Examining Netflows

The “all exchanges netflow” from cryptoquant.com is an indicator that measures the net amount of Bitcoin entering or exiting wallets of all centralized exchanges as a whole. The “netflow” metric’s value is calculated by simply taking the difference between the inflows and the outflows of centralized exchanges.

When the value of the netflow is positive, it means a net number of coins are moving into these exchange wallets right now. As investors usually deposit their coins to exchanges for selling purposes, this kind of signal can prove to be bearish for the value of BTC.

On the other hand, the value of the indicator being negative suggests investors are withdrawing their coins at the moment. Such a trend, when prolonged, can be a sign of accumulation from holders, and hence can be bullish for the price of the crypto.

We will always expect to see investors exhibit more extreme behavior at turning points of either euphoria or capitulation. Let’s use the following graph for reference, and show a couple of extreme examples that we can use for our reference in the future:

Inflow Spikes

Inflow spikes are where investors transfer coins to centralized exchanges, presumably for the purpose of selling them. We can see inflow spikes during capitulation points in March 2020, July 2021, and June 2022. These all represented contrarian buy points, or “exhaustion selling” in BTC at the time.

Outflow Spikes

Outflow spikes occur when investors transfer coins FROM their centralized exchanges, presumably for the purpose of transferring them to their hard wallets or cold storage. This is representative of accumulation, and not selling. We can see outflow spikes like these in January 2021, July 2021, September 2021, June 2021, and most recently in October 2022.

Using Netflow

Use Netflow as a more accurate way of judging investor sentiment. We have always used price action to identify capitulation selling vs. accumulation (only price pays!) but some of these new on-chain metrics are extremely valuable for determining the “market internals” of the cryptosphere.

The ReadySetCrypto "Three Token Pillars" Community Portfolio (V3)

Add your vote to the V3 Portfolio (Phase 3) by clicking here.

View V3 Portfolio (Phase 2) by clicking here.

View V3 Portfolio (Phase 1) by clicking here.

Read the V3 Portfolio guide by clicking here.

What is the goal of this portfolio?

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
Pillars of ReadySetCrypto. We aim to Capitalise on the collective knowledge and experience of the RSC
community & build model portfolios containing the premier companies and projects
in the industry and manage risk allocation suitable for as many people as
possible.

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.

Our Current Allocation As Of Phase Three:

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The ReadySetCrypto "Top Ten Crypto" Community Portfolio (V4)

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Read about building Crypto Portfolio Diversity by clicking here.

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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