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January 2021 in Numbers: Bitcoin and Ethereum Hit New Highs, Miner Revenues Reach Record Levels, and the Reddit Factor

05.02.2021 ForkLog

Key Highlights

On 8 January, Bitcoin price hit a new all-time high around $42,000.
The cryptocurrency market cap surpassed $1 trillion for the first time.
Ethereum posted a new all-time high above $1,430.
The month proved record-breaking for spot and derivatives trading volumes.
The value of assets locked in DeFi applications approached $27 billion. Tokens such as 1inch, Curve and others surged several-fold.
The market capitalization of “Bitcoin on Ethereum” surpassed $5 billion.
In January, trading on decentralized exchanges (DEX) reached a record $55 billion.
Total market cap of stablecoins rose to $37.5 billion.
Bitcoin miners’ revenues in January rose 58%, surpassing $1 billion — the highest since December 2017.
Billionaires shifted their rhetoric on Bitcoin. Financial firms are launching Bitcoin funds aimed at big players.
Reddit users’ battle with Wall Street spurred a rally in several stock prices. Its effects spilled over into Dogecoin and created headaches for Robinhood.
Elon Musk described himself as a Bitcoin supporter.

Movements of Leading Assets

January 2021 in numbers: Bitcoin and Ethereum highs, and Reddit-driven momentum

Daily BTC/USD chart on Bitstamp. Data: TradingView.

Daily ETH/USD chart on Bitstamp. Data: TradingView.

In the first week of 2021, Bitcoin crossed the important psychological level of $30,000, having set on 8 January a new all-time high around $42,000. The rapid rise of digital gold pushed the market cap above $1 trillion. A correction followed, and the first cryptocurrency declined by about a quarter. By month-end, Bitcoin’s price was up 15%, to $32,192.
The second-largest cryptocurrency also set an all-time high — on 19 January Ethereum traded above $1,430. During January the asset rose by 120%.

Market Sentiment and Correlations

Fear and Greed Index dynamics. Data: alternative.me.

90-day asset correlation readings. Data: Blockchain Center.

In January, correlations of Bitcoin with gold and the S&P 500 were below the 2020 averages.
Historically, digital gold has shown a tight relationship with other Proof-of-Work assets, especially Ethereum and Litecoin, which tend to move in tandem during volatility spikes.

Trading Volumes

Spot exchange trading volumes, $bn. Data: CryptoCompare.

January 2021 became a record month for spot-platform trading volumes — total turnover reached $845 billion.

By exchange, the leader remains Binance ($518 billion). In the top three also are American platforms Coinbase and Kraken — their January volumes were $117 billion and $56 billion respectively.

Futures and Options

Bitcoin and Ethereum futures trading volumes, $bn. Data: skew.

January proved to be a record month for crypto derivatives — total trading volume exceeded $2 trillion.
In the most active session, January 11, Bitcoin futures turnover reached $170 billion, and Ethereum-based contracts $50 billion.
On a platform basis, Binance remained the leader, but ahead of the busiest sessions CME led in open interest. CME’s share of open positions at peak activity exceeded 18.4% of total OI, equivalent to $2.4 billion.

Options trading volumes for Bitcoin and Ethereum, $mln. Data: skew.

Investors actively traded Bitcoin and Ethereum options in January amid the rapid asset price growth.
In the most active session on 11 January, turnover reached $2.5 billion, $2 billion of which went to the leader of the segment — Deribit.
On 29 January, the largest expiry of more than 120,000 Bitcoin options took place, worth over $4 billion.

Dynamics of large institutional positions (Commercial) on CME. Data: CFTC.

On the regulated market, large institutional players continued to build longs after booking near the historical maximum (+77 contracts). 90 short positions remained unchanged since late December.

DeFi

Dynamics of assets locked in DeFi sector. Data: DeFi Pulse.

Top-3 DeFi projects by value locked, $bn. Data: DeFi Pulse (as of 1.02.2021).

