February in Figures: Rising Investor optimism, Bitcoin Outflows from Centralised Exchanges, and the NFT Marketplace Showdown

After a strong start to the year, mining- and crypto-related stocks traded in mixed directions, largely moving in step with Bitcoin.

• During February the Fear and Greed Index largely stayed in the Greed zone. In mid-month Bitcoin prices tested the $25,000 level — the index reached a yearly high of 62.
• The indicator’s minimum reading was 48, the average 53.3. This pattern signals investor optimism despite a rise in the Federal Reserve’s rate and an uptick in inflation in the United States.

• In February the statistical relationship between Bitcoin and the US stock market rose slightly. Correlation with the S&P 500 reached 0.42, and with the Dow Jones — 0.38.
• The movement of Bitcoin and gold prices trended in the same direction, but their correlation remains relatively low.
• The average BVOL24H over the last month stood at $2.1, somewhat above January’s figure.
• The index peaked at $3.5 on 17 February when prices touched $25,000.

• US consumer expenditure inflation in January rose from 5.3% year-on-year to 5.4%, versus a 4.9% forecast; core inflation rose from 4.6% to 4.7% (4.6%). CPI rose by 6.4% with expectations for a slower 6.5% to 6.2%, core — up 5.6% (from 5.7% to 5.5%). The slower inflation backdrop is also visible in fresh PPI data.
• In January, US nonfarm payrolls rose by 517,000 versus a forecast of 188,000. Over the prior two months, the gain was 71,000 higher. Unemployment, contrary to expectations, fell to the lowest since 1969 — 3.4%. Yearly wage growth slowed to 4.4% vs 4.3% expected. Retail sales jumped by 3% against a 2% forecast.
• Fed officials, including the chair, signalled the need “for further work” — elevating the policy rate and keeping it high for an extended period. This prompted a revision of expectations about its ceiling and timing for a shift to easing policy.

• Options traders now price in a 50 bps hike in March with a 23.3% probability. A month ago odds were 1 in 5 that rates would stay at 4.5-4.75%.
• Investors also revised expectations for the Fed’s next steps. If a month ago the market doubted whether rates would exceed 5.25% and saw a 76.5% chance of returning to the current level by year-end, now a peak of 5.75% is priced in with 42.8% probability and a 5.25-5.5% range by year-end (73.7%).

• The prospect of a negative swing in risk assets due to Fed policy had little effect on crypto price movements.
• Bernstein analysts counted that Bitcoin’s correlation with the Nasdaq Composite fell from 0.94 to 0.58.

Number of whale addresses (balance >1000 BTC). Data: Glassnode

• The number of addresses with 1,000 BTC or more fell to mid-2019 levels. As of 28.02.2023, such whale addresses stood at 2,006; the similar peak of 2,005 was recorded on 30.07.2019.
• The count in this category peaked near 2,500 in February 2021. Since then, despite Bitcoin’s rally to a new high around $69,000, the metric declined.
• Smaller-address categories (>0.01, >0.1 and >1 BTC) show a more optimistic picture — these groups have rarely seen declines, signalling gradual growth in the number of crypto investors and their drive to accumulate more digital gold, regardless of volatility and cycles.

• The aSOPR indicator spent most of February above 1, signaling improved sentiment and profit-taking by many investors.
• Decentrader analysts believe that short-lived dips below key levels present a good “buy the dip” opportunity.
• The recently released MVRV Z-Score that re-entered territory below zero indicates potential for further price gains and overall market recovery.

• In February there was a notable uptick in Taproot‑sig shares in Bitcoin’s blockchain — on 15 February the share rose above 12%, before retreating.
• The trend is tied largely to the Ordinals project, which enables digital artifacts on Bitcoin. The number of Bitcoin NFTs surpassed 228,000, according to a Dune dashboard by @dataalways.
• Total digital gold on centralized exchanges fell to March 2018 levels. The pullback from exchanges intensified in 2022 amid Terra’s collapse, FTX’s demise and broad market contagion. The persistent decline in this metric suggests many investors are moving to non-custodial wallets for safety.

• Trading volume on NFT marketplaces rebounded as Blur challenged OpenSea. Blur drew attention in February with a generous airdrop of its native token BLUR, which promptly appeared on leading platforms, with Binance notably absent. Reports say Blur is raising funds at a $1bn valuation.
• In February Blur’s volume reached $1.21bn versus $333m for OpenSea. The newcomer announced an additional distribution of 300m tokens, and the revealed CEO urged a boycott of the flagship. The result was that the leading marketplace had to alter its royalty model.

As the segment revived, new leading collections emerged while legacy premium collections remained in play. In some cases volumes and transactions rose by tens or hundreds of percent. The same pattern was seen across blockchains, with Ethereum remaining the undisputed leader.

• In February the Ordinals protocol launched — “attacks on the network” according to supporters of Bitcoin. Ordinals allow recording up to 4 MB of data in a Bitcoin block. Network activity surged mempool, and the average block size grew from 1.5–2.0 MB to 3.0–3.5 MB.
• By month-end the total NFT count on Bitcoin exceeded 250,000, and the Ordinals fork was launched on Litecoin.

• Most public company digital holdings were unchanged in February. One of the largest Bitcoin holders, MicroStrategy, did not acquire or announce purchases of Bitcoin in early 2023.
• In February the software company reported that its Q4 2022 net loss was $249.7m. The write-down of Bitcoin holdings and the price drop weighed on MicroStrategy’s results. The company sold 704 BTC but remains the owner of 132,500 BTC, whose value fell by $197.6m.
• Nevertheless, MicroStrategy managed to raise $46.6m since September 2022 by selling its securities.
• Last month it emerged that Marathon Digital sold 1,500 BTC in January to cover some costs. CEO Fred Thiel said additional sales would follow to finance monthly operating expenditures this year.

• BTC Trust (GBTC) quotes remain at a very low level relative to NAV — around -45.5%. The situation is worsened by Digital Currency Group (DCG)’s deteriorating finances.
• According to the Financial Times, DCG began selling shares in major crypto funds managed by Grayscale at a substantial discount.
• In 2022 Digital Currency Group reported a net loss of $1.1bn.