Doc's Daily Commentary

Mind Of Mav

How Are Crypto On-Chain Metrics Responding To War?

 

It is crucial to understand the current regime of the delta between perpetual futures and spot BTC.  Prolonged regimes of spot premium paired with trends towards additional spot premium almost always lead to short-term price reversion for Bitcoin. 

Over the last week have seen that spot premium push further, especially during the announcement of the Russian invasion into Ukraine Wednesday night EST. 

So far, today is another spot premium print despite the mean reversion following yesterday’s short squeeze.

Bitcoin/U.S Dollar, 1D

Many of the late shorts that piled in at the lows amidst the Russia panic got squeezed yesterday noon following President Biden’s speech, wiping out a fair bit of open interest. 

Curious to see if we see a further squeeze upon breaking the critical level of $40.7, but this open interest has been quite strange, as we’ve seen a slow bleed out over the last two months compared to the traditional flush out BTC loves to do. 


Open Interest Dominance

On-Chain Supply Dynamics:

In regard to supply dynamics, one of the main indications of assertive holding behaviour is HODL waves, measuring the amount of BTC supply that has not moved in each denominated cohort of time. 

Currently, 76.5% of Bitcoin’s supply hasn’t moved in at least six months, an all-time high.

Bitcoin: HODL Waves (7D Moving Average)

Illiquid supply continues to climb, indicating a flow of supply to entities who hold over 75% of the coins they take in or conversely sell less than 25% of the coins they take in.

76% of supply is currently “illiquid”.


Supply Shock Ratios

Comparing the value of stablecoins on exchanges to Bitcoin’s market cap. 

Significant increases have marked bottoms as dry powder (capital waiting to be deployed) steps into the market.

Dry Powder Ratio

Next, we look at the supply delta. This normalizes long and short-term holder supply and visualizes vital pivot points in their behaviours.


Supply Delta

Last, we look at dormancy flow.

This shows that the spending on older coins is lower than the 365-day trend.

This is another indication that these price levels are likely good to the dollar cost average for investors with broader time horizons.

Bitcoin: Entity-Adjusted Dormancy Flow

On-Chain Activity:

We’ll look at a few things.

First, we have the active address with a 7-day moving average applied, showing after April 2021, exuberance in Bitcoin never reached the same levels.


Bitcoin: Number of Active Addresses

Very similar signature in the number of entity adjusted transactions.

Bitcoin: Number of Transactions

Lastly, confluence with the transfer volume coming from transactions with a USD value of less than $100K. Another indication of lack of retail interest in BTC following April 2021.

Bitcoin: Total Transfer Volume Breakdown by Size

Closing Thoughts

The most important part of trading is discipline and patience. So, again, it’s your hard-earned money you’ll be investing, so Do Your Own Research before investing and nothing in this newsletter is financial advice.

 
 
 
 
 
 
 

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The “Three Token Pillars” portfolio is democratically proportioned between the Three Pillars of the Token Economy & Interchain:

CryptoCurreny – Security Tokens (STO) – Decentralized Finance (DeFi)

With this portfolio, we will identify and take advantage of the opportunities within the Three
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The Second Phase of the RSC Community Portfolio V3 was to give us a general idea of the weightings people desire in each of the three pillars and also member’s risk tolerance. The Third Phase of the RSC Community Portfolio V3 has us closing in on a finalized portfolio allocation before we consolidated onto the highest quality projects.

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What is the goal of this portfolio? 

The “Top Ten Crypto” portfolio is a democratically proportioned portfolio balanced based on votes from members of the RSC community as to what they believe are the top 10 projects by potential.
This portfolio should be much more useful given the ever-changing market dynamics. In short, you rank the projects you believe deserve a spot in the top 10. It should represent a portfolio and rank that you believe will stand the test of time. Once we have a good cross-section, we can study and make an assessment as to where we see value and perhaps where some diamonds in the rough opportunities exist. In a perfect world, we will end up with a Pareto-style distribution that describes the largest value capture in the market.
To give an update on the position, each one listed in low to high relative risk:
SoV/money == BTC, DCR
Platforms == ETH, XTZ
Private Money == XMR / ZEC / ZEN
DeFi == MKR / SNX and stablecoins
It is the most realistic way for us to distill the entirety of what we have learned (and that includes the RSC community opinion). We have an array of articles that have gradually picked off one by one different projects, some of which end up being many thousands of words to come to this conclusion. It is not capitulation because we all remain in the market. It is simply a consolidation of quality. We seek the cream of the crop as the milk turns sour on aggregate.

Current Top 10 Rankings:

 

 

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