In January, the DeFi sector’s growth accelerated. Total value locked (TVL) on smart contracts approached a near-record $27 billion (excluding tokenised Bitcoin like WBTC).
The top trio remained unchanged — Maker, Aave and Compound. Their TVLs on 1 February stood at $4.8 billion, $3.98 billion and $3.29 billion respectively. The fastest-growing DeFi platform was Aave (+100% vs. the previous month).

Top-20 DeFi tokens by market cap, sorted by price growth. Data: Messari (as of 1.02.2021).

Market cap of popular Bitcoin on Ethereum, $m. Data: DeFi Pulse.

During January, many DeFi tokens surged in price; Alpha Finance, 1inch, Curve and Uniswap rose several times.
The ‘Bitcoin on Ethereum’ theme continued to grow. HBTC outpaced renBTC in market cap. Total value of assets in the segment surpassed $5 billion.

DEX

Dynamics of trading volumes on decentralized exchanges, $bn. Data: Dune Analytics.

Market shares of the largest DEXes. Data: Dune Analytics as of 1.02.2021.

In January, decentralized exchanges enjoyed particular popularity. For the month, total trading volume in this segment reached $55 billion for the first time.
Uniswap remained dominant — in January it accounted for 48% of total monthly DEX turnover ($25.7 billion). The top three also included the competing platform SushiSwap ($12.1 billion) and Curve ($6.2 billion).

Stablecoins

January 2021 in numbers: Bitcoin and Ethereum Hit New Highs

Dynamics of total stablecoin market cap, $bn. Data: Messari.

Top-5 leading stablecoins by market cap, $bn. Data: Messari (as of 1.02.2021).

USDC flows to and from centralized exchanges. Data: Glassnode.

In January, the overall stablecoin market cap rose by $7.5 billion — from around $30 billion to $37.5 billion.
The leader of the segment remains USDT from Tether, with capitalization exceeding $27 billion.
In terms of growth, Centre’s USDC surpassed all other stablecoins; supply grew by 50% in January, to near $6 billion. Binance’s BUSD also rose significantly.
Glassnode CTO Rafael Schulze-Kraft noted the exponential growth of exchange balances in USDC. He regards this as “fuel” for the future rise in Bitcoin’s price.

P2P Trading

LocalBitcoins p2p trading volumes in 2020-2021, $m. Data: coin.dance.

LocalBitcoins p2p trading volumes in 2020-2021, BTC. Data: coin.dance.

The same LocalBitcoins trend of deceleration is visible on rival Paxful. Trading volume fell to below 1,000 BTC. In USD terms, turnover declined by about a quarter.

Mining, Hashrate, Fees

Bitcoin hash rate dynamics since the start of the year, EH/s. Data: Glassnode.

Ethereum hashrate dynamics, H/s. Data: Glassnode.

Despite the correction after the new all-time high, the Bitcoin hashrate, correlated with price, rose by more than 8%. This signals miners’ confidence in the long-term prospects of the first cryptocurrency.
Against the backdrop of the rapid price rise, Ethereum hashrate rose by 21%. This points to high profitability and renewed interest from domestic miners in mining the second-largest cryptocurrency.

Bitcoin miners’ revenue by month, $m. Data: Coin Metrics.

Ethereum miners’ revenues by month, $m. Data: Coin Metrics.

Total Bitcoin miners’ revenue in January rose 58%, surpassing the $1 billion mark.
This was the highest since December 2017.
$977.7 million of the $1.09 billion came from block rewards — a record; $112.8 million came from fees.
Ethereum miners earned $798 million in the month, beating the three-year high of $762 million.
Revenue growth was driven by ETH’s move to a new all-time high above $1,400. 40% of January inflows came from transaction fees.

Average BTC- and ETH-transaction fees. Data: Blockchair.

In January, Ethereum transaction fees rose by 220% — to $10.60 (as of 1 February).
Bitcoin transaction fees rose by 162% — to $14.44 in the same period.

On-Chain Data

Percentage of Bitcoin supply that has not moved in more than two years. Data: Glassnode.

Bitcoin price and number of addresses with ≥ 1000 BTC. Data: Glassnode.

