ID Theory Insights
27th April 2020
ID Theory is a London-based cryptoasset investment firm. Our weekly Insights report provides the latest key macro as well as on-chain data for Bitcoin. If you would like to receive insights directly to your inbox, you can subscribe here.
Correlations
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).
BTC and USD/CNY
Weakening CNY may lead to a greater demand for capital flight from China.
BTC and CHF/EUR
The Swiss Franc (CHF) is a safe haven currency.
BTC and VIX
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 WeeklyDaily SMAs
After breaking above its 50d MA mid-April, Bitcoin eyes a potential breakout above its 200d MA for the first time since the March 12th crash.
BTC Weekly SMAs and MACD
BTC continues its re-bound from its 200w MA (historically an area of key long-term support) in early March. The weekly MACD is set to rise above the signal line for the first time since 27th January providing stronger confirmation of bullish momentum.
Bitcoin Price Action
2020 is currently the fourth best performing year since 2013.
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.
There has been no shift in sentiment for dealers/intermediaries from last week. Asset managers continue to take a predominantly short stance.
Open interest shows the USD value of open contracts offered by various platforms.
Open interest continues to recover from the March lows, providing evidence institutions want to buy bitcoin.
Fundamentals
Google Trends - ‘Bitcoin’
Past 3 months - Worldwide
Google searches for ‘bitcoin’ still remains largely flat since the start of April.
Google Trends - ‘Bitcoin halving’
Past 3 months - Worldwide
Google searches for ‘Bitcoin halving’ continues to gain momentum in the last week as we approach the halving event in May.
WeChat Index - ‘Bitcoin’
Searches for ‘Bitcoin’ have failed to gain any significant momentum since the local peak seen in early March.
Localbitcoins and Paxful Volume - Global
USD volume on Localbitcoins is flat the previous week.
USD volume on Paxful is down 14% from the previous week.
Localbitcoins has gained market share against Paxful as volume Localbitcoins now represents ~60% of the combined USD volume.
Confirmed Transactions Per Day
Confirmed transactions are up 3% since last week and up 1% YTD.
Mean Transaction Value
The mean transaction value has increased 15% for the week and is up 22% YTD.
Bitcoin Economic Throughput
Current economic throughput is up 12% since last week hovering around $1.58Bn USD and is up 9% YTD on the 7d MA (moving average).
Hashrate
Bitcoin hashrate (7 day moving average) is down 3% for the week. Hashrate is up 15% YTD. It is currently at 111m TH/s on the 7 day moving average.
Daily Active Addresses
The daily active addresses count for Bitcoin is up 1% from the last week. Daily active address count is up 38% 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 ~$101 Bn.
MVRV
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 ~1.39.
Lightning Nodes
The number of unique lightning nodes on the Bitcoin network is up 3%. The number of nodes is up 13% YTD.
Sidechain Channels and Capacity
The number of unique channels on the lightning network is flat for the week. The BTC capacity on the Lightning Network is also flat for the week (total capacity is ~953. BTC). Liquid, Blockstream’s Bitcoin sidechain, has now achieved a capacity of ~2054 BTC which represents 2.2x the capacity seen on lightning.
Wrapped BTC
The total value of Wrapped BTC is flat in the past week. There are 1070 WBTC, which represents an increased interest in using BTC within the Ethereum ecosystem (and by extension DeFi).
BTC Days Since All Time High
Spotlight
Data from Glassnode shows that the Hodler Net Position Change remains very positive in the last few weeks as it climbs to yearly highs suggesting that that long term investors are capitalising on the discounted BTC and increasing their positions.
Tweet of the Week
Our ‘tweet of the week’ is from Dan Tapiero who highlights that Bitcoin is being sold at a premium in Lebanon (~$15k) on OTC platform, Localbitcoin. Lebanon is currently experiencing a severe economic crisis with the Lebanese Pound crashing by nearly 50% and an increase in BTC buying in the region suggests there is a desire locally to have currency outside their current fiat system that is not controlled by governments or central banks.
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 info@idtheory.io.