Introduction

After cryptoasset prices fell by more than -30% in May, the crypto market ticked even lower this
month as market participants withdrew their risk appetite further. Leading cryptoasset BTC
dropped by another -44% from $31,800 at the end of May 2022 to a 1.5-year low of $17,600 in
June 2022. Concerns of a brewing recession grew further as global consumer inflation reached
multi-decade highs. The US inflation rate rose to a 40.5-year high of 8.6% while the EU and
UK observed inflation of 8.1% and 9.1%, respectively.1,2,3 The US Federal Reserve’s decision to
hike interest rates by 75 basis points while signaling additional rate hikes, along with Russia’s
continued occupation of Ukrainian territory, stirred the market further.4,5 The crypto industry
faced additional headwinds in June following the large-scale death spiral of the Terra ecosystem.
Major crypto lending platforms including Celsius, BlockFi, Voyager, and Vauld took drastic
measures to accommodate for “extreme market conditions.” Deleveraging further contributed to
downward market pressures.6

Between the declining asset prices and the hectic macroeconomic environment, it is difficult
to anticipate what lies ahead. However, on-chain data can help filter out the signal from the
noise by providing evidence of trends in network usage and demand. To surface recent network
performance, the Kraken Intelligence team analyzed several core on-chain metrics across select
cryptoassets.

On-chain fundamentals
Core on-chain metrics for measuring adoption and general network supply and demand
dynamics include market capitalization dominance, transaction fees, daily settlement value,
active addresses, transaction count, and circulating supply growth, to name a few. Readers
can use these data points to analyze any blockchain network’s demand and supply dynamics.
Please note that the on-chain data coverage in this report spans May 31, 2022, to June 30, 2022.

Total Market Capitalization Dominance

Looking at the total market capitalization share, or market dominance, of the selected
cryptoassets in this report helps describe which assets are experiencing rising or falling

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demand and, more generally, whether the market sentiment is rotating between BTC and
altcoins. Moreover, we decided to compare BTCUSD price with the market dominance of
altcoins to analyze how dominance shifts relative to BTC price performance.

Figure 1: Total Market Capitalization Dominance

Source: Kraken Intelligence, CoinGecko

Though the total crypto market cap has trended lower year-to-date, BTC dominance has
increased by +3% as altcoin market dominance fell. AVAX7,8 led the pack in 2022 with a -55%
drop in dominance due to the Terra ecosystem death spiral in May. In particular, the Luna
Foundation Guard (LFG) held nearly 2 million AVAX in its treasury, which was subsequently
liquidated.9 Likewise, Terraform Labs purchased an additional 1.1 million AVAX with a one-year
lockup, which may have further pressured the market.10 ALGO paced closely behind AVAX with
a -53% dominance decline, followed by SOL (-48%), NEAR (-32%), ETH (-26%), ADA (-8%), and
DOGE (-4%). However, dominance rose month-over-month for ADA (+0.1 percentage point),
ALGO (+0.01 percentage point), SOL (+0.1 percentage point), and DOGE (+0.9 percentage
points), but fell for ETH (-3.1 percentage points), NEAR (-0.05 percentage points), and AVAX
(-0.003 percentage points).

BTCUSD has fallen -58% this year, posting its worst first half of the year in history. The previous
worst half was in 2018, when BTC fell about -55%. Though BTC has historically served as a
buffer during market downturns, some altcoins outperformed the crypto leader in June.

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Transaction Fees

Transaction fees are a proxy for network demand because they represent the cost market
participants are willing to pay to include a transaction on a protocol’s ledger. Note that this
figure does not include SOL, ALGO, and ADA because of their static fee rate, which does not
respond to varying levels of network congestion.

Figure 2: Layer-1 Cryptoasset Transaction Fees (7-Day Moving Average)

Source: Kraken Intelligence, Coin Metrics

Because transaction fees are a proxy for network demand, on-chain demand is trending down
year-to-date and month-over-month. ETH (-87%) took the biggest hit year-to-date, followed by
DOGE (-71%) and BTC (-57%). After DOGE took the biggest hit in May, the meme coin was the
best performer of the cohort, with an -11% decline in June. BTC was the worst performer this
month, followed by ETH (-33%) and DOGE (-32%).

Similar to market dominance, network demand appears to have been the strongest for BTC this
year as it outperformed the cohort. Despite performing better than DOGE and ETH year-to-date,
the latest pullback in prices saw BTC as the worst performer in June.

Daily Adjusted Settlement Value

Network transaction volume, also known as on-chain settlement value, is another strong
reference for network demand as it measures the aggregated value of funds market participants
are transferring. Specifically, the metric captures the USD equivalent value of a cryptoasset’s on-
chain transfer activity during that day.