In January, the share of Bitcoin supply that has not moved in more than two years fell by about 1.5% — possibly as long-term holders realise profits after the Bitcoin reached its all-time high.
Despite the rise in liquid supply, the number of “whale” addresses (≥ 1000 BTC) grew by 8.6%.
In January, 22.3 million addresses were active on the Bitcoin network — an all-time high.

Bitcoin price and Centralized Exchange balances, thousand BTC. Data: Glassnode, Yahoo Finance.

Exchange balances and share of Ethereum supply engaged in smart contracts. Data: Glassnode.

The ongoing trend of shrinking balances on centralized exchanges may reflect participants taking control of their funds and a reduction in temporary preference.
The supply of Ethereum on centralized exchanges also decreased amid rising ETH deployed in smart contracts. This is largely tied to DeFi activity, where there are broad opportunities for borrowing collateral and deploying spare funds profitably. It may also reflect reduced user trust in centralized exchanges.

ETH in staking on Ethereum 2.0. Data: Glassnode.

By the end of January, more than 2.8 million ETH were in the deposit contract of the new system (+32% vs. the previous period). A decline in active supply with steady demand for Ethereum could support long-term growth for the second-largest cryptocurrency.

Activity of Major Players

Grayscale

Bitcoin inflows into Grayscale GBTC trust. Data: bybt.

GBTC assets (thousand BTC). Data: grayscale.co.

In January, Grayscale Bitcoin Trust (GBTC) attracted 41,430 BTC.
The firm posted a record daily inflow — on 18 January the GBTC balance rose by 16,244 BTC (~$600 million).
As of the end of the month the GBTC trust held 648,470 BTC ($22 billion).

MicroStrategy

Having previously invested more than $1 billion in Bitcoin, MicroStrategy purchased an additional 313 BTC for $10 million. The average purchase price was $31,808. As of 1 February 2021, the company held 70,784 BTC, valued at $2.4 billion.

CEO Michael Saylor, in a Q4 earnings release, stated that MicroStrategy will continue to deploy free cash into Bitcoin and will consider new opportunities for investing.

BlackRock

The world’s largest asset manager BlackRock ($7.8 trillion) has filed requests with the SEC to approve Bitcoin futures trading through two of its funds.

Other Players

Ray Dalio, founder of hedge fund Bridgewater Associates, who previously criticised Bitcoin, did not rule out that his firm may consider investments in the first cryptocurrency.
Having invested $182 million in Bitcoin, SkyBridge Capital’s Anthony Scaramucci launched a Bitcoin-focused fund with $310 million in assets.
Kryptovalut bank Galaxy Digital founder Mike Novogratz will launch three Ethereum funds — one for institutional investors and two for retail; the firm also announced the launch of a mining-focused division.
Pantera Capital will lend to a Bitcoin fund aimed at institutional investors.
Endowments of Harvard, Yale, Brown and Michigan reportedly invested in cryptocurrency through Coinbase.
BlockFi’s lending platform filed with the SEC to launch a Bitcoin-based investment fund.
Custody provider Anchorage received a national digital assets bank license.

Key Regional Developments

President of Ukraine Volodymyr Zelenskyy was proposed for a government position to lead asset tokenisation and a national digital currency program.
At the Rivne Nuclear Power Plant, a contractor for building a mining center worth 9 million hryvnias was approved.
Rada deputies own cryptocurrencies worth 5.7 billion hryvnias.
Ministry of Digital Transformation and Stellar signed a memorandum of cooperation on virtual assets.

In Russia, the Tax Code will be amended to regulate crypto tax treatment.
The Bank of Russia set a limit of 600,000 rubles on retail investment in digital assets.
The Ministry of Justice and National Association of Private Traders and Investors on financial markets registered as an entity; one focus will be improving regulation of the crypto market.
The Bank of Russia saw demand for a digital ruble and projected higher rates for holders of accounts and deposits; experts see risks to commercial banks and question the feasibility of a CBDC launch.

