# Onchain data pointing to cycle top? _A "cycle awareness" update_ February 15, 2025 • Michael Nadeau --- # Onchain data pointing to cycle top? ## A "cycle awareness" update Michael Nadeau February 15, 2025 Hello readers, If you can’t develop conviction on the macro setup, you probably shouldn’t be investing in crypto assets. That’s why we shared [our latest views on the setup for 2025](https://thedefireport.io/research/risk-on-risk-off?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=onchain-data-pointing-to-cycle-top) with you yesterday. In today’s report, we are focused purely on the crypto markets, with the goal of building conviction by combining the two analyses. Topics covered: - [Sentiment](#sentiment) - [BTC Onchain Data](#btc-onchain-data) - [New Large Buyers in the Market](#new-buyers-in-the-market) - [Final Thoughts & Portfolio Management](#final-thoughts-portfolio-management) ***Disclaimer:**** Views expressed are the author’s personal views and should not be relied upon as investment, legal, tax, business, or any other advice. * [](https://studio.glassnode.com/partner/thedefireport?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=onchain-data-pointing-to-cycle-top) Special thanks to our friends at Glassnode for making our analysis possible. Use the link [here](https://studio.glassnode.com/partner/thedefireport?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=onchain-data-pointing-to-cycle-top) for 10% off any license tier. Let’s go. # Sentiment Crypto natives were bulled up post-election through the week or so before Trump’s inauguration. But then the President dropped a memecoin — which sucked up liquidity from almost all other memes in the market. This was followed by: - What was perceived as lackluster announcements/promises regarding the Strategic Bitcoin Reserve. - The “Monday Deepseek/AI Scare.” - The weekend “Tariff Scare” in early February — which has been reported as the largest capitulation event in history ($2.2b of liquidations, with some estimates much higher). Bitcoin has held up quite well, trading in a channel from $90k - $108k over the last 3 months. But sentiment has turned quite sour — revealing the impatience, inexperience, and emotional nature of the retail-driven crypto markets. Below we can observe this in the data. Market sentiment was in “extreme greed” less than 1 year ago — when the price of BTC was $70k. Here we are today at a price of $95k, and yet the sentiment has flipped into “fear.” The last time we were at these levels was early October of last year when the price of BTC was $62k. ##### Fear & Greed Index Data: Glassnode Below, we have funding rates — which measure the amounts longs are paying to shorts every 8 hours to keep their positions open. It gives us a sense of the appetite that traders have to pile on leverage — a fantastic sentiment/momentum indicator. ##### Funding Rates Data: Glassnode We can see that the data supports what we see on the fear/greed index. So, why are investors so fearful? Probably because most of the market is in altcoins and memecoins — which are down 50-75% as BTC dominance has edged back over 60%. This has investors questioning if we’ll ever see a proper “altseason” — precisely at the range lows. ##### Altseason Index Data: Bitformance “Altseason” Index *The above data looks at the top 200 assets by market cap that have a higher 90-day return than BTC. The takeaway? You always want to be zigging when the market is zagging. We think it’s the right time to consider allocating to select altcoins again (we share some favorites later in the report). Moving onto BTC onchain data… # BTC Onchain Data If you’re going to invest in altcoins, we think you need to have a view on the direction of BTC. That’s why we focus on Bitcoin in our onchain data updates. In this section, we’ll run through a number of our favorite “cycle awareness” indicators, sharing where we stand today relative to the peaks of past cycles. ##### MVRV - Long Term Holders MVRV (Market Value to Realized Value) helps us understand the relationship between the current market value and the “cost basis” of bitcoins in circulation (Realized Value). Glassnode calculates the cost basis of all bitcoins on the network by taking the price each UTXO last moved onchain. It does not factor in Bitcoin on exchanges or in ETFs (about 18% of the supply). In this analysis, we separate long-term holders (wallets that have not moved BTC in > 155 days) from short-term holders (wallets that have moved BTC within < 155 days). Data: Glassnode ##### Takeaway: - The MVRV for long-term holders sits at 3.96 today after getting as high as 4.4 on 12/17. This tells us that, on average, long-term holders are sitting on 296% gains. The market peaked when this cohort was sitting on 1,150% gains in the last cycle and 3,480% gains in the ‘17 cycle. ##### MVRV - Short Term Holders Data: Glassnode Remember. Short-term holders tend to chase the market. They enter late in the game, and tend to buy coins from long-term holders. ##### Takeaways: - The Short-Term Holder MVRV is currently 1.06 (barely in profit) after getting as high as 1.45 in March of last year. - In the last cycle, the market peaked when short-term holders were sitting on 74% unrealized gains. - 20% of the circulating supply is currently in the hands of short-term holders (16.4% this time last year). Again, this does not include exchanges or ETFs. In the last cycle, the markets peaked when 24% of the supply was held by short-term holders (when we didn’t have ETFs). This is an interesting data point because it tells us that there is more new money in the market today vs one year ago — and that we are getting close to where we peaked in % terms last cycle. ##### Long-Term Holder Supply Data: Glassnode ##### Takeaway: - When we started this cycle, 73.3% of coins in circulation were held by long-term holders. We’re now down to 66.1% held by long-term holders (a drop of 7.2%) - When we started the last cycle, 67.2% of the supply was held by long-term holders. When the market peaked, this number