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Figure 3: Daily On-Chain Transfer Volume (7-Day Moving Average)
Source: Kraken Intelligence, Coin Metrics

Based on on-chain transaction volume, most cryptoassets have experienced significantly

declining demand year-to-date. ADA was the group’s exception in 2022 with a +218% rise in
on-chain volume, though it has steadily declined by nearly -89% since March 31. Though there’s
no definitive driver for the growth in ADA on-chain volume, several notable developments
have taken place on the Cardano blockchain. Namely, the platform likely saw increased
volume due to its launch of SundaeSwap, the first decentralized finance (DeFi) exchange on
the Cardano blockchain, Gaming application Pavia, the first-ever metaverse project on the
blockchain, and developers increased the blockchain’s block size limit by 10%, to name a few
key developments.11,12,13

On-chain volume for ALGO remains the worst performer this year at -81%, followed by DOGE
(-66%), ETH (-65%), and BTC (-22%). In June 2022, both DOGE (+60%) and ALGO (+9%) saw
on-chain volume rise while volumes fell month-over-month for ADA (-32%), ETH (-30%), and
BTC (-8%). The large month-over-month increase in DOGE volume follows tweets from SpaceX
co-founder Elon Musk stating that he will “keep supporting [d]ogecoin,” and adding that he was
buying DOGE on June 19.14

Daily Active Addresses

Analyzing the number of active addresses per day can help identify network demand from
existing and new market participants. A rising number of active addresses may indicate
increasing demand among market participants and vice-versa.

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Figure 4: Daily Active Addresses
Source: Kraken Intelligence, CoinMetrics, SolScan, Avalanche Network

Based on our analysis of active addresses, SOL (+87%), DOGE (+11%), and BTC (+3.4%)
were the only cryptoassets to experience rising activity year-to-date. Conversely, ETH (-24%),
AVAX (-42%), ADA (-55%), and ALGO (-81%) posted declines in active addresses year-to-date.
Notably, BTC’s active addresses posted a decline year-to-date through May, suggesting that
the recent +4% month-over-month rise flipped BTC’s year-to-date active address growth into
positive territory. Apart from DOGE (+10%), the rest of the cryptoassets saw declining active
addresses in June, with ALGO (-49%) leading the pack, followed by ADA (-30%), SOL (-15%),
ETH (-14%), and AVAX (-13%).

Daily Transaction Count

A blockchain network’s daily transaction count is another great indicator of on-chain demand as
it highlights which protocols are experiencing higher levels of relative activity.

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Figure 5: Total Daily Transactions
Source: Kraken Intelligence, CoinMetrics, SolScan, Avalanche Network

While daily transaction count rose year-to-date for BTC (+14%), the altcoins in the cohort all
saw notable drops in transactions. AVAX led the cohort in losses with a -57% loss, followed
by ALGO (-53%), SOL15,16 (-28%), ADA (-27%), and ETH (-17%). However, network activity
appeared brighter on a month-over-month basis as AVAX (+0.1%), BTC (+2%), and SOL (+82%)
saw transaction count rise. This month’s rise in SOL transactions comes after the cryptoasset
made headlines with Solana Labs’ announcement of their mobile phone, featuring a Web3
dApp store, integrated “Solana Pay” to facilitate QR code-based on-chain payments, a mobile
wallet adapter, and a “seed vault” that stores private keys.17 Furthermore, Solana saw significant
DEX and NFT volume with major platforms such as MagicEden conducting large fundraising
rounds.18,19 SOL transactions also rose this month because users of Solana-based borrowing and
lending service Solend conducted many vote transactions on June 19 to force a takeover of the
protocol’s largest account, whose “extremely large margin position” was getting dangerously
close to a catastrophic on-chain liquidation. 20

Circulating Supply Growth

A cryptoasset’s circulating supply growth provides a look at on-chain liquidity. The metric
includes tokens that have been unlocked from vesting and/or minted by the protocol. This data
sheds light on the supply dynamics of a cryptoasset. For instance, an influx of immediately
marketable supply can pressure market activity.

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Figure 6: Circulating Supply Growth
Source: Kraken Intelligence, CoinGecko, CoinMetrics, AlgoExplorer

NEAR saw the most significant influx of immediately marketable supply in 2022 with a +20%
rise in circulating supply growth, followed by AVAX (+15%), which underwent a large unlock of
supply overnight in early March, SOL (+11%), ALGO (+9.8%), DOGE (+1.8%), ADA (+1.7%), ETH
(+1%), and BTC (+0.87%).

