October 2021 Takeaways

• As foreshadowed in our September On-Chain Digest: End of Summer Sale, data suggests a
supply shock appears to have contributed to BTC gaining more than +50% month-to-date.
Despite the latest rally, our findings indicate there has been little profit-taking from long-term
holders.

• 1-year revived supply, which reflects long-term holder activity, supports the observation that
holders are contributing to BTC’s supply shock; on October 18th, BTC’s 1-year revived supply
fell to ₿2,293.5, the lowest level since August when BTC was trading at about $48,000.

• BTC’s HODL Waves shows that the number of coins that haven’t moved in the past 6 months
(young coins) recently hit a 3-year low of 25.49%, which suggests that long-term holders held
through September softness and October’s strength.

• Miner supply points to further holding amongst mining pools, while individual miners realized
a relatively modest amount of profit.

• Validating the uptrend and highlighting strong demand for BTC, the excitement in the market
is evident across several metrics and indicators. Renewed demand for BTC is increasingly
clear when looking at active addresses, new addresses, transaction count, velocity, and
other metrics; since September, active addresses, new addresses, transaction count, and
1-year active supply velocity have risen +10.3%, +4.7%, +10.5%, and +4.9%, respectively. Data
indicates that much of this jump in network activity is attributable to BTC “whales.”

• BTC’s Spent Output Profit Ratio (SOPR), MVRV Z-Score, and exchange net position suggest
that the bull market cycle may have further room to run despite BTC reaching new all-time
highs.

BTCUSD (1D)

Source: Cryptowatch

https://kraken.com/subscribe/intelligence
Livin’ In a HODLer’s Paradise
October is proving to be an excellent month for cryptoassets after an underwhelming
September; BTC reached new all-time highs the day after the first BTC futures ETF in the US
launched on October 19th and is up more than +50% month-to-date. Although the crypto
market’s outlook appears bright on the surface, observing key on-chain trends can help paint a
complete picture of where BTC is and where it could go.

As discussed in last month’s on-chain report, “End of Summer Sale,” BTC has been priming itself
for a supply shock thanks to further accumulation by long-term holders. This accumulation may
be a driver for BTC’s recent move past $60K. The latest on-chain data indicates that this supply
shock trend is growing.

Metrics such as BTC’s 1-year Revived Supply and HODL Waves point to a trend of more coins
remaining dormant for longer. This means that long-term BTC holders may be fueling this supply
shock. However, market participants should note that these metrics solely track when a coin
was last moved, which doesn’t necessarily constitute a sale. Despite BTC falling more than -15%
in September and surging through October, long-term holders continued accumulating. Such
leaves market observers to believe that long-term holders see further upside heading into a new
year. New data shows that long-term holders continue to contribute to the supply shock even
through BTC’s new record highs.

1-Year Revived Supply

BTC’s 1-year revived supply provides a granular view of long-term or short-term holder supply
activity. The metric presents the total volume of coins that become active after being dormant
for a specified time frame. For instance, “3-month revived supply” is the amount of supply
reactivated after remaining dormant for at least 3 months and is used as a proxy for short-term
holder supply activity.

Currently, the 1-year revived supply metric indicates that the market remains in accumulation
territory among long-term holders. Compared to 4Q2020 and 1H2021, a modest number of coins
have come back into liquid circulation after at least 1-year of dormancy. This suggests that the
majority of long-term holders are not moving and possibly selling coins. With the 1-year revived

https://kraken.com/subscribe/intelligence
supply remaining in a year-long downtrend and recently hitting a 3-year low of ₿1,577.82, the
supply squeeze remains unabated despite rallying as much as +100% since late-July. Last
month, BTC’s 1-year revived supply hit a reading of ₿2,293.5 ($139.6M), the lowest level since
August when BTC was roughly $48,000. If the indicator reverses into an uptrend, this may
indicate a shift in market sentiment.

Bitcoin’s 1-Year Revived Supply (7-Day Moving Average)

Source: Kraken Intelligence, Coin Metrics

HODL Waves

BTC’s HODL Waves, which reflect the percentage of BTC’s circulating supply that hasn’t moved
over a specific time, also lend insight into holding and spending behavior changes. When
plotted against BTC’s price, one can better understand which market participants (long-term,
medium-term, or short-term holders) may be fueling selling pressure. To differentiate between
long-term and short-term holders, we segment coins into the following groups:

• Ancient or Lost Coins (> 5 years): Coins that have not moved in over five years are often
assumed lost since they haven’t moved despite BTC’s rapid appreciation, though some
continue to hold and leave their coins untouched.

