ID Theory Insights
20th 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 Weekly SMAs and MACD
BTC continues its re-bound from dipping slightly below the 200w MA (historically an area of key long-term support) in early March. The weekly MACD continues to show increased bullish momentum.
Bitcoin Price Action
2020 is now currently the fourth worst 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 have now shifted to a predominantly short stance.
Open interest shows the USD value of open contracts offered by various platforms.
Open interest has recovered significantly from the March lows, indicating a resurgence in institutions that want to buy bitcoin.
Fundamentals
Google Trends - ‘Bitcoin’
Past 3 months - Worldwide
Google searches for ‘bitcoin’ has remained largely flat since the start of April.
Google Trends - ‘Bitcoin halving’
Past 3 months - Worldwide
Google searches for ‘Bitcoin halving’ has picked up momentum in the last week as we approach the halving event in May.
WeChat Index - ‘Bitcoin’
Searches for ‘Bitcoin’ has climbed 18% since the local low seen on the 12th April indicating growing interest.
Localbitcoins and Paxful Volume - Global
USD volume on Localbitcoins is up 11% from the previous week.
USD volume on Paxful is up 6% 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 4% since last week but down 2% YTD.
Mean Transaction Value
The mean transaction value has decreased 7% for the week but is up 6% YTD.
Bitcoin Economic Throughput
Current economic throughput is down 21% since last week hovering around $1.41Bn USD and is down 3% YTD on the 7d MA (moving average).
Hashrate
Bitcoin hashrate (7 day moving average) is up 4% for the week. Hashrate is up 18% YTD. It is currently at 115m TH/s on the 7 day moving average.
Daily Active Addresses
The daily active addresses count for Bitcoin is up 16% from the last week. Daily active address count is up 37% 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 ~1.29.
Lightning Nodes
The number of unique lightning nodes on the Bitcoin network is up 1%. The number of nodes is up 10% 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 up 1% for the week (total capacity is ~953. BTC). Liquid, Blockstream’s Bitcoin sidechain, has now achieved a capacity of ~1940BTC which represents 2x the capacity seen on lightning.
Wrapped BTC
The total value of Wrapped BTC is up 1% in the past week. There are now 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
This week’s spotlight comes from the ID Theory team and explores 10 reasons why crypto-networks and blockchain technology are well positioned to flourish as a consequence of the emerging crisis.
Read the full article here.
Tweet of the Week
Our ‘tweet of the week’ comes from Grayscale who experienced their strongest quarter since inception. Some of key takeaways in their report include:
Grayscale raised $503.7 million in 1Q20
Grayscale Bitcoin Trust experienced a record quarterly inflow of $388.9 million
Average Weekly Investment – Grayscale Bitcoin Trust: $15.7 million
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.