Executive Summary
Since the cycle low established in Nov 2022, Bitcoin Dominance has continued to climb, now commanding 56% of the total crypto market capitalization.Despite tumultuous and choppy price action, the conviction of Long-Term Holders remains steadfast and unfazed, with a clear preference to accumulate and HODL coins.Short-Term Holders have carried the brunt of the losses during the recent downturn. However, the degree of locked-in losses suggests a possible overreaction towards the event.
Market Overview
Since the cycle low established in Nov 2022, capital continues to accrue towards the major asset end of the digital asset risk curve. Bitcoin Dominance has risen from non-trivial 38% in Nov-2022 to a staggering 56% of the total digital asset market today.
As the second largest asset in the ecosystem, Ethereum has recorded a dominance decline of 1.5%, remaining relatively flat over the past two years. Stablecoins and the wider Altcoin sector have experienced a more pronounced decline of 9.9% and 5.9%, respectively.
🟠 Bitcoin Dominance: 38.7% (Nov 2022) —> 56.2% (Current)🔵 Ethereum Dominance 16.8% —> 15.2%🟢 Stablecoin Dominance 17.3% —> 7.4%🟣 Altcoin Dominance 27.2% —> 21.3%Live Workbench
However, when we assess the Net Capital Change across the major assets, Bitcoin, Ethereum and Stablecoins exhibit a net positive capital inflow. Only 34% of trading days have seen a larger 30-day USD inflow, even though the market has generally contracted since the March ATH.
Next, we can utilize the Major Asset Buy-Side vs Sell-Side metric, which seeks to identify shifts in capital depending on the preference of exchange inflow volumes. This can be considered under the following framework:
Values near zero suggest a neutral regime, where buy-side inflows are the same magnitude as BTC+ETH sell-side inflows.🟢 Positive values suggest a net buy-side regime, where buy-side inflows of stablecoins exceed BTC+ETH sell-side inflows.🔴 Negative values suggest a net sell-side regime, where buy-side inflows of stablecoins are less than BTC+ETH sell-side inflows.
Since the new ATH creation in March 2024, sell-side pressure has subsided and is now recording the first positive data point since June 2023 ($91.8M/day).
Long-Term Holders
Amidst tumultuous market conditions as of late, Long-Term Holders have been locking in a reasonably consistent $138M in profit per day. With each transaction, a buyer and a seller are matched, with supply and demand imbalances resolved via price changes.
Therefore, we can infer that this ~$138M/day in LTH sell-side pressure is a read for the daily capital inflows required to absorb supply and keep prices steady. While market conditions have been choppy, prices are generally flat over the last few months, suggesting a form of equilibrium is being reached.
The Realized Profit / Loss Ratio for Long-Term Holders is a metric we can use to assess cyclical behavior of this cohort. We note that this metric remains elevated, although is experiencing a substantial decline from the peak. This indicates that long-term investors are in the process of cooling off profit-taking activities.
Notably, during the March 2024 ATH, this metric reached a similar altitude to prior market tops. In both the 2013 and 2021 cycles, the metric declined to similar levels prior to resuming an uptrend in price. In 2017-18, however, this decline was one way, as the market entered a loss-dominant bear market.
From the perspective of Long-Term Holder SOPR, we can see that coins are locking in an average profit margin of +75%, and LTH-SOPR remains elevated at this time.
Utilizing our Binary Spending Indicator for LTHs, the aforementioned slowdown in Long-Term Holder spending can be seen.
LTH supply is rapidly increasing at present. When we consider that the 155-day threshold for LTH status is near the March ATH, this provides an indication of the volume of supply acquired during the ATH run-up, which remains held. This highlights that HODLing behavior is significantly outpacing spending behavior.
A Psychological Correlation
Moving toward the inverse cohort, the Short-Term Holders, we can measure the intensity of unrealized financial stress experienced by recent buyers. We can observe this dynamic using the STH-MVRV Ratio metric, with a 30-day average applied.
STH-MVRV has recently contracted below the equilibrium value of 1.0, suggesting that the average new investors now hold an unrealized loss.
Periods of brief unrealized loss pressure are common during bull markets. However, sustained periods where STH-MVRV trades below 1.0 can lead to a higher likelihood of investor panic and precede a more severe bearish market trend.