• Old Coins (6 months - 5 years): Coins typically owned by long-term holders who
accumulate in bear markets or after big moves lower. Usually, they hold for a long time, sell

https://kraken.com/subscribe/intelligence
 into bull market strength, and opportunistically buy back coins when the time is right. The
number of old coins usually fluctuates between market cycles, ballooning after accumulation
and dwindling as coins are spent but remain in a much larger uptrend.

• Young Coins (0-6 months): Coins held by short-term holders, such as traders or those
using BTC as a medium of exchange. For that reason, they are likely to be moved around. As
demand from long-term holders outpaces short-term holders, the number of young coins
continues to dwindle. This typically happens during bear markets, as market participants
expect future price appreciation and opt to buy and hold. This outsized demand from
accumulators can result in a supply shock that drives prices higher.

BTC’s HODL Waves show that long-term holders did not sell during September’s weakness nor
October’s strength and have been accumulating coins for the past 5 months. Since
​​ May 24th,
young coins have been maturing into the long-term holdings category at a rapid rate. During the
nearly 5-month period, old coins grew 10.9 percentage points to 51.6%, while young coins fell
-11.8 percentage points to 25.49%, the lowest figure since November 2018 when BTC was worth
roughly $5,700. In the last month, young coins ticked down another -1.57 percentage points
while old coins grew +1.48 percentage points. This tells us that long-term holders, who own
most coins, continue to accumulate supply. For this reason, the immediately marketable supply
continues to dwindle – hence our observation that BTC may be experiencing a supply shock.

Bitcoin HODL Waves (Young Coins vs. Old Coins)

Source: Kraken Intelligence, Glassnode

https://kraken.com/subscribe/intelligence
0-Hop Supply (Mining Pool Holdings)

Optimism in BTC’s uptrend is also confirmed by analyzing 0-hop supply, which is one of the
best ways to understand aggregate mining pool behavior. The metric observes the holdings of
addresses that received funds from the “coinbase transaction,” or the first transaction of every
BTC block, which are paid out directly to mining pools for their Proof-of-Work. Individual mining
pool contributors aren’t included in this calculation as mining pools are the typical recipient of
the coinbase transaction, who then payout hash rate contributors. In other words, individual
mining contributors aren’t accounted for in 0-hop supply because they don’t directly receive the
coinbase transaction.

Before miners sell cryptoassets, they must send a transaction directly to a buyer or an
exchange. In either case, there must be a transaction to send coins from miners to other
addresses. Therefore, if 0-hop supply is downtrending during an uptrend in price, that is a
potentially bearish signal as the downtrend may indicate mining pools are starting to sell down
inventory. Conversely, an uptrending 0-hop miner supply during a rise in prices indicates that
miners are accumulating into market strength, a sign that mining pool operators are confident in
market conditions.

BTC’s 0-hop supply signals a continuation of this year’s accumulation through September’s sell-
off and into October’s rally. In early September, mining pools took profit following BTC’s +106%
run from July lows. On-chain data tells us that accumulation picked up again in mid-September
and persisted through October despite September softness. Since September 29th, mining pool
supply (0-hop) has risen over +42% from $74.1B to $105.3B. Corroborating this observation that
mining pool operators are more bullish than mining pool contributors, the largest public BTC
mining firms in North America, including Riot, Marathon, Bitfarms, Hut8, Greenidge, Argo, and
HIVE, have publicly reported that they are holding ₿20,459 (~$1.25B), including ₿4,812 (~$293M)
of Marathon that it bought from the secondary market earlier this year. Besides Cleanspark, BIT
Digital, and Greenidge, the other firms have added all their mined BTC from this year to their
balance sheets. Because these companies now hold their mined BTC on their balance sheets
and haven’t liquidated, some are borrowing capital to pay utility bills, pre-order new equipment,
or expand their facilities amid an infrastructure boom in North America. Needless to say, mining
pools are aligned with long-term holders in their bullish sentiment and represent a further
contribution to BTC’s latest supply shock.

https://kraken.com/subscribe/intelligence
Bitcoin Miner Supply (0-Hop)

Source: Kraken Intelligence, Coin Metrics

1-Hop Supply (Individual Miner Holdings)

Meanwhile, on-chain data suggests individual miners have taken profit through BTC’s recent
uptrend. This is measured by looking at BTC’s 1-hop supply, a metric that attempts to track
the coins paid out to miners that are part of a mining pool. When comparing 0-hop and 1-hop
supply, it appears that mining pools (0-hop) are more optimistic than mining pool contributors
(1-hop).

