Bitcoin Spent Output Profit Ratio Indicated Crypto Is Selling at Loss, Ethereum “Oversold” in Feb: Report

January 2022 was a “turbulent” month for the cryptocurrency sector as market participants saw “a broad sell-off,” the team at Kraken noted in an update.

Kraken wrote in a blog post that the “continued uncertainty about the proposed U.S. Fed rate hikes in March and growing tensions in Eastern Europe plagued the market for most of February, though prices rebounded at the month’s end.”

Although such macroeconomic skepticism makes it challenging to “separate the signal from the noise,” analyzing on-chain data may offer “a clearer view of underlying crypto fundamentals.”

Kraken Intelligence’s report, Sitting Tight, “takes a closer look at on-chain metrics and indicators to explore where the market stands today, and what may lie ahead in the crypto space.”

BTC and ETH inflow

As mentioned in the update:

“On-chain metrics such as exchange net flows show that BTC and ETH posted net inflows in February, increasing their marketable supply. This signals that market participants may be moving their BTC and ETH out of cold storage to potentially trade them on exchange platforms. However, while BTC’s bearish momentum ostensibly fades, the opposite is true for ETH.”

Miner uncertainty

The report added that Bitcoin miner optimism “appears to be falling amid the market’s uncertainty, as evidenced by a recent drop in hash rates, an expected negative mining difficulty adjustment ahead and a pull back in the Puell multiple.”

Bullish on ETH, bearish on BTC

According to several on-chain indicators, sentiment “is bearish for BTC and potentially bullish for ETH at the moment.” Specifically, BTC’s Spent Out Profit Ratio (SOPR) “indicates that market participants are selling BTC at a loss and ETH’s Market Value to Realized Value (MVRV) Z-Score suggests that it was oversold in February.”

Although crypto prices shifted within a tight band for most of February on the back of “macroeconomic uncertainty brought by the proposed Fed rate hikes in March and the latest Ukraine-Russia crisis, prices are climbing again.”

Kraken Intelligence acknowledged that it is “tough to confidently determine what’s ahead for the crypto markets. However, on-chain data currently paints a slightly bearish picture.”

Metrics like exchange net position change “show that market participants are potentially moving BTC and ETH out of long-term holding and into marketable supply.” Namely, exchange net position “change for BTC shows net flows accelerated positively throughout most of January but flipped trend to the downside in February.”

As noted in the report, the total exchange net position change for BTC “is now +$13.5M over the past 30 days.” ETH’s exchange net position change “tells a similar story, though bearish momentum appears greater than BTC.” ETH’s exchange net position change “was +$874.5M over the past 30 days. Still, bearish momentum is slowing for BTC, while the opposite is true for ETH.”

As mentioned in the update, on-chain data relating to mining, including hash rate, difficulty, and the puell multiple, “suggests that miners may be losing optimism amid the tenuous macroeconomic situation and decreasing.”

To view the complete report from Kraken, check here.

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