Prices of digital assets crashed in early May 2020, when Bitcoin (BTC) fell almost 32% from $39,500 to $27,000 within only a week.
The team at Kraken asks, “Could this be the beginning of a long crypto winter?” Or do the on-chain metrics “tell a different story?” In Kraken Intelligence’s report, Survival Mode, the team investigates key on-chain data points “to explore where the crypto market stands today and what may lie ahead.”
During the past month, crypto-assets slumped “as U.S. inflation rates continued to hover around 40-year highs.” The report from Kraken added that Russia’s ongoing military operations in Ukraine also “contributed to the risk-off sentiment across financial markets.”
The Terra ecosystem also “experienced a large-scale death spiral in May, further contributing to broad-based declines.”
While BTC/USD trended lower in May, altcoins “performed worse, leading the crypto market lower across almost all assets.”
Overall, altcoin dominance (the ratio between the market capitalization of a crypto asset to the total market cap of the entire crypto market) also “fell year-to-date.”
The report further noted that “ADA dominance rose month-over-month in May, while ALGO saw the smallest dominance decline, followed by DOT, ETH, NEAR, SOL and AVAX.”
As mentioned in the update from Kraken, network transaction volume continues “to present mixed sentiment.”
Since January 2022, on-chain volume for ADA has “seen a strong upward trend, while BTC, ETH, DOT, DOGE and ALGO saw on-chain volume fall.”
New addresses and active addresses also “reflect mixed sentiment of on-chain demand, leaning negative.”
While SOL active addresses rose, “signaling network demand from existing and new market participants, BTC, ETH, AVAX, ADA, ALGO and DOT saw a drop in active addresses.”
As noted in the report:
“While BTCUSD has trended lower year-to-date, altcoins performed worse, leading to a decline in altcoin market dominance. Specifically, nearly all observed crypto-assets dropped in market dominance this year and in May, though ADA saw a +17% increase month-over-month.”
The report also mentioned:
“ETH market dominance fell by -9% this year, the least within the cohort. ETH is followed by ADA (-16%), NEAR (-20%), DOT (-34%), SOL (-51%), AVAX (-55%), and ALGO (-56%). In May, ALGO saw the smallest month-over-month decline at -0.9%, followed by DOT (-3.6%), ETH (-5.5%), NEAR (-20%), SOL (-27%), and AVAX (-37%). AVAX fell disproportionately following the Terra ecosystem death spiral.”
The update further noted:
“In particular, the Luna Foundation Guard (LFG) held nearly 2M AVAX in its treasury, which was subsequently liquidated. Likewise an additional 1.1M AVAX were purchased by Terraform Labs with a one-year lockup, which may have further pressured the market.”
To access the complete crypto market report from Kraken, check here.