Unlike mining pools, BTC’s 1-hop transactions show that smaller miners took little profit in
market strength as the 1-hop supply has continued its downtrend that started on September
5 during the same period. In other words, smaller miners who contribute to mining pools are
selling fewer coins than they are holding. However, if we see a trend reversal, it could potentially
exacerbate this supply shock as it would tell us that smaller miners have stopped selling.

https://kraken.com/subscribe/intelligence
Bitcoin Miner Supply (1-Hop)

Source: Kraken Intelligence, Coin Metrics

https://kraken.com/subscribe/intelligence
An Active Network Is a Happy Network
Amidst BTC’s rally and further accumulation, on-chain metrics point to greater demand in
network usage, which may lend further insight into BTC’s uptrend. We measure on-chain
demand using network metrics such as active addresses, new addresses, transaction count,
velocity, and more.

Daily Active Addresses

Since BTC and other cryptoassets fell from all-time highs in late-May and bottomed in late-July,
daily active addresses, i.e., the total number of addresses that sent or received BTC each day,
have been in an uptrend. After falling -39.6% from May 13th to a 1.5-year low of 745.7K on July
3rd, the weekly average of BTC’s daily active addresses rebounded +32% to a near 5-month
high of 984,400 on October 10th. Moreover, active addresses have increased +10.3% in October
alone. Though daily active addresses have since pulled back modestly, this metric remains in a
robust uptrend and consistently above May levels. Notably, cryptoasset prices don’t necessarily
correlate with network activity. For example, BTC appreciated +109% from January to April,
while active addresses grew only +7%. Still, more active market participants during bull runs
indicate a growing interest in BTC.

Bitcoin’s Daily Active Addresses (7-Day Moving Average)

Source: Kraken Intelligence, Coin Metrics

https://kraken.com/subscribe/intelligence
Daily Transaction Count

In addition to this month’s uptick in network participants, the number of daily transactions also
ticked up notably. After trending downward with last month’s humdrum performance, the 7-day
moving average of BTC’s daily transaction count is beginning to trend higher. Daily transactions
are up roughly +10.5% month-to-date and hit a 5-month high of more than 284,936 on October
22nd. Coupled with an increase in active addresses, an uptick in transaction count during a bull
cycle highlights organic demand for the network.

Bitcoin’s Daily Transaction Count (7-Day Moving Average)

Source: Kraken Intelligence, Coin Metrics

1-Year Active Supply Velocity

Looking at BTC’s velocity, which quantifies the speed at which BTC is sent around the network,
we also see further proof that BTC’s price appreciation may coincide with the growth in network
demand.

https://kraken.com/subscribe/intelligence
Because velocity measures the network’s transaction volume relative to its market capitalization,
a change in velocity can lend insight into whether network demand outpaced or lagged price
appreciation when analyzed alongside the trend in price.

The 1-year active supply velocity is a variant of velocity that measures the ratio of the adjusted
value transferred (i.e., the aggregate volume of all transfers) in the trailing 1-year divided by
active supply in the trailing 1-year. We interpret this measure as the rate of “turnover,” or the
number of times that an average BTC among the active supply was transferred in the past year.

Since falling to a more than 6-year low of 10.4x on September 11th, BTC’s 1-year active supply
velocity rebounded +4.9% to 10.92x on October 15th. BTC’s 1-year active supply velocity now
sits near the highest level since March, though it remains relatively low compared to previous
bull cycles and levels seen last year. Considering that the metric fell -16% since late-2020, a
recent reversal alongside a rally in price indicates that, unlike 1H2021, renewed network demand
accompanied BTC’s rally in price.

Bitcoin’s 1-Year Active Supply Velocity

Source: Kraken Intelligence, Coin Metrics

https://kraken.com/subscribe/intelligence
New Addresses

Further evidence that greater network demand has contributed to BTC’s price appreciation is
visible in the rise in new addresses, which are defined as addresses identified in the blockchain
that did not exist before the observation period (i.e., 1 day). The 7-day moving average of new
addresses increased +4.7% since late-September to 448.4K, hit a 5-month high of 463.5K on
October 15th, and remains in an uptrend since June 26th.

