fall of any change, the market is still in a dangerous state of decline.

The Market Was Under Pressure from the Miners Because of the Mine’s Migration

With China’s comprehensive crackdown on the mining industry in place, cryptocurrency markets have been speculating about when the miners will be pushed and the size of the sell-off, which is largely driven by two factors. On the one hand, mining revenues have fallen sharply. Falling prices cause miners to sell BTC to cover normal expenses. On the other hand, inventory clean-up. The costs and settlement costs incurred by miners moving or liquidating mining equipment make them required to liquidate BTC to pay for it.

In terms of mining revenue, mining profits are still very high, and some miners on the verge of elimination can still generate profits. So miners can cover costs with a small amount of cash. China’s big miners are more likely to liquidate their debts and are the main source of the sell-off. Miners need to liquidate their debts to cover the cost of moving mines. In June, miners spent 7,000 BTCs on addresses, and miners transferred about 200 BTCs a day to the exchange, most likely to liquidate BTC for the relocation of mines.

Institutional Demand Growth Is Weak and There Is a Lack of Interest in Entry

The volatility of the cryptocurrency market in June showed institutions the huge volatility of the crypto market relative to the gold market, preventing them from further adopting cryptocurrencies such as Bitcoin in their allocation of funds because it reduced the attractiveness of Bitcoin, a “digital gold”, in institutional portfolios compared to traditional gold.

Chicago Mercantile Exchange (CME) bitcoin futures open contracts fell to their lowest level this year, indicating a diminished appetite for institutions to enter the market to trade bitcoins. Institutional investor enthusiasm for buying at low levels is beginning to show signs of weakness due to the weak performance of the bitcoin market, which has seen a marked recent inflow of institutional funds from Bitcoin to the traditional gold market.

Short-Term Holders Leave, Retail Investors out, Bitcoin Whales Increase Holdings

The sell-off in June of the cryptocurrency market caused panic among both long-term and short-term holders, with both long-term and short-term holders selling in panic. Short- and medium-term holder losses in this round of selling were only slightly lower than last year’s “312”, while long-term holders fluctuated between $9,200 and $16,300 after partially selling chips, demonstrating uncertainty about the futures market. Currently, only 2.44% of BTC in circulation is a long-term holder and no realized loss. 23.5% of BTCs in circulation are owned by short-term holders, of which 3.4% are profitable

Bitcoin’s whale addresses have been buying bitcoins since the price fell below the $40,000 mark, and have accumulated nearly $2 billion. Bitcoin whales with 100 to 10,000 BTC pieces in their wallets began to increase their holdings after the price of BTC reached $37,000, and retail investors sold their bitcoins at low prices. Whale addresses with more than 1,000 BTCs now hold more than 7.88 million BTC, the largest number since March 14. Only 2.65 million BTC addresses with less than 10 BTCs were held, the smallest number in the past six months, in contrast to whale purchases.

On the other hand, as the giant whale’s address continues to hoard, the number of bitcoins stored on the exchange has been steadily declining, the supply of bitcoin on the exchange has slipped to its lowest level since early January, and the likelihood of another sharp decline in the BTC is diminishing. Exchange flow data is an important indicator for monitoring the short- and medium-term price trajectory of Bitcoin. The increase in the supply of bitcoin on exchanges often heralds a sharp sell-off, as it means investors choose to move their holdings of bitcoins from cold wallets to exchanges in order to sell.