Regulation

Key Appointments After the US Elections

US President Joe Biden nominated Gary Gensler to lead the US Securities and Exchange Commission. Gensler is a former CFTC chair and Goldman Sachs veteran, known for a crypto-friendly stance.
Janet Yellen was appointed to the position of Treasury Secretary. She has in the past described Bitcoin as a speculative asset used to finance terrorism, and promised to monitor the industry after her appointment. She later called for a “balanced” fintech regulation.
Brian Brooks left his post as OCC head; reports suggest Biden may appoint former Ripple counsel Michael Barr to head the agency.
Under Biden, the head of the US Commodity Futures Trading Commission (CFTC) also changed. Rostin Behnam was named acting chair, after Hester Peirce; he had advocated a level-headed approach to regulating fintech, including blockchain and crypto assets.

Other Regulatory Developments

Joe Biden froze a number of initiatives from former US President Donald Trump, including a FinCEN proposal to verify non-custodial crypto wallets. The regulator extended the discussion period by 60 days.

The US Treasury’s Office of the Comptroller of the Currency allowed national banks and federal savings associations to use public blockchains and stablecoins for settlements.

Philippines introduced mandatory licensing for crypto service providers.

In South Africa regulators again aim to develop a regulatory framework for crypto amid rising Ponzi activity.

Bitstamp tightened KYC for users in the Netherlands due to regional scrutiny. Changes require adding a withdrawal address to the white list and wallet ownership verification via photo.

A resident of the United Kingdom registered a petition to ban crypto transactions. The Financial Conduct Authority warned of risks in crypto derivatives. The region also considered regulation of crypto assets and stablecoins akin to traditional financial services; on 6 January a ban on the sale of crypto derivatives to retail investors took effect.

Head of the European Central Bank Christine Lagarde described Bitcoin as a speculative asset requiring regulation.

The Dubai Financial Services Authority will begin work on creating a regulatory framework for digital assets in 2021-2022.

Other Regulatory Developments

Joe Biden froze a number of initiatives from former US President Donald Trump. One of them was the FinCEN proposal to verify users of non-custodial wallets. The regulator extended the discussion period by 60 days.

The OCC allowed national banks and federal savings associations to use public blockchains and stablecoins for settlements.

Philippines introduced mandatory licensing for crypto service providers.

In South Africa regulators again plan to develop a regulatory framework for crypto amid rising Ponzi activity.

Bitstamp tightened KYC for Netherlands-based users; changes require adding a withdrawal address to the white list and wallet-verification via photo.

A UK resident registered a petition to ban crypto transactions. The Financial Conduct Authority warned of risks in crypto derivatives. The region also considered regulating crypto and stablecoins like traditional financial services. A ban on retail crypto derivatives took effect on 6 January.

The European Central Bank head Christine Lagarde called Bitcoin a speculative asset requiring regulation.

Dubai’s Financial Services Authority will start working on a regulatory framework for digital assets in 2021-2022.

Other Notable January Events

President Biden froze a number of initiatives from former US President Donald Trump. One was FinCEN’s proposal on verifications for non-custodial wallets. The regulator extended the discussion period by 60 days.
The OCC allowed US banks to use public blockchains and stablecoins for settlements.

In the UK, a petition to ban cryptocurrency transactions was registered.
The UK financial watchdog warned about risks in crypto derivatives. Regulators there are also considering regulating crypto assets and stablecoins akin to traditional financial services. A ban on retail crypto derivatives took effect in January.

Regulation

Key Appointments After US Elections

US President Joe Biden nominated Gary Gensler to head the US Securities and Exchange Commission. Gensler is a former CFTC chair and Goldman Sachs veteran, known for a crypto-friendly stance.
Janet Yellen was appointed to the post of Treasury Secretary. She previously described Bitcoin as a speculative asset used to finance terrorism, and promised to monitor the industry after her appointment. Later she called for a balanced approach to fintech regulation.
From OCC, head Brian Brooks left. Media suggested Biden might appoint former Ripple advisor Michael Barr as head of the agency.
Under Biden, the head of the US CFTC was also replaced. Rostin Behnam was named acting chair, previously urging a neutral stance on financial technology including blockchain and crypto assets.

