ID Theory Insights
30th March 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 Daily SMAs
The 50d MA has crossed below the 200d MA (commonly referred to as a “death cross”) on the 25th March. The last time this occurred was October 2019 when shortly afterwards, BTC dropped from $9.5k to $7k.
BTC Weekly SMAs and MACD
BTC has kept above the 200w MA with the MACD indicating increase 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.
Dealers/intermediaries have reduced their long positions. Institutions continue to take a predominantly short stance.
Open interest shows the USD value of open contracts offered by various platforms.
Open interest has decreased overall from the previous week.
Fundamentals
Google Trends - ‘Bitcoin’
Past 3 months - Worldwide
There is a continued reduction of searches for ‘Bitcoin’ from the peak seen in the middle of March.
Google Trends - ‘Bitcoin halving’
Past 3 months - Worldwide
Searches for ‘Bitcoin halving’ continues to show an overall upwards trend over the last 90 days as we approach the halving in May.
WeChat Index - ‘Bitcoin’
Searches for ‘bitcoin’ on WeChat continue to decline since the local peak on 13th March.
Localbitcoins and Paxful Volume - Global
USD volume on Localbitcoins is down 28% from the previous week.
USD volume on Paxful is down 33% 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 down 1.3% since last week and down 14% YTD.
Mean Transaction Value
The mean transaction value has decreased 32% for the week and is up 15% YTD.
Bitcoin Economic Throughput
Current economic throughput is down 20% since last week hovering around $1.53Bn USD but is up 5% YTD on the 7d MA (moving average).
Hashrate
Bitcoin hashrate (7 day moving average) is up 5% for the week. Hashrate is up 2% YTD. It is currently at 99m TH/s on the 7 day moving average.
Daily Active Addresses
The daily active addresses count for Bitcoin is up 2% from the last week. Active address count is still up 13% 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 ~$101.4 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 ~1.06.
Lightning Nodes
The number of unique lightning nodes on the Bitcoin network is up 1% for the week. The number of nodes is up 8% YTD.
Lightning Channels
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 ~920. BTC).
Wrapped BTC
The total value of Wrapped BTC is up 1% in the past week. There are now 954 WBTC, which represents an increased interest in using BTC within the Ethereum ecosystem (and by extension DeFi).
BTC Days Since All Time High
Spotlight
According to Glassnode’s centralised exchange wallet labels, BTC holders have been withdrawing their BTC from exchanges. Net flows have been decreasing since March 18th. Overall exchange balance is now at its lowest point in ~8 months.
Tweet of the Week
Our ‘tweet of the week’ comes from BitMEX research who have provided a thorough analysis of the current funding landscape for Bitcoin and lightning development. They conclude that the finance, transparency, and distribution of financial backers are “more healthy than they have been in the past”.
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.