ID Theory Insights
9th March
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
Historically bitcoin has clearly demonstrated that it is uncorrelated to any other asset. However, given the adoption and evolving use cases of bitcoin, it can be useful to look at particular groups of assets for emerging correlation:
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 SMAs
Simple moving averages (SMA’s) smooth price histories by averaging daily prices over a given period of time. Crossing moving averages represent a shift in momentum.
This week Bitcoin’s 7d MA has moved down to touch the 200d twice in the last week but failed to cross over.
BTC and MACD
The MACD has crossed below the signal line for the first time since 20th January signifying continued bearish momentum.
Bitcoin Price Action
2020 continues to be the 3rd best performing year after 2013 and 2017 for the first 90 days.
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.
Sentiment has not shifted this week as Institutions continue to have predominantly short positions.
Open interest shows the USD value of open contracts offered by various platforms.
Fundamentals
Google Trends - ‘Bitcoin’
Past 3 months - Worldwide
Google searches for ‘bitcoin’ continues to trend upwards in the last 3 months.
Google Trends - ‘Bitcoin halving’
Past 3 months - Worldwide
Google searches for ‘bitcoin halving’ continues to show an upwards trend in the last 3 months.
WeChat Index - ‘Bitcoin’
WeChat has shown sustained search volume for ‘bitcoin’ with searches staying above 320k per day since the 8th Feburary.
Localbitcoins and Paxful Volume - Global
LocalBitcoins and Paxful are both platforms that facilitate over the counter and peer-2-peer trading for bitcoin from local currencies.
Global volume on Localbitcoins dropped 3% last week.
Global volume on Paxful dropped 6% last week.
Localbitcoins continues to have ~55% of the USD denominated volume market share over Paxful.
Confirmed Transactions Per Day
Confirmed transactions are up 3% since last week and up 14% YTD.
Mean Transaction Value
The mean transaction value has decreased 15% for the week and is up 46% YTD.
Bitcoin Economic Throughput
Current economic throughput is down 3% since last week hovering around $2.24Bn USD but is up 54% YTD on the 7d MA (moving average).
Hashrate
Bitcoin hashrate (7 day moving average) is up 11% for the week. Hashrate is up 27% YTD. Currently at 123m TH/s on the 7 day moving average and is at ATH.
Daily Active Addresses
The daily active addresses count for Bitcoin is down 3% from the last week. Active address count is still up 25% YTD.
Bitcoin Days Destroyed
During the last week there has not been any significant BDD activity observed.
Realised Cap
Realised Cap is currently standing at ~$105.9 Bn.
MVRV
Historically, two important thresholds can be observed - 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 1% for the week. The number of nodes is up 6% YTD.
Lightning Channels
The number of unique channels on the lightning network is down 1% for the week. The BTC capacity on the Lightning Network is also down 1% for the week (total capacity is ~879 BTC).
Wrapped BTC
The total value of Wrapped BTC is flat for the past week. There are now 884 WBTC.
BTC Days Since All Time High
Spotlight
Out ‘spotlight’ this week focusses on Bitcoin (and the wider cryptoasset universe) gaining certain legal statuses across different jurisdictions. Please click on the countries below to read the full articles.
Germany
South Korea
India
France
Tweet of the Week
Our ‘tweet of the week’ comes from Glassnode who highlights that the number of non-zero addresses has reach an ATH of 29.32m. Non-zero addresses are up 4% YTD.
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.