January was a turbulent month for the crypto space as market participants saw a broad sell-off. Continued uncertainty about the proposed U.S. Fed rate hikes in March and growing tensions in Eastern Europe plagued the market for most of February, though prices rebounded at the month’s end. While such macroeconomic skepticism makes it difficult to separate the signal from the noise, analyzing on-chain data can provide a clearer view of underlying crypto fundamentals.

Kraken Intelligence’s latest report, Sitting Tight, takes a closer look at on-chain metrics and indicators to explore where the market stands today, and what may lie ahead in the crypto space.

BTC and ETH inflow

On-chain metrics such as exchange net flows show that BTC and ETH posted net inflows in February, increasing their marketable supply. This signals that market participants may be moving their BTC and ETH out of cold storage to potentially trade them on exchange platforms. However, while BTC’s bearish momentum ostensibly fades, the opposite is true for ETH.

Miner uncertainty

Bitcoin miner optimism appears to be falling amid the market’s uncertainty, as evidenced by a recent drop in hash rates, an expected negative mining difficulty adjustment ahead and a pull back in the Puell multiple. 

Bullish on ETH, bearish on BTC

According to several on-chain indicators, sentiment is bearish for BTC and potentially bullish for ETH at the moment. Specifically, BTC’s Spent Out Profit Ratio (SOPR) indicates that market participants are selling BTC at a loss and ETH’s Market Value to Realized Value (MVRV) Z-Score suggests that it was oversold in February. 

Want to learn more about on-chain activity in February and what’s ahead? Download the Kraken Intelligence report Sitting Tight where the team explores crypto fundamentals and on-chain data that shaped the market in February.