With unrealized losses increasing, an expectation of an eventual investor capitulation grows. Such events are characterized by significant losses being locked in via spent coins.
Evaluating the periods of high-loss realization in the market by new investors can be seen when STH-SOPR trades below 1.0.
From this lens, we can also see that STH-SOPR trades below 1.0, indicating a degree of realized loss-taking activities by new investors. This adds weight to the case that the market is at a decision point, and the price is marginally below the comfort point of STHs.
Despite the correlation between unrealized and realized activities, new investors can overreact to their portfolio being held at a relatively high unrealized profit (or loss). Such over-reactions are a key feature of markets, where the emotional response of investors results in their realizing an excessive profit (or loss) at inflection points, forming both local and macro tops (or bottoms).
The chart below compares the spent cost-basis of new investors who decided to transact against the average cost-basis of all investors who still hold. The deviation between these two metrics provides insight into the magnitude of potential overreactions.
The bull market corrections seen throughout our current cycle have experienced only a slight deviation between the spent and holding cost basis. From this, it could be argued a modest overreaction may have occurred as the market sold off below $50k.
Navigating Investor Cycles
In the above section, we utilized the MVRV and SOPR metrics, which consider investors’ general profit and loss positioning. This section will isolate solely for coins held and transacted in a loss.
By evaluating the Relative Unrealized Loss metric for new investors, we can directly measure the unrealized financial stress that new investors are shouldering.
Presently, the magnitude of Unrealized Loss relative to the STH Market Cap remains relatively low compared to historic capitulation events. The magnitude of loss held by the market is arguably similar to prior bull market corrections.
However, we can see a divergence in this correlation when we compare the build-up of Unrealized Losses to those locked in by spent coins (Realized Losses). Realized Losses tricking notably higher highlights the moderate overreaction we described above.
Assessing the cumulative 90-day realized loss and the average unrealized loss for STHs, we can visually highlight the confluence and correlation between these two measures.
During cyclical price lows, the magnitude of realized and unrealized loss tends to spike between 10% and 60% of total STH holdings. By this measure, the magnitude of both unrealized and realized losses remains relatively small compared to previous major bottom-forming events.
One constructive analogue would be the similarity between the current structure and the 2016-2017 cycle, where the described relative metrics traded below a consistent ceiling of ~10%.
From this, we could argue that the hit taken to investor sentiment may not be as severe as it may seem at face value.
Summary and Conclusions
With a degree of uncertainty rife amongst market investors, capital continues to flow down the risk curve, leading to a significant expansion in Bitcoin dominance, with the leading asset now commanding a staggering 56% of the total market capitalization.
In spite of the tempestuous and choppy price action, the resolve of Long-Term Holders remains resolute, with a clear preference for HODL and acquiring coins. Alternatively, Short-Term Holders have carried the vast majority of the losses across the recent downturn. Nonetheless, the degree of locked-in losses suggests a possible overreaction towards the event.
Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.
Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.
Join our Telegram channelFor on-chain metrics, dashboards, and alerts, visit Glassnode StudioFor automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter Bitcoin, as the leading digital asset, continues to see its dominance expand, now commanding a staggering 56% of the total market capitalization. Supporting this, Bitcoin Long-Term Holders remain steadfast in their conviction, with significant accumulation pressure below the surface.
Amazon.com: Its Role in the U.S. Industry
Introduction
Amazon.com, often simply referred to as Amazon, has transformed from an online bookstore into a colossal global conglomerate that has fundamentally altered the landscape of retail, technology, and numerous other industries. Founded in 1994 by Jeff Bezos, Amazon’s rapid growth and diversification have made it a central player in the U.S. economy. Its impact is felt across various sectors, including e-commerce, logistics, cloud computing, entertainment, and even artificial intelligence. This article explores Amazon’s role in the U.S. industry, examining its influence, achievements, and the challenges it faces.
The Rise of Amazon.com
Origins and Early Growth
Amazon began as an online bookstore in Bezos’s garage in Bellevue, Washington. The vision was simple but revolutionary: to create an online platform where people could buy books. Bezos recognized the potential of the internet to disrupt traditional retail and chose books as his starting point due to their wide appeal and ease of distribution. By offering a vast selection and competitive prices, Amazon quickly gained a foothold in the market.