State of the market

On-chain indicators, such as BTC’s market value to realized value (MVRV) z-score help
determine where the market stands from an on-chain perspective. This metric suggests a
continuation of last month’s negative sentiment.

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

As a reminder, the MVRV z-score compares the difference between a crypto asset’s market cap
and realized value relative to the standard deviation of its market cap to lend insight into how
much BTC’s market cap has deviated above or below its average market cap. MVRV z-score is
calculated accordingly:

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The three metrics that comprise the MVRV z-score include:

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

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

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

measured in standard deviations. For example, in a normal distribution 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.

The MVRV z-score helps us better understand when BTC might be “overbought” or “oversold.” A
reading above 5 has historically indicated that BTC is “overbought,” while readings below 1 have
suggested that BTC is “oversold.” BTC’s MVRV z-score continues to sit well below a reading of
0 as prices falter, implying BTC is deep in oversold territory, which has historically served as a
strong level of support. Although BTC’s MVRV z-score still has room to fall before reaching the
lows recorded during the bear markets of 2015, 2018, and 2020, its current reading of -0.15x is
rapidly approaching the lows of -0.26x recorded in March 2020 when BTC fell to $3,900 during
the initial phases of the COVID-19 pandemic. However, if the indicator breaks up into neutral
territory and holds as prices rebound, it could imply that network demand is rising.

Figure 9: Market Value to Realized Value Ratio (MVRV) Z-Score (30-Day Moving Average)
Source: Kraken Intelligence, CoinMetrics, SolScan, Avalanche Network

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Conclusion & outlook
Cryptoasset prices ticked even lower this month after crashing in May. Market participants are
becoming increasingly concerned about a brewing recession with the UK, US, and EU reaching
multi-decade inflation rate highs, the Federal Reserve hiking interest rates by an unprecedented
amount, and Russia continuing to occupy Ukrainian territory. The crypto space is also
experiencing more headwinds after last month’s large-scale death spiral of the Terra ecosystem.
In June, major crypto lending platforms including Celsius, BlockFi, Voyager, and Vauld took
drastic measures to accommodate for the “extreme market conditions,” further contributing to
downward market pressures.

The uncertainty in the macroeconomic environment has caused cryptoassets to continue

rapidly declining this month as market participants withdrew their risk appetite. Fundamental
on-chain data, such as transaction fees, transaction count, active addresses, circulating supply
growth, and more, indicate that general cryptoasset network demand decreased further in June
with a few exceptions, continuing the downtrend year-to-date. BTC outperformed altcoins year-
to-date in many regards; BTC was the first or second-best performer in every on-chain metric
we tracked and saw the smallest circulating supply growth year-to-date.

The total crypto market cap has trended lower year-to-date, with leading cryptoasset BTCUSD
falling by -58% in its worst first half of the year in history. Still, altcoins performed worse, leading
to a decline in altcoin market dominance. AVAX led the altcoins in declining dominance in
2022 with a -55% drop due to the Terra ecosystem debacle, followed by ALGO (-53%), SOL
(-48%), NEAR (-32%), ETH (-26%), ADA (-8%), and DOGE (-4%). However, dominance rose
month-over-month for ADA (+0.1 percentage point), ALGO (+0.01 percentage point), SOL (+0.1
percentage point), and DOGE (+0.9 percentage points), but fell for ETH (-3.1 percentage points),
NEAR (-0.05 percentage points), and AVAX (-0.003 percentage points).

Transaction fees, a proxy for network demand, are trending down year-to-date and month-over-
month. ETH (-87%) took the biggest hit year-to-date, followed by DOGE (-71%) and BTC (-57%).
After DOGE took the biggest hit in May, the meme coin was the best performer of the cohort,
with an -11% decline in June, followed by ETH (-32%) and BTC (-33%).

Network transaction volume also presents a negative sentiment in 2022 as most cryptoassets

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have seen declining volumes in 2022. ADA was the group’s exception in 2022 with a +218% rise
in on-chain volume, though it has steadily declined by nearly -89% since March 31. ADA’s solid
performance stems from increased NFT and DEX demand and increased activity from forcing
a takeover of the protocol’s largest whale account. On-chain volume for ALGO remains the
worst performer this year at -81%, followed by DOGE (-66%), ETH (-65%), and BTC (-22%). In
June 2022, both DOGE (+60%) and ALGO (+9%) saw on-chain volume rise while volumes fell
month-over-month for ADA (-32%), ETH (-30%), and BTC (-8%).

