2022 Bitcoin Overview: Price falls over 65%, on-chain transaction volume rises 36%, mining profits narrow.

In 2022, the Bitcoin market experienced significant adjustments. Affected by the tightening of global liquidity, Bitcoin ended the rising trend of the previous two years and entered a downward channel. The coin price fell below the $20,000 mark, and leading exchanges and DeFi protocols faced consecutive collapses, further undermining market confidence. This article will comprehensively review the important changes in Bitcoin in 2022 from the perspectives of the trading market, on-chain data, chip structure, mining, and application ecology.

Content Summary

1. Exchange Market

1. The price of Bitcoin has fallen by over 65% throughout the year, showing a "stair-step" decline pattern.

2. The exchange Bitcoin supply has decreased by approximately 20.20%.

3. After mid-October, the market leverage ratio fell from a high of 40.47% to around 28%.

4. The institutional holdings have moderately decreased by 4.54%, and the OTC premium rate has fallen to -44%.

2. On-chain data

1. The number of active addresses and new addresses has decreased compared to last year, but overall it remains relatively stable.

2. The annual trading volume decreased by 4.13%, but the total trading amount increased by 36.37% to 1.256 billion BTC.

3. The on-chain transaction fees are approximately 137 million USD, showing a clear downward trend.

3. Chip and Address Structure

1. The average profit chip share is 60.50%, showing a significant downward trend throughout the year.

2. The concentration of chips in the "whale" address first increased and then decreased. The number of small addresses and both long-term and short-term holding addresses have increased.

4. Mining

1. The overall network hash rate has risen moderately by 11.21%, averaging about 218.5 EH/s per day.

2. The mining profit margin has narrowed, with the revenue per unit of computing power falling by 76% to $0.06.

5. Application Ecosystem

1. The number of Lightning Network channels decreased by 18.53%, but the funding capacity increased by 46.19%.

2. WBTC circulation decreased by 24.48%, weakening its connection with the DeFi ecosystem.

The trading market has experienced significant volatility, and institutional demand continues to decrease.

In 2022, the price of Bitcoin fell from around $47,700 to approximately $16,600, a decrease of about 65.09%. The price showed a "stair-step" decline pattern, with 6 instances throughout the year of daily drops exceeding 10% categorized as "crashes."

The exchange's Bitcoin supply decreased from 2.6423 million coins to 2.1086 million coins, a drop of 20.20%. Especially, about 240,000 BTC were reduced within 11 days after the FTX incident. The market leverage first rose and then fell, reaching a peak of 40.47% in mid-October, and then falling below 30%.

The institutional open interest has decreased moderately by 4.54%. The OTC premium rate has fallen from -20.74% in January to -44.12% in December, a decline of 112.73%, indicating a continuous decrease in indirect investment demand.

on-chain activity decreased, but trading volume increased

In 2022, the average monthly active addresses for Bitcoin were 27.82 million, a decrease of 7.67% compared to last year. The average daily active addresses were 916,500, down 7.70% from last year. There were 141 million new addresses, which is a reduction of 9.50% compared to last year.

The total number of transactions for the year reached 88.99 million, a decrease of 4.13%. However, the total transaction amount reached 1.256 billion BTC, a significant increase of 36.37%. The average monthly transaction amount in the first half of the year was 135 million BTC, significantly higher than the 86.96 million BTC in the second half.

On-chain transaction fees are on a downward trend. The total for the year is approximately $137 million, with an average daily transaction fee of $1.53. In the second half of the year, the average transaction fee is $1.26, lower than in the first half.

The chip structure has changed significantly, with a noticeable increase in small addresses.

In 2022, the average share of profitable Bitcoin chips was 60.50%, showing a clear downward trend throughout the year, dropping from 74.54% at the beginning of the year to 55.77% at the end of the year. In mid-November, it was below 50% for nearly two weeks.

The total balance proportion of the top 100 addresses experienced a process of first rising and then falling, increasing from 15.03% at the beginning of the year to 15.81% in mid-June, and then decreasing again to 14.82% by the end of the year.

The number of small addresses has increased significantly. The number of addresses with a balance of 0.01-10 BTC has risen by more than 19%. The share of coins held for 1-2 years has increased the most, by more than 8 percentage points. There has also been an increase in short-term and ultra-long-term holding addresses.

The scale of mining has grown moderately, but profit margins have narrowed.

In 2022, the total network hash rate of Bitcoin rose moderately by 11.21%, averaging about 218.5 EH/s daily. The total electricity consumption for the year was approximately 113.83 TW/h.

However, the decline in coin prices is greater than the growth in hash rate, leading to a narrowing of mining profit margins. Daily mining revenue per T of hash rate dropped from $0.25 to $0.06, a decrease of 76%. It has remained below $0.10 since September.

The overall selling pressure from miners is relatively small. The annual miner position index (MPI) has an average of -0.52, with brief selling pressure appearing only at the end of March, the beginning of April, mid-June, and mid-November.

Application ecosystem development is hindered, and the connection with Decentralized Finance is weakening.

The number of Lightning Network channels decreased from 83,000 to 67,700, a decline of 18.53%. However, the funding capacity increased by 46.19% over the year, rising from approximately 3,305 BTC to around 4,760 BTC.

The circulating supply of WBTC first rose and then fell, increasing from 258,100 coins to a peak of 285,000 coins, and then dropping to 194,900 coins, with an annual decline of 24.48%. In late November, the WBTC/BTC exchange rate briefly fell below 1.

Overall, the connection between Bitcoin and other Decentralized Finance ecosystems weakened in 2022, but the infrastructure development as a decentralized payment network is still ongoing.