Bitcoin’s New Addresses (7-Day Moving Average)

Source: Kraken Intelligence, Coin Metrics

https://kraken.com/subscribe/intelligence
Whales Lead The Charge
Though we know that long-term holders are the main driver of BTC’s latest supply squeeze, it’s
not obvious which long-term holders are leading the charge.

Value in Wallets With ≥ ₿100 (Whales)

Looking at on-chain data, we observe that whales (wallets with ≥ ₿100) are the primary culprit
for increased network activity and the long-term holder supply shock. The weekly average of
holdings of “whales” rose +0.25% since early October to an all-time high of ₿11.9M ($724.4B)
after falling -0.1% with last month’s market pullback. This means larger market participants have
grown increasingly more confident, preferring to accumulate further than to take profit.

Value in Addresses With ≥ ₿100 (7-Day Moving Average)

Source: Kraken Intelligence, Coin Metrics

https://kraken.com/subscribe/intelligence
Total Wallets With ≥ ₿100 (Whales)

In addition to whale holdings bouncing back with market prices, the total number of whales also
saw a notable increase. Since reaching an all-time low of 15,894 on September 15th, the total
count of whales rose +1.6% to 16,156, the highest figure since May when BTC was trading -34%
lower relative to current levels. With the number of whales and whale holdings rising, it is clear
that whales are a driving force in this latest run-up and remain optimistic.

Total Addresses With ≥ ₿100 (7-Day Moving Average)

Source: Kraken Intelligence, Coin Metrics

Daily Transfer Value (Adjusted)

Lastly, we see that whales were also the drivers behind the jump in BTC’s adjusted daily transfer
value. This metric is the USD value of the total BTC transferred on-chain per day, filtering
out noise (e.g., self-sends and cold wallet shuffles). When market participants trade coins
on exchanges, these transactions typically occur off-chain, meaning they don’t settle on the
blockchain. The daily transfer value metric doesn’t account for these “transfers.” Instead, the
daily transfer value can help measure BTC’s peer-to-peer activity.

https://kraken.com/subscribe/intelligence
BTC’s adjusted daily transfer value saw an all-time high of $21.85B in the weekly average of daily
transaction settlements on October 6th and an overall uptick in daily transaction settlement
values this month. Though this does not necessarily imply demand from whales, we believe the
recent uptick of whale activity is the likeliest contributor to daily value transfer rising to all-time
highs.

Bitcoin’s Adjusted Daily Transfer Value

Source: Kraken Intelligence, Coin Metrics

https://kraken.com/subscribe/intelligence
State of the Run
With BTC recently hitting a new all-time high, we can look to on-chain fundamental data to get
a sense of where BTC may stand in the grand scheme of things, given that the market is asking
a critical question: “what is the next step of the bull market run?” To get a sense of where we
stand in this market cycle, we can first look at BTC’s Spent Output Profit Ratio (SOPR).

Spent Output Profit Ratio (SOPR)

The SOPR is a metric used to estimate where a UTXO-based cryptoasset, like BTC, stands in a
bear or bull cycle. SOPR attempts to measure whether market participants are selling at a profit
or loss. It is calculated by taking a spent output (i.e., BTC sent in a transaction) and dividing
its realized value (USD) by its value at creation (USD). In short, SOPR is the price “sold” (sent)
divided by the price “paid” (received). Note that the SOPR is only an estimate of profitable BTC
sales as not every on-chain transaction is a sale.

Consider the following framework when attempting to interpret a cryptoasset’s SOPR:

• SOPR < 1 - Indicates bitcoin is being sold at a loss, signaling a potential bottom.

• SOPR > 1 - Signals that most bitcoin is being sold for a profit, history suggests a local top
might be close.

• SOPR = 1 - Implies a relatively high amount of bitcoin is being sold at or around the price
purchased, meaning market participants are uncertain about where price may go.