Active addresses provide a mixed sentiment of on-chain demand, though it is leaning negative.
SOL (+87%), DOGE (+11%), and BTC (+3.4%) were the only cryptoassets to experience rising
activity year-to-date. Conversely, ETH (-24%), AVAX (-42%), ADA (-55%), and ALGO (-81%)
posted declines in active addresses year-to-date. Notably, BTC’s active addresses posted a
decline year-to-date through May, suggesting that the recent +4% month-over-month rise
flipped BTC’s active address growth into positive territory. Apart from DOGE (+10%), the rest of
the cryptoassets saw declining active addresses in June, with ALGO (-49%) leading the pack,
followed by ADA (-30%), SOL (-15%), ETH (-14%), and AVAX (-13%).

Network transaction count presents a positive sentiment for BTC and negative sentiment for
altcoins in 2022. transactions. AVAX led the cohort in losses with a -57% loss, followed by ALGO
(-53%), SOL (-28%), ADA (-27%), and ETH (-17%). However, network activity appeared brighter
on a month-over-month basis as AVAX (+0.1%), BTC (+2%), and SOL (+82%) saw transaction
count rise.

The circulating supply of these cryptoassets suggests that immediately marketable supply rose
the most this year for NEAR (+20%) rise in circulating supply growth, followed by AVAX (+15%),
which underwent a large unlock of supply overnight in early March, SOL (+11%), ALGO (+9.8%),
DOGE (+1.8%), ADA (+1.7%), ETH (+1%), and BTC (+0.87%).

On-chain indicators like BTC’s MVRV z-score continue to signal oversold conditions while
BTC struggles to break back into neutral territory. Should this indicator break back into neutral
territory as prices rebound, it could suggest network demand is returning.

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Endnotes
1. https://www.politico.com/news/2022/07/04/recession-talk-surges-in-
washington-00043818#

2. https://www.bls.gov/news.release/cpi.nr0.htm

3. https://www.reuters.com/markets/europe/euro-zone-inflation-confirmed-record-high-81-
may-2022-06-17/#:~:text=FRANKFURT%2C%20June%2017%20(Reuters),to%20tame%20
runaway%20price%20growth.

4. https://www.bloomberg.com/news/articles/2022-06-15/fed-hikes-rates-75-basis-points-
intensifying-inflation-fight

5. https://www.npr.org/2022/06/22/1106659122/uk-inflation-rate-hits-a-new-40-year-high-of-
9-1#:~:text=U.K.%20inflation%20rate%20hits%20a%20new%2040%2Dyear%20high%20
of%209.1%25&text=LONDON%20%E2%80%94%20Britain’s%20inflation%20rate%20
hit,the%20highest%20level%20since%201982.

6. https://blog.celsius.network/a-memo-to-the-celsius-community-
59532a06ecc6?gi=7fe3fbaafc5a

7. Avalanche’s architecture consists of three chains — the Exchange Chain (X-Chain), Platform
Chain (P-Chain), and Contract Chain (C-Chain). The numbers in this report reflect activity
on Avalanche’s C-Chain, which supports smart contracts and is EVM-compatible.

8. https://docs.avax.network/overview/getting-started/avalanche-platform-overview/

9. https://twitter.com/avalancheavax/status/1527367371689603072

10. https://twitter.com/avalancheavax/status/1527367370695553035

11. https://www.coindesk.com/markets/2022/01/17/cardano-price-surges-on-sundaeswap-
dex-catalyst/

12. https://www.coindesk.com/markets/2022/01/17/land-prices-surge-on-cardano-metaverse-
project-pavia/

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13. https://www.coindesk.com/tech/2022/04/27/cardano-network-developers-increase-block-
size-by-10/

14. https://twitter.com/elonmusk/status/1538406040374595585

15. Transactions on Solana are defined differently than on other account-based blockchains,
with consensus votes and failed transactions being recorded on the ledger. Therefore, in
an effort to bring transaction counts semantically aligned with other networks, Solana
transactions have been filtered to include non-vote, successful transactions only.

16. https://docs.solana.com/developing/programming-model/transactions

17. https://www.coindesk.com/business/2022/06/23/solana-labs-is-building-a-web3-mobile-
phone/

18. https://www.coindesk.com/business/2022/06/21/solana-nft-marketplace-magic-eden-
raises-130m-at-16b-valuation/

19. https://www.coindesk.com/business/2022/06/30/stepns-dex-surpasses-orca-to-become-
largest-decentralized-exchange-on-solana/

20. https://www.coindesk.com/tech/2022/06/19/solana-defi-platform-votes-to-control-whale-

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 JUNE 2022 CRYPTO ON-CHAIN DIGEST

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