Cryptocurrencies experienced a major market crash on May 10th, losing over 10% of most coins in a single day. This is the second time in 2022 that most cryptocurrencies have suffered losses of over 10%. Over Over the past month, BTC has posted a 23.57% loss, while Ethereum has posted a 26.32% loss.. Meanwhile, US equities suffered slightly more moderate losses: S&P 500a -11.07%, Nasdaq 100a -14.93%:

Price-performance comparison with US stocks according to IntoTheBlock Capital Market Insights.

As seen in the chart above, cryptocurrencies continue to experience worse sell-offs than capital markets. The actual macro context of rising interest rates means that most investors are averse to risky assets, which cryptocurrencies, by their very nature, have highly volatile price movements.

The origins of the May 10th decline came as US stock markets rebounded from last week’s short-lived recovery. As has been shown in recent monthsThe 30-day correlation between cryptocurrency markets and US stock indices continues to grow, hitting all-time highs for both BTC and ETH this weekwith around 0.9 points for both the S&P 500 and the Nasdaq 100:

Correlation matrix with US stocks according to IntoTheBlock Capital Market Insights.

A correlation coefficient close to 1 implies a strong positive correlation between the two prices, meaning that the price of BTC or ETH and these indices have a highly statistically significant relationship, so they will tend to move in the same direction. Understanding how these relationships are evolving is essential to understanding how macro markets are affecting the cryptocurrency market and where to look for leading indicators of crypto price movements.

It’s valuable to look internally at how crypto holders are reacting to recent price movements, despite external factors. Bitcoin continues to dominate the crypto market, so it’s worth checking out what its on-chain data tells us.

As previously researched, investors are sensitive when their investments reverse and they are no longer in a profitable position. BTC recently reached a critical position where Almost half (47.8%) of addresses holding BTC would lose money if they sold at current prices. This is something not seen since the March 2020 Covid crash:

BTC Historical In/Out of the Money according to IntoTheBlock Bitcoin Indicators.

This indicator, which shows the fluctuations in holders’ profits over time, also shows the percentage of addresses that would have made or lost money if they had been sold at a given point in time. Addresses are classified according to whether they are profiting (in-the-money), breaking even (at-the-money), or losing money (out-of-the-money).

Addresses are a good approximation of individual investors, although it’s always possible for a small minority of users to use multiple addresses. If we look at how long BTC investors have held, we can see that The vast majority (26.74 million addresses) have held BTC for more than a year. A metric with no sign of slowing down so far (blue line):

BTC addresses by time held according to IntoTheBlock bitcoin indicators.

This shows how the number of BTC holders with a long-term perspective is growing despite the recent market turmoil and crypto’s weak price action. For short-term holders (classified as traders, orange line on chart) it’s the other way around: their numbers increase when significant price movements occur, and speculation fuels the entire ecosystem.

After the worst start to the year for US equities in 83 years, the question remains whether the current market situation could present an attractive buying opportunity for long-term investors. Crypto’s next price moves will no doubt be heavily influenced by what US stocks are doing, although so far at least the majority of BTC holders remain unfazed.

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