With the SOPR indicator tending to oscillate around a reading of 1, a bounce in a downtrend
could signal the end of a bull market correction, while a breakdown could signal either a full-
blown trend reversal. During August 2020, the SOPR indicator entered into a downtrend after
recently soaring as high as 1.024 amidst BTC’s rally to $12,000. As BTC corrected down to
$10,000, the SOPR indicator momentarily traded below a reading of 1 before bouncing higher
as BTC embarked on a historic 6.5x gain over 8 months. Though history does not necessarily
repeat, it often rhymes, and it appears we may be witnessing a repeat of August 2020.

https://kraken.com/subscribe/intelligence
The 7-day moving average BTC’s SOPR saw a textbook bounce off a reading of 1 on September
26th as BTC began its more than +50% rise, suggesting that $42,000 marked a local bottom
after falling $10,000 in September. SOPR’s latest bounce confirms the start of an uptrend, and
recent weakness observed in September appears more likely as a healthy retracement of the
broader macro uptrend.

Spent Output Profit Ratio (SOPR) (7-Day Moving Average)

Source: Kraken Intelligence, Coin Metrics

Market Value to Realized Value Z-Score (MVRV Z-Score)

Notwithstanding BTC’s climb to a new all-time high, the Market Value to Realized Value Z-Score
(MVRV Z-Score) suggests that BTC is not “overbought.” The MVRV Z-Score compares the
difference between a cryptoasset’s market cap and realized value relative to the standard
deviation of its market cap. MVRV Z-Score is calculated accordingly:

https://kraken.com/subscribe/intelligence
The three metrics that comprise the MVRV Z-Score include:

1. Market Value (MV): BTC’s price multiplied by coins in circulation, i.e., market capitalization.

2. Realized Value (RV): The price of each BTC when it was last moved multiplied by coins in
circulation.

3. Z-Score: A numerical measurement that explains a value’s relationship to a group’s average,

measured in standard deviations. For example, a z-score of 0 means that a value is identical
to the average, and a z-score of 1.0 means that a value is one standard deviation above the
average.

Simply put, the MVRV Z-score helps us get a better sense of when BTC might be “overbought”
or “oversold.” A reading above 7 has historically indicated that BTC is “overbought,” while
readings below 0 have suggested that BTC is “oversold.” Despite BTC rising to new all-time
highs, the MVRV-Z Score is at a reading of 3.16 - less than halfway between the “undervalued”
and “overvalued” territories of 0 and 7, respectively.

Bitcoin’s Market Value to Realized Value Z-Score (MVRV Z-Score)

Source: Kraken Intelligence, Glassnode

https://kraken.com/subscribe/intelligence
Exchange Net Position Change

Finally, by examining the 30-day change of the supply held in exchange wallets, we can
estimate whether there is a change in pace in the market. Because the metric tracks the 30-day
change of the supply held in exchange wallets, many rely on the indicator to better understand
whether buyers (outflows) or sellers (inflows) make up the lion’s share of exchange flows. A
rise in withdrawals from exchanges contributes to a supply shock, while increased deposits
typically add selling pressure to the market. Though the market shifted from dominant inflows
to outflows in July, we have seen consistent net outflows since then, ranging from -₿60,000
(~$3.76B) to -₿100,000 (~$6.27B) per month. However, following the extended 4-month period
of net exchange outflows, the on-chain change in exchange balances briefly reversed to slightly
positive. This means that exchange inflows have slowly outpaced outflows over the last month,
a sign that prevailing demand was absorbing sell-side. Historically, net exchange outflows
reversing to neutral net flows during bull runs can signal price retracements. In 1Q2021, for
example, we saw several moves up to a net position change of ₿0 that coincided with brief
corrections. Though the market is ostensibly bullish, market participants should follow exchange
flows closely for potential signals in sentiment shifts.

Bitcoin Exchange Net Position Change

Source: Kraken Intelligence, Glassnode

https://kraken.com/subscribe/intelligence
 October On-Chain Overview

Cryptoasset Matrix
Bitcoin (BTC) Ethereum (ETH) Cardano (ADA) Polkadot (DOT) Chainlink (LINK)
Monthly MoM Monthly MoM Monthly MoM Monthly MoM Monthly MoM
Avg Change Avg Change Avg Change Avg Change Avg Change
Onchain Economics
Active Addresses 961.2K 9.7% 567.6K 5.8% 136.9K -8.9% 28.7K -3.3% 4.6K -14.5%
Active supply 1 yr 8.7M 0.6% 77.3M -3.2% 26.6B 0.8% 821.4M 1.0% 393.7M -0.3%
Active supply 30 days 1.5M 13.5% 35.8M -1.4% 9.7B 0.0% 275.1M -6.3% 204.1M 7.3%
Transactions 271.9K 8.9% 1.2M 2.3% 80.2K -9.5% 184.9K 1.5% 6.3K -17.1%

