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Felipe Sant Ana @Felipether
, 15 tweets, 6 min read Read on Twitter
1/ Bubbles burst only once. Bitcoin has 'bursted’ many times. After a handful of bear & bull seasons, we now have crypto-native indicators to track market emotions, imbalances and cycles. Let’s have a look at some useful ones 👇

medium.com/paradigma-capi…
2/ Goal here is to help piece together parts of a puzzle that can improve our understanding of Bitcoin fundamentals - and their impact on price - at any given moment. Thanks to @KenoShaking for the visual synthesis below.
3/ Specifically, to assess, at anytime:

👮 What's the network worth (in cash flows) to maintainers?
🎉 How euphoric vs. acclimated is the market?
📅 What’s the age profile of bagholders out there (v. roughly)?
🚢 Is the asset under/overvalued re: its usage for value transfers?
4/ 1️⃣ Market cap is a "problemetric". It’s been said over and over.

"Thermocap" can be a more appropriate measure of wealth in illiquid markets, as argued by @nic__carter. It’s found by pricing outstanding coins based on the value when they were mined...

5/ ...in other words, the value paid out to miners (hence the name "Aggregate Security Spend"), assuming a price based on the date each coin was mined.
6/ 2️⃣ Realised value (RV) presents another way of relativising “market cap”. Find it by counting all mined coins acc. to the U$ price on the time *when they were last moved*. The MVRV ratio is found dividing market value by realised value on a daily basis.
7/ MVRV gives a measure of “detachment” b/ween price discovery at exchanges and the steadier rise of unmoved coins. It's shown parabolic spikes right b4 prolonged downturns (1-2-3 weeks before 2013 and '17 bears). *MVRV-z*, in turn, is modelled to aid with predictive signalling.
8/ 3️⃣ It helps to calibrate baselines for wealth and euphoria in the market.

Also helps to calibrate perceptions on “who exactly” is the buyer/seller in the other side of the order book.

Charting the age distribution of UTXOs yields an age profile of coins outstanding.
9/ An alternative PoV highlights differences in "co-horts" between specific points in time. Below, a comparison between 31Oct2018 vs. 31Oct2017. Note: by *age profile we mean "time when coins last moved"* (not when they were mined, nor the time holders "entered" the market).
10/ 🌊 "HODL waves” is how @unchainedcap coined the tides of bitcoin transacting to and through a local price high, becoming recent and slowly ageing”.
I like too interpret them as a signal of confidence in the store of value use case for bitcoin.
11/ 4️⃣ Conversely, I think as the NVT / NVT Signal as metrics related to market confidence in the MoP narrative. NVT is akin to the P/E of stocks. Here, we divide market value not by earnings, but rather by the USD amount transacted on chain - a proxy for the network’s utility.
12/ 5️⃣ The Network Momentum is an alternative that takes into account the BTC value flowing on-chain (rather than USD equivalents). The NVT Signal is a derivative of the NVT that emphasises predictive signalling. Note how both can trigger alarms consistently ⏰.
13/ Take all these indicators w/ a grain of salt. Not only we have little historical evidence, activity in the Bitcoin network also mutates with time. Side chains are poised to ostracise one of the longest standing indicators (above), for example 👵.

14/ If you’re curious to see where these (and other) metrics currently stand, here are two folks who've done a great job laying out both bear and bull cases. Read through the threads:

🐻
15/

🐂

⛄️ Happy crypto-winter, & stay safe out there :) 🧣
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