Other Regulatory Developments

Joe Biden froze a number of initiatives from former US President Donald Trump. One was the FinCEN proposal to verify users of non-custodial wallets. The regulator extended the discussion period by 60 days.

The OCC allowed national banks and federal savings associations to use public blockchains and stablecoins for settlements.

Philippines introduced mandatory licensing for crypto service providers.

In South Africa regulators again plan to develop a regulatory framework for crypto amid rising Ponzi activity.

Bitstamp tightened KYC for Netherlands-based users; changes require adding a withdrawal address to the white list and wallet ownership verification via photo.

A UK resident registered a petition to ban crypto transactions. The Financial Conduct Authority warned of risks in crypto derivatives. The region also considered regulation of crypto assets and stablecoins akin to traditional financial services; on 6 January a ban on retail crypto derivatives took effect.

Head of the European Central Bank Christine Lagarde called Bitcoin a speculative asset requiring regulation.

The Dubai Financial Services Authority will start work on creating a regulatory framework for digital assets in 2021-2022.

Other Notable January Events

Robinhood faced a scandal over Reddit’s battle with Wall Street. A group of Reddit traders pursued GameStop (GME) stock in response to the hedge fund Melvin Capital’s large short position. In January, GME rose from $17 to $483, and losses to Wall Street bears exceeded $19 billion. The move evolved into a broader fight against large players.

Robinhood stopped trading GME, AMC and Dogecoin, which was also pumped up. Later, Robinhood co-founder explained the halt as technical difficulties amid a surge of users. Binance founder Changpeng Zhao said his platform faced rapid inflows and had trouble generating Dogecoin addresses.

Nevertheless, users filed a class action accusing the service of “deliberate and conscious” denial of access to investment for private traders. In Congress, lawmakers plan to investigate potential collusion between Robinhood and hedge funds. Hearings with the platform’s co-founder are scheduled for 18 February.

The WSB movement proved a source of inspiration for crypto enthusiasts. Beginning r/Bitcoin, it saw a surge in DOGE interest as the price aimed at a $1 milestone; DOGE jumped by 1,000% in 24 hours, to a new high of $0.0875, entering the top-10 by market cap and briefly displacing Cardano from sixth place.

Elon Musk’s Bitcoin stance

SpaceX and Tesla chief Elon Musk did not limit himself to Dogecoin. On 29 January, a Bitcoin hashtag in his Twitter profile bio triggered a rally from about $32,000 to $38,000. A later comment, “Looking back, this was inevitable,” linked to the increases in listed assets and was recorded in several Bitcoin transactions.

In a Clubhouse podcast a few days later, Musk admitted he is a Bitcoin supporter and said he would approach posts with caution given their market impact.

However, Musk noted that he did not invest in Bitcoin and, despite longstanding urging from his circle, “was late to the party.”

WSB hype attracted new crypto users

At the start of January, 775,000 people subscribed to the Reddit subforum r/WallStreetBets; by the end of the month, subscribers rose to 8 million. The movement reflected in crypto communities across Reddit. The r/Bitcoin community grew by about 200,000 in the last week of January, reaching 2.2 million.

Subscriber growth for the r/Bitcoin subreddit on Reddit. Data: FrontPageMetrics.

A similar influx of users was observed in threads dedicated to Ethereum, Dogecoin and cryptocurrencies in general.

Subscriber growth for r/Bitcoin on Reddit. Data: FrontPageMetrics.

The r/SatoshiStreetBets subreddit saw a rapid build-up in followers, rising from 15,000 to 250,000 in a week.

Growth in followers of cryptocurrency exchange accounts on Twitter. Data: socialblade.

The trend of new followers for leading exchanges on Twitter rose roughly threefold by the end of January, from under 5,000 to about 15,000 per day.

The Reddit WSB episode demonstrated how social-media communities can influence prices across assets, regardless of big-cap resistance. Investors should look to Reddit for potential pumps or negative media framing that can create market-moving narratives — as with silver.

Twitter activity from Elon Musk proved to move more than just the Tesla stock or adoption of Signal/Clubhouse — it can move Bitcoin’s price.

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