The company’s initial public offering (IPO) in 1997 marked the beginning of its journey toward becoming a dominant player in the U.S. and global markets. Amazon’s early success was driven by its focus on customer satisfaction, an extensive inventory, and a commitment to fast and reliable delivery. This focus laid the foundation for its expansion into other product categories and services.
Diversification and Expansion
Amazon’s diversification strategy began with the introduction of new product categories, such as electronics, toys, and apparel. This move positioned Amazon as a one-stop shop for consumers, significantly expanding its customer base. The company also introduced its marketplace platform, allowing third-party sellers to offer their products alongside Amazon’s own inventory. This not only increased the variety of products available but also created a new revenue stream for the company through commissions on sales.
One of the most significant milestones in Amazon’s diversification was the launch of Amazon Web Services (AWS) in 2006. AWS provided cloud computing services to businesses, enabling them to rent computing power and storage rather than investing in expensive infrastructure. This service quickly became a cornerstone of Amazon’s business, contributing significantly to its profitability and establishing Amazon as a leader in the tech industry.
Amazon’s Role in E-Commerce
Transforming Retail
Amazon’s impact on the retail industry cannot be overstated. It has revolutionized the way consumers shop, shifting much of retail activity from brick-and-mortar stores to online platforms. The convenience of shopping from home, coupled with Amazon’s vast selection and competitive pricing, has led to a fundamental change in consumer behavior. This shift has forced traditional retailers to adapt, leading to the rise of omnichannel strategies that integrate online and offline sales.
The concept of “one-click shopping,” patented by Amazon in 1999, further streamlined the online shopping experience. This innovation reduced the friction in the purchasing process, contributing to higher conversion rates and reinforcing Amazon’s dominance in e-commerce. Additionally, Amazon Prime, launched in 2005, offered customers free two-day shipping and other benefits for an annual fee, further solidifying customer loyalty and increasing the frequency of purchases.
Impact on Small Businesses
While Amazon has provided opportunities for small businesses through its marketplace platform, it has also posed challenges. On the one hand, small businesses gain access to a vast customer base and the logistics infrastructure that Amazon offers. On the other hand, they face intense competition, not only from other third-party sellers but also from Amazon itself. The company’s ability to undercut prices and its control over the marketplace platform have led to concerns about fairness and market power.
Moreover, Amazon’s algorithms and data-driven approach to retail have raised questions about the transparency of how products are promoted and priced on the platform. Small businesses often struggle to achieve visibility without spending on Amazon’s advertising services, which can be costly. Despite these challenges, many small businesses continue to rely on Amazon as a vital sales channel, underscoring its central role in the U.S. retail industry.
Amazon in the Logistics and Supply Chain Industry
Revolutionizing Logistics
Amazon’s impact extends beyond retail into logistics and supply chain management. To fulfill its promise of fast and reliable delivery, Amazon has invested heavily in building a sophisticated logistics network. This network includes a vast network of fulfillment centers, advanced robotics, and a growing fleet of delivery vehicles, including drones.
Amazon’s logistics capabilities have set new standards for the industry. The company has pushed the boundaries of what is possible in terms of speed and efficiency, challenging traditional logistics providers like FedEx and UPS. Amazon’s commitment to customer satisfaction has driven innovations such as same-day and even one-hour delivery in select areas, further raising consumer expectations.
In-House Logistics Services
In recent years, Amazon has taken steps to reduce its reliance on third-party logistics providers by expanding its in-house delivery capabilities. The launch of Amazon Logistics, a service that uses independent contractors to deliver packages, is a testament to this strategy. This move has enabled Amazon to exert greater control over the delivery process and reduce costs.
However, this expansion has not been without controversy. Amazon’s use of independent contractors has sparked debates about labor practices and the gig economy. Critics argue that Amazon’s business model places financial and physical burdens on its delivery drivers, who are often classified as independent contractors rather than employees. This classification exempts Amazon from providing benefits and protections typically afforded to employees, such as health insurance and minimum wage guarantees.
Amazon Web Services: The Backbone of the Internet
Dominating Cloud Computing
Amazon Web Services (AWS) has emerged as one of the most significant contributors to Amazon’s success. As the leading provider of cloud computing services, AWS powers a vast portion of the internet, supporting everything from startups to large enterprises. Its services include computing power, storage, databases, machine learning, and more.