had dropped to 59.4% (a drop of 7.8%) - If we’re following the trends from the last cycle, both the short and long-term holder counts are telling us we’re in the latter stages. ##### BTC Available on Exchanges Data: Glassnode ##### Takeaways: - There is currently less BTC available on exchanges than there was in late 2018, yet the market is much larger today — with most institutions now able to purchase BTC. - We typically see the yellow line rise toward the end of cycles as investors send their BTC back to exchanges to cash out. We do not see any strong signs of this just yet. The ETFs may be playing a role here. ##### Pi-Cycle Top Indicator Data: Glassnode The Pi-Cycle top indicator has historically been an accurate tool for identifying market peaks in BTC. It consists of the 111-day moving average and a 2x multiple on the 350-day moving average. When the market becomes overheated, the shorter 111-day moving average crosses over the longer 350-day moving average. We can see above that there is still a healthy gap between the two moving averages — an indication that the markets have not reached extreme levels just yet. ##### Stablecoins Data: Token Terminal ##### Takeaways: - Tether supply grew $20b + from the election date through year end. It’s since stalled out (zero growth over the last two months). - USDC is now leading the charge (primarily on Solana). It’s grown 22% over the last two months (over $7b) - We’re keeping an eye on stablecoin growth as onchain liquidity is correlated to crypto prices. A new stablecoin bill (which could be the first piece of legislation we see) could radically change the look of this chart. ##### ETFs Data: Glassnode ##### Takeaways: - Net flows are actually negative for BTC over the last two weeks — a sign that investors are taking some profit. Still, the ETFs have added over $3.6b of net flows over the last month. For those curious, the ETH ETFs have added $735m over the last month and have outpaced BTC over the last two weeks. - The BTC ETFs have been trading for over a year now and have amassed nearly $38b of net flows. Combined, they hold more than $114b of AUM. - The ETF experts over at Bitwise will tell you that it’s more likely we’ll see *more* flows into ETFs this year than last year. Why? There tends to be a pattern with ETFs where flows grow in years two, three, etc, as liquidity begets more liquidity. Additionally, there are still large institutions that haven’t yet received the green light to start allocating into BTC. # New Buyers in the Market Shifting away from the onchain data, we’d be remiss not to mention that there are several large new buyers in the market. For example: - Mubadala, Abu Dhabi’s sovereign wealth fund that manages over $1 trillion, recently announced a $436m investment into BTC - Per Matthew Sigel from VanEck, there are currently 20 state-level Bitcoin reserve bills. If enacted, they could drive [$23 billion in buying](https://x.com/matthew_sigel/status/1889666062892888338?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=onchain-data-pointing-to-cycle-top). - The repeal of SAB121 means that banks can now custody crypto assets. - New FASB rules for Bitcoin mean that corporations can now hold BTC on their books at fair value, marking the value of their holdings up with unrealized gains for the first time. Previously, BTC was recorded as an intangible asset and only marked down. We didn’t even mention the Strategic Bitcoin Reserve. A new committee has been formed that plans to make a decision by July. We think other Central Banks may already be front-running this. The takeaway? Bitcoin is a big boy now. It’s historically traded like a risk-on asset driven by retail FOMO. That’s changing as we speak. Investors should anticipate that if Central Banks start holding the asset, it could shift to more of a “risk off” asset, with less volatility over time. We believe we’re already seeing the effects of this, with a more steady bid coming from ETF buyers. # Final Thoughts & Portfolio Management We shared our views on the macro setup yesterday. Today, we’ve shared a “cycle awareness” update as it pertains to BTC onchain data. When we combine the analysis, our conclusion is that the probability points to Bitcoin (and the crypto markets broadly) having some room to run. But that doesn’t mean there aren’t plenty of risks out there. Some onchain indicators indicate caution. Not to mention, we’ve already seen many [“toppy” like antics](https://thedefireport.io/research/bear-case-2025?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=onchain-data-pointing-to-cycle-top) this cycle. At the same time, we have had difficulty aligning ourselves with the bear case — from both a macro and onchain data perspective. Let’s not forget that the largest moves in crypto tend to happen at the end of cycles. As far as portfolio management? We like the barbell approach for this stage of the cycle. That means we maintain positions in core assets such as BTC, ETH, SOL + other projects with strong fundamentals (cash flows and buybacks). These include HYPE & Raydium. We also like TIA and SUI as alternative L1 plays. That’s one side of the barbell (which should be weighted more to BTC/ETH/SOL in our opinion) We then pair these core assets with smaller allocations to blue chip memecoins that have high beta and plenty of liquidity. SPX6900, GIGA, PEPE, and BONK are our favorites — all of which are more than 50% off their highs as of writing. In case you missed it, we shared our views on memes (and how we analyze them) [here](https://thedefireport.io/research/investing-in-cults?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=onchain-data-pointing-to-cycle-top). Onchain data we track was shared [here](https://thedefireport.io/research/which-memecoins-have-conviction?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=onchain-data-pointing-to-cycle-top). We’ll have more details on specific assets in the coming weeks. Take a Report. And Stay Curious. ***Disclaimer****: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.*