Network Value

Market Cap $1.04T 18.7% $426.6B 7.7% $70.2B -14.5% $40.8B 19.4% $26.9B -2.2%
Free Float Supply 14.5M 0.1% 111.8M 0.2% 30.9B 0.0% 1.1B 0.9% 458.2M 1.5%

Total Issuance (USD) $52.2M 20.3% $48.7M 6.8% - - $13.4M 55.1% - -

Total Supply 18.8M 0.2% 117.4M 0.1% 32.4B 0.2% 1.1B 0.9% 1.0B 0.0%

Transaction Fees (USD) $861.3K 34.7% $38.8M 6.4% $36.7K -22.9% - - - -

Transaction Fees (Native Units) 15.4 13.2% 10.7K 0.5% 17.0K -9.4% - - - -

Network Security

Hash rate (TH/s) 147.7M 10.2% 0.7K 7.4% - - - - - -

Mean Difficulty 19.72T 8.3% 9.56T 8.7% - - - - - -

Miner Market Cap $246.5B 17.3% $86B 16.5% - - - - - -

HODL Distribution

Addresses with balances > $100 16.0M 4.7% 11.4M 7.9% 1.6M 4.8% 349.0K 13.4% 353.7K 1.1%
Addresses with balances > $1K 6.9M 7.6% 3.3M 6.8% 842.2K -1.4% 119.5K 11.4% 165.9K -2.1%

Addresses with balances > $10K 2.3M 10.7% 689.1K 6.7% 252.1K -7.2% 31.1K 22.1% 35.0K -9.6%
Addresses with balances > $100K 471.9K 17.0% 125.7K 6.9% 48.5K -10.9% 6.3K 16.1% 6.3K -3.0%

Source: Kraken Intelligence, Coin Metrics

https://kraken.com/subscribe/intelligence
On-Chain Highlights
• Network activity in terms of active addresses grew for BTC (+9.7%) and ETH (+5.8%), while
LINK, ADA, and DOT were outliers with a decline of -14.5%, -8.9%, and -3.3%, respectively.

• BTC, ETH, and DOT were the only cryptoassets we tracked that saw monthly transactions
grow, notching up +8.9%, +2.3%, and +1.5%, respectively.

• DOT was the best performer this month, rising on the back of news that Polkadot parachain
auctions will start November 11th if passed by the Polkadot council and the community
via public referendum. These auctions will follow this schedule. To learn about parachain
auctions, check out Kraken Intelligence’s “Polkadot and Kusama Parachains Primer.”

• ADA underperformed this month, posting a -14.5% drop in market capitalization, following a
massive run-up last month on the back of smart contract functionality.

• BTC’s hash rate rose +10.2% to 147.7 EH/s and remains on track to break records by year-
end.

• ETH mining is ramping up with hash rate rising over +7.4% this month, even after we
reported that ETH’s hash rate broke all-time highs last month. Miners are ostensibly
accumulating as much as possible ahead of the transition to Ethereum 2.0. The transition
to Proof-of-Stake from Proof-of-Work is rapidly approaching as developers announced
Ethereum’s Altair hard fork, the next step toward Proof-of-Stake, kicked off on October 27th.
As a result, we may see ETH miners slow down the expansion of operations. For the time
being, the ETH hash rate continues to bust through new all-time highs.

• Unsurprisingly, the number of DOT addresses holding more than $10 and $100,000 worth of
DOT grew significantly across the board and outperformed other cryptoassets. This growth
may be in anticipation of long-awaited parachain auctions launching soon.

• Compared to other cryptoassets, ADA and LINK had a pretty lackluster month. For both
assets, wallets holding more than $10,000 declined materially. However, both assets saw
growth in wallets holding more than $100. While ADA’s growth was a notable +4.8% uptick,
LINK only saw a modest +1.1% uptick.

https://kraken.com/subscribe/intelligence
Conclusion and Outlook
After BTC fell more than $10,000 in a single day in September and ended the month down
-7%, price appreciation in October and the latest on-chain data signal a fairly healthy macro
environment. In hindsight, last month’s sell-off appears to have been a market retracement
rather than a full-blown trend reversal. On-chain metrics and indicators such as BTC’s HODL
Waves and 1-Year Revived Supply indicate that demand from long-term holders remains
strong, despite the latest more than +50% price rise offering a good profit-taking opportunity.
Echoing long-term holders, miner demand also appears to be significant through the latest
bull cycle. However, the demand predominantly came from mining pools rather than individual
miners, suggesting that institutions are driving this strong sentiment. Notably, while long-term
holders were unfazed by the retracement last month and used it as an opportunity to continue
accumulating, this trend has not changed despite a significant rebound in price to new all-time
highs near $67,000. In other words, the supply shock brought by long-term holders last month
has only grown stronger this month.

