AVAX Adoption and Bridging Highs, BTC Miners Accumulate as Alongside HODLers

NOV 24, 2021 • 4 Min Read

Joo Kian

DISCLOSURE: DELPHI VENTURES AND MEMBERS OF OUR TEAM ARE INVESTED IN BTC, ETH, AVAX. THESE STATEMENTS ARE INTENDED TO DISCLOSE ANY CONFLICT OF INTEREST AND SHOULD NOT BE MISCONSTRUED AS A RECOMMENDATION TO PURCHASE ANY TOKEN. THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND YOU SHOULD NOT MAKE DECISIONS BASED SOLELY ON IT. THIS IS NOT INVESTMENT ADVICE.

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Avalanche Usage Trends Up While Ethereum Remains a Stronghold

  • AVAX C-Chain adoption has been increasing lately and recently hit 600k daily transactions.
  • Avalanche’s EVM and Metamask compatibility, much cheaper fees, and familiar DeFi experiences have been tailwinds for adoption. Naturally, this has boosted on-chain transactions and demand for the ecosystem’s native gas token.
  • There has been an ongoing debate around L2 scaling versus cheaper L1s. Ethereum is costly to use and effectively prices out users with smaller positions. Unfortunately, live L2 solutions like Optimism, Boba Network, and Arbitrum have yet to see serious adoption (only Boba has a native token, a valueless governance token not used for gas). On the flip side, cheaper L1 solutions like Avalanche are seeing more usage than L2s.
  • There is still no defined winner yet as Ethereum usage remains strong. Nonetheless, Avalanche is showing itself to be a formidable competitor. On top of advocacy from notable Crypto Twitter influencers, one of the main reasons for Avalanche’s success is due to Avalanche Rush, an ecosystem incentives program for attracting users to interact with projects that deploy on Avalanche (like Aave and Curve).
Bridging From Mainnet to Ronin and Avalanche

  • As scaling solutions come, we see high bridging activity as funds move away from the expensive Ethereum chain and continue staying there. Of all the chains, Ronin and Avalanche have seen the highest activity and funds moved.
  • Ronin recently released Katana, a DEX in Ronin, that reduces the need for scholars/managers to bridge back to Ethereum for swaps. This reduced the need for scholars to move funds to and fro to realize their income. Alongside this, Binance’s Ronin integration allowed for a much cheaper bridging process.
  • As previously mentioned, Avalanche serves as a cheaper alternative chain to Ethereum, which attracted massive capital due to its cheap fees. As of today, the Avalanche bridge is the most used bridge on Ethereum.
Exchange Flow Remains Negative

  • Despite the poor price action of late, on-chain data still shows positive signs of more BTC outflow than inflow on exchanges. This metric signals accumulation is still happening, which is very bullish.
  • Exchange Net Position Change is used to gauge flow in/out of exchanges. Usually, high net inflows are bearish as it suggests people are transferring onto an exchange to sell (or to prepare to sell). Meanwhile, high net outflows are bullish as users are likely to buy and transfer it to a cold wallet (to presumably HODL).
Miners Back to HODL

  • Recently, miners have started to HODL their BTC mining rewards.
  • Years ago, this was a bullish sign because miners held higher market-moving abilities. After 3 miner reward halvings, this net position represents a much smaller percentage of the total circulating supply. In any case, it’s still a sign that miners might see more room for BTC to run.
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