Chainalysis Archive

Regulatory pressure lowers prices but whales re-stock and activity increases, plus Market Intel launches

30 June 2021
    • Cryptocurrency prices fall as regulatory pressure, particularly from China, spooks the market and leads to at least 50k bitcoin outflows from Chinese-related exchanges. However, the consequences of such pressure are likely to be on long-term demand rather than immediate changes in liquidity.
    • Prices below major levels, of $30k for bitcoin and $2k for Ethereum, seem to have incentivised an increase in activity, with the number of transfers and active users rising recently. Investor whales have also acquired at low prices, adding 42k bitcoin to their holdings since mid-June. This appears to have taken prices back above those levels.
    • Data subscriptions for Market Intel launch! Now you can access the data behind the Market Intel Report for your research and investment decisions. Email me at to learn more.

Cryptocurrency prices have fallen in the two weeks since my last Report. The bitcoin price has declined from $38.3k at the close of Wednesday 16 June to $34.7k today, Wednesday 30 June, with a low of $28.9k on Tuesday 22 June. The Ethereum price has declined from $2,361 last Wednesday to around $2,130 today, with a low of $1,706 on Tuesday 22 June. 

So prices went below the big round numbers that people regularly comment on, $30k for bitcoin and $2k for Ethereum, but then they recovered from these lows. What is going on?

I will give a high level answer today. As you may have seen, I launched data subscriptions for Market Intel this Monday – more on that below – and Chainalysis announced its Series E funding round last Friday. I’m also on vacation next week. So normal programming will resume on 14 July.

As I described in my previous Market Intel Report, it seems that the market is trying to find a new level with lower activity but returning investors. That trend appears to be continuing, with the added disruption from regulatory pressure on crypto in China.

Activity levels have continued to stabilize after declining in May and June. Activity is represented in the first chart of the report by the number of transfers per day and in the second chart by the number of daily active users per day.

Activity even appears to have increased recently, although very recent increases in activity may be activity internal to services, such as exchanges, rather than due to individual users. So as time passes, and so we collect more data, the most recent spike is likely to remain, but not be so high. Overall, lower prices have led to lower activity, but the even lower prices we’ve experienced recently appear to be enticing activity back.

Investors also appear to be returning. In particular, investor whales who first acquired bitcoin from 2017 have increased their holdings by 42k bitcoin in the last two weeks, as the third chart in the report shows. They are still holding 83k bitcoin less than they did at the end of April, but it is positive for the price if investor whales are buying again.

As to the disruption in the market due to regulatory pressure on crypto in China. At a high level, this is clearly spooking the industry and in the long term it could reduce the total addressable market for crypto, in the same way that some tech companies cannot serve customers in China.

Miners, many of whom are based in China and now face restrictions, are important to the security of the blockchain and so disruption is a concern. However, even with recent declines, the hash rate is still historically high, so security is still historically high. If that hashrate is more evenly distributed around the world, that likely improves security further.

But in terms of the current market, I think the impact is more limited than widely thought. Miners who have acquired their bitcoin since the start of 2017 currently hold 187k bitcoin. This is a large amount but around 1% of the total supply. If it were all sold at once then it would crash the market, but miners do not need to sell it all at once. Not all of them are in China, and even for miners in China, there is nothing forcing them to sell except to cover additional costs of responding to regulation.

The bigger challenge to the market is the loss of demand from China. It appears there has been some loss of demand, for example exchanges related to the Chinese market have seen net outflows of at least 50k bitcoin since 19 May. But this is not extensive, although I’d like to dive deeper in the future to provide a more comprehensive analysis.

But maybe you could dive deeper into the data yourself! That is now possible with the launch of data subscriptions for Market Intel. Our Market Intel product provides the unique insights you need to make cryptocurrency research and investment decisions. It is a curated set of metrics that summarises how cryptocurrencies are used and the direction of the market. All metrics are built on top of Chainalysis’ industry-leading blockchain data, which means you get the most comprehensive, high quality view of cryptocurrency activity.

If you’d like to learn more, read the launch blog for a walk through of key metrics, download a sample dataset for free, listen to me interview Chainalysis CEO Michael Gronager on the Market Intel podcast, view the technical docs for a complete description of all the metrics, or email me to arrange a call.

I am really excited to be able to get our Market Intel data into your hands. My team and I have been developing our methods and metrics for years, and I’ve been testing them over the last year in these Market Intel Reports. I believe that one of the innovations of cryptocurrencies is the richness of the data they provide, and at Chainalysis we’ve done the hard work of mapping blockchain data into real-world metrics. I’m looking forward to working with you all as you research and invest using Market Intel.

Philip Gradwell, Chief Economist

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