In addition to this month’s continuation in long-term holdings accumulation, network activity

is flourishing, evidenced by material increases in core on-chain measurements such as new
addresses, active addresses, transactions, and velocity. Healthy network activity, coupled with
solid long-term holding conviction, institutional miner demand, and rising prices, provides
strong confirmation of the trend and highlights strong demand for BTC.

Interestingly, smaller traders do not seem to be behind the latest push. Instead, whales
appeared to have led the charge as the number of whales, the balance of whale holdings, and
BTC settlement volume reached all-time highs.

Because bull runs don’t last forever, indicators like SOPR, MVRV Z-Score, Exchange Net
Position Change provide some context as to where the market stands concerning the current
cycle. Specifically, BTC’s SOPR confirmed BTC found a local low at around the $40,000s, BTC’s
MVRV Z-Score indicates that BTC is less than halfway between “undervalued” and “overvalued”
territory, and the Exchange Net Position Change is warning of a potential correction. Though the
future is bright, there is no growth without pain, and BTC is no exception!

https://kraken.com/subscribe/intelligence
 OCTOBER 2021 CRYPTO ON-CHAIN DIGEST

We appreciate your feedback!

Please visit https://surveys.kraken.com/jfe/form/SV_8udBtlPs7CZsl3o to participate in a brief survey.

For all future Kraken Intelligence content, sign up here. For comments, suggestions, or questions

related to this article or future topics you’d like to learn more about, you may also direct your

communication to intel@kraken.com or to your account manager.

Kraken provides access to 85 cryptocurrencies spanning more than 390 markets with advanced trading

features, industry leading security, and on-demand client service. With the acquisition of Crypto

Facilities, Kraken now offers seamless access to regulated derivatives on 5 cryptocurrencies with up to

50x leverage. Sign up for a free account in minutes at www.kraken.com/sign-up. We look forward to

welcoming you.

For multi-exchange charting, trading, portfolio tracking, and high resolution historical data, please

visit https://cryptowat.ch. Create a free Cryptowatch account today at https://cryptowat.ch/account/

create.

For OTC-related execution services or inquiries, please direct your communication to otc@kraken.com

or to your account manager.

https://kraken.com/subscribe/intelligence
 OCTOBER 2021 CRYPTO ON-CHAIN DIGEST

Disclaimer
The information in this report is provided by, and is the sole opinion of, Kraken’s research desk.
The information is provided as general market commentary and should not be the basis for making
investment decisions or be construed as investment advice with respect to any digital asset or the
issuers thereof. Trading digital assets involves significant risk. Any person considering trading digital
assets should seek independent advice on the suitability of any particular digital asset. Kraken does not
guarantee the accuracy or completeness of the information provided in this report, does not control,
endorse or adopt any third party content, and accepts no liability of any kind arising from the use
of any information contained in the report, including without limitation, any loss of profit. Kraken
expressly disclaims all warranties of accuracy, completeness, merchantability or fitness for a particular
purpose with respect to the information in this report. Kraken shall not be responsible for any risks
associated with accessing third party websites, including the use of hyperlinks. All market prices, data
and other information are based upon selected public market data, reflect prevailing conditions, and
research’s views as of this date, all of which are subject to change without notice. This report has not
been prepared in accordance with the legal requirements designed to promote the independence
of investment research and is not subject to any prohibition on dealing ahead of the dissemination
of investment research. Kraken and its affiliates hold positions in digital assets and may now or in
the future hold a position in the subject of this research. This report is not directed or intended for
distribution to, or use by, any person or entity who is a citizen or resident of, or located in a jurisdiction
where such distribution or use would be contrary to applicable law or that would subject Kraken and/
or its affiliates to any registration or licensing requirement. The digital assets described herein may or
may not be eligible for sale in all jurisdictions.

https://kraken.com/subscribe/intelligence