AWS’s dominance in cloud computing has had a profound impact on the tech industry. By providing scalable and cost-effective solutions, AWS has lowered the barriers to entry for new businesses, fostering innovation and entrepreneurship. Companies no longer need to invest heavily in physical infrastructure; instead, they can rent the necessary resources on demand from AWS.
Economic Impact and Innovation
The success of AWS has not only boosted Amazon’s financial performance but also contributed to the broader U.S. economy. AWS has created jobs, driven innovation, and supported the growth of numerous tech companies. Its services have become integral to the operations of many businesses, from streaming services like Netflix to financial institutions and government agencies.
AWS’s role in advancing technologies such as artificial intelligence and machine learning has also been significant. By making these technologies accessible through cloud services, AWS has enabled companies to develop new applications and services that were previously out of reach. This has spurred growth in sectors such as healthcare, finance, and entertainment.
Amazon’s Influence on Entertainment and Media
Amazon Studios and Prime Video
Amazon’s foray into the entertainment industry began with the launch of Amazon Studios and Prime Video. These platforms have become key players in the streaming wars, competing with giants like Netflix, Disney+, and HBO Max. Amazon Studios produces original content, including critically acclaimed series like The Marvelous Mrs. Maisel and The Boys, as well as feature films.
Prime Video, available as part of the Amazon Prime membership, has become a major driver of subscriber growth. By offering a mix of original content and licensed programming, Amazon has been able to attract a diverse audience. The company’s investment in high-quality content has not only boosted its streaming service but also positioned it as a significant player in Hollywood.
Impact on the Publishing Industry
Amazon’s origins as an online bookstore continue to influence the publishing industry. The company has become the largest bookseller in the world, both in physical books and e-books. The Kindle, Amazon’s e-reader, revolutionized the way people consume books, making digital reading mainstream.
However, Amazon’s dominance in the book market has raised concerns among publishers and authors. The company’s pricing strategies and negotiation tactics have led to disputes over revenue sharing and control. Amazon’s influence over the publishing industry extends to self-publishing, where its Kindle Direct Publishing platform allows authors to bypass traditional publishers and reach readers directly. While this has democratized publishing, it has also led to an oversaturation of the market and challenges in quality control.
Challenges and Criticisms
Regulatory Scrutiny
Amazon’s immense size and influence have made it a target for regulatory scrutiny. In the U.S. and abroad, lawmakers and regulators have raised concerns about the company’s market power, labor practices, and treatment of third-party sellers. Antitrust investigations have been launched to determine whether Amazon engages in anti-competitive behavior, such as favoring its own products over those of third-party sellers on its platform.
The company’s expansion into various industries has also led to concerns about its dominance and potential to stifle competition. Critics argue that Amazon’s control over data, logistics, and retail gives it an unfair advantage, making it difficult for smaller companies to compete. In response, there have been calls for greater regulation and even the potential breakup of Amazon into smaller entities.
Labor Practices and Workers’ Rights
Amazon’s labor practices have come under intense scrutiny, particularly in its fulfillment centers and delivery network. Reports of grueling working conditions, high injury rates, and inadequate breaks have sparked widespread criticism. Workers have organized protests and strikes, demanding better pay, safer working conditions, and the right to unionize.
The company’s use of technology to monitor and manage workers has also raised ethical concerns. Amazon’s reliance on algorithms to track productivity and enforce performance targets has been criticized for creating a dehumanizing work environment. The company’s resistance to unionization efforts has further fueled debates about workers’ rights and corporate responsibility.
Environmental Impact
As one of the largest companies in the world, Amazon’s environmental impact is significant. The company’s vast logistics network and rapid delivery services contribute to carbon emissions and packaging waste. Amazon has faced criticism for its role in driving consumerism and its contribution to environmental degradation.
In response, Amazon has pledged to become more sustainable. The company launched the Climate Pledge in 2019, committing to reach net-zero carbon emissions by 2040. Amazon has also invested in renewable energy, electric delivery vehicles, and sustainable packaging. While these efforts are a step in the right direction, critics argue that more needs to be done to address the environmental impact of the company’s operations.
