Glassnode 2023 Yearly Onchain Review: BTC Spikes by +170% while Retracements were (>-20%)

Bits Logics Team . 20th Dec 2023

• On Chain metrics tool Glassnode released the 2023 Yearly Review
• BTC market cap peaked by +170% in the 2023 year 
• BTC and ETH had very shallow corrections: BTC had -20% correction from the local high

Glassnode, an on-chain metrics tool released the 2023 Yearly On-chain Review. The report delves into the intricate details of how Bitcoin, Ethereum, Derivatives and Stablecoin evolved throughout the year. The report further elaborates how this evolution has set the stage for an exciting journey ahead.

The report shows Bitcoin’s dominance where the market cap increased by a peak of +172% in 2023. The rest of the digital space also saw a market cap increase of +90% including Ethereum and other altcoins. 

However, the ETH/BTC Ratio declined to multi-year lows at around 0.052, despite the Shanghai update, and growth of its L2 ecosystem. 

Meanwhile, digital assets outperformed all Equities, Bonds, and Precious Metals courtesy the surge in October, which was driven by BTC hitting $30K and other altcoins reaching prominent levels. 

Interestingly one of the standout features was that BTC’s corrections were very shallow. 

The report stated:

“Historically, periods of bear market recovery, and bull market uptrends for BTC regularly see at least -25% pullbacks from the local high, with many examples exceeding -50%.”

Nonetheless, the deepest correction for 2023 was -20% below the local high suggesting that the overall supply-demand equilibrium was favourable.  

Ethereum was no different as it also saw relatively shallow corrections, with the deepest reaching -40% in early January. Despite ETH’s effort to cut short the supply by the Merge, the demand has been resilient although it has been quite lethargic relative to BTC. 

The above chart shows the net unrealized profit/loss for short-term and long-term holders. Both STH-NUPL and the LTH-NUPL were below zero only on two occasions as shown in the graph. One occasion was in January 2019 while the other occurred from June 22- January 2023.

A significant feature was where Options markets grew to match and even overtake Futures markets in open interest size. 2023 saw Options and Futures as the preferred market for price exposure and liquidity. 

Both markets now boast between $16B and $20B in open contracts, with Deribit continuing to dominate (90%+) the options space. This alludes to a growing institutional interest in Bitcoin, as traders and positions utilize options markets to deploy more sophisticated trade, risk management, and hedging strategies.