ID Theory Insights

18th May 2020

Dear readers,

It’s with a heavy heart that we have to inform you that this will be the last edition of Insights. It's been a privilege to provide our readers with a neutral and unbiased view of the most important metrics of the bitcoin network, but all good things must come to an end

Insights has been produced by our long-suffering analyst Lewis, who has recently caught the entrepreneurial bug himself. He will be focussing more time on his own project, an upcoming paid for crypto newsletter, Formal Verification. Lewis will be contributing to the Fund as a research analyst but will not be able to juggle producing two newsletters. We wish him all the best with his new venture, go check it out!

If anyone is interesting in learning more about ID Theory, we do have monthly newsletters for investors and anyone considering an allocation. Please reach out directly to if you would like to be added to this distribution.

Have a great week,

Graham and James

Founders of ID Theory


BTC and Gold

Gold has served as a safe haven asset for 1000’s of years.

BTC and Inverted US 2 Year Treasury Yield

In a risk-off environment Treasury yields drop (and hence inverted yields rise).


Weakening CNY may lead to a greater demand for capital flight from China.


The Swiss Franc (CHF) is a safe haven currency.


Volatility (represented by the VIX) generally increases in times of economic uncertainty.

BTC and S&P 500

The S&P 500 generally rises as risk appetite increases.

BTC Weekly SMAs and MACD

The weekly MACD continued to rise above the signal line providing stronger indication of bullish momentum.

Bitcoin Derivative Market

The Commitment of Traders (COT) is a weekly report issued by the CFTC enumerating the holdings of participants in the Futures market. Dealer/Intermediary represents the sell side, Asset Manager/Institutional represents the buy-side.

Dealers have kept a predominantly short stance while asset managers have continued to take a predominantly long stance.

Open interest shows the USD value of open contracts offered by various platforms.

Last week, CME open interest for Bitcoin futures and options reached ATHs ($502m and $142m respectively) as institutions look to build positions.


Google Trends - ‘Bitcoin’

Past 3 months - Worldwide

Google searches for ‘bitcoin’ has trended downwards since the local peak on the day of the bitcoin halvening.

Google Trends - ‘Bitcoin halving’

Past 3 months - Worldwide

Google searches for ‘bitcoin halving’ has dropped sharply indicating a sharp reduction in interest after the halving occurred.

WeChat Index - ‘Bitcoin’

On WeChat, the number of ‘bitcoin’ searches has dropped 36% from the day of the bitcoin halving.

Localbitcoins and Paxful Volume - Global

USD volume on Localbitcoins is up 3% from the previous week.

USD volume on Paxful is down 2% from the previous week.

Localbitcoins volume represents ~60% of the combined USD volume of Localbitcoins and Paxful.

Confirmed Transactions Per Day

Confirmed transactions are down 6% since last week and up 3% YTD.

Mean Transaction Value

The mean transaction value has decreased 17% for the week and is up 33% YTD.

Bitcoin Economic Throughput

Current economic throughput is down 4% since last week hovering around $2.3Bn USD but is up 59% YTD on the 7d MA (moving average).


Bitcoin hashrate (7 day moving average) is down 9% for the week. Hashrate is up 13% YTD. It is currently at 109m TH/s on the 7 day moving average.

Daily Active Addresses

The daily active addresses count for Bitcoin is down 12% from the last week. Daily active address count is up 46% YTD.

Bitcoin Days Destroyed

During the last week there has not been any significant BDD activity observed.

Realised Cap

Realised Cap (Coinmetrics, 2018) is currently standing at ~$104 Bn.


MVRV (Mahmudov & Puell, 2018) historically provides two important thresholds - MVRV above 3.7 could signal potential overvaluation and MVRV below 1 could signal undervaluation. The ratio ratio is currently at ~1.69.

Lightning Nodes

The number of unique lightning nodes on the Bitcoin network is flat for the week. The number of nodes is up 14% YTD.

Sidechain Channels and Capacity

The number of unique channels on the lightning network is down 1% from last week (28,207 total). The BTC capacity on the Lightning Network is down 2% for the week (total capacity is ~907. BTC). Liquid, Blockstream’s Bitcoin sidechain, now has a capacity of ~2066 BTC which represents 2.2x the capacity seen on lightning.

Wrapped BTC

The total value of WBTC has increased by 76% in the past week. There are 2290 WBTC in circulation, which represents an increased interest in using BTC within the Ethereum ecosystem (and by extension DeFi).

BTC Days Since All Time High


Our spotlight is on Nathaniel Whittmore and his latest Money Reimagined episode titled, “Where Bitcoin Fits in the New Monetary Order”. In this episode, he explores how Bitcoin has performed in the wake of the financial crisis as well as how Bitcoin as a non-state currency and hard asset may thrive in a potentially inflationary market.

Tweet of the Week

Our ‘tweet of the week’ is from Yan Liberman (Delphi Digital) who expands on Delphi’s State of Bitcoin 2020 report. Yan dives into the supply in wallets with 1k-10k BTC and the growth in the # of wallets holding 1k-10k BTC and provides evidence that there has been steady accumulation of BTC off-exchanges through multisig wallets and accumulation by whales throughout 2019 and 2020.

About the Author

Lewis Harland is an analyst at ID Theory and is a full-time researcher of decentralised networks and cryptoassets.

ID Theory Ltd. is an Investment Advisor for cryptoasset investment fund, IDT Crypto Asset Fund Ltd.

Interested in partnering with ID Theory or building something special? Get in touch through our website or at

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