0/ A look back at '18 which was the worst calendar year on record for $BTC (-70%) ended w/ 5 consecutive down months and 7 of 8 only the 3rd such time that’s happened June-Oct of ’14 & July-Nov of ’11. 
1/ Looking @ $BTC's realized cap (thanks again @Coinmetrics) we saw the greatest divergence in mid-Dec b/w RC & spot price since the end of the bear market in Jan ’15 both bottoming -30.0% (this isn’t to suggest the selloff is done yet as ’15 bottomed at -43.3% vs. ’18 -30.7%).
2/ On a monthly basis December was the first negative month for $BTC realized cap vs. spot since October of ’15 and lowest since April of ’15 (and 6th lowest ever including 3 months in '11).
3/ We finished the year with the average $BTC cost basis ~8.0% lower than it was at year end ’17 only the second down year on record (2015 was the other).
4/ In terms of $BTC price volatility 2018 marked the was in the middle of the road with annualized vol of ~76% lower than ’13, ’14, and ’17 but higher than ’12, ’15 and ’16. Particularly notable given the cadence of the sell off.
5/ For the less established alt assets 2018 annualized vol was also middle of the pack on average lower than ’17 but greater than ’16 . $ETH had it’s lowest annualized vol of ~100%.
6/ While volumes were well off there YE17 / 1Q18 highs there continues to be an upward trajectory over a longer period of time on an ADV basis for the top 10 assets $BTC $ETH $XRP $BCH $EOS $XLM $BSV $LTC $ADA $XMR $DASH
7/ So where are we now? First looking at $BTC realized cap vs. market cap there is still a ~16.0% difference which is in the bottom 8.0% of observed periods back to 2010.
8/ The last time $BTC realized cap vs. market cap went negative (’14-’15) it lasted for 10 months although $BTC price started to recover at the start of that period ( as evidence by the ’15-’17 graph below).
9/ The length of the bear market to date and the divergence of RC vs. MC would put this recent bear market near the upper levels of the previously observed drawdowns as evidenced below; although there's a case to be made this should be extended given the level of euphoria in '17
10/ Switching gears to positioning December was the second lowest average funding rate for any month of $BTC on Bitmex (-0.108%) with 27 of 31 days negative. At last levels it’s in the ~50% range.
11/ The $BTC Bitfinex L/S ratio finished December with the second lowest monthly reading on record (0.795) and now sits in the bottom 30.0% at 0.9185 last.
12/ For $ETH the Bitmex funding rate is in the bottom ~13.0% last although December still saw consistently positive funding rate (0.118% average).
13/ The $ETH Bitfinex L/S ratio is now in the upper ~40% range although December finished as the 5th lowest month on record (1.320).
14/ Over a shorter term time horizon positioning data indicates we could be due for pull back; but over the medium to longer term we’ve seen what seems to be the beginning of signs of a bottom including:
15/ near record high BTC turnover, near record low divergences of market cap to realized cap plus the most consistent negative funding on Bitmex as well as a bottoming of transaction data & sentiment data (searches, job titles, etc..)
16/ As we pivot to '19 you have the launch of “institutional” infrastructure in @Bakkt @DigitalAssets @ErisX_Digital as well as the continued growth of Lightning Network for $BTC. You'll also have some newer ETF applications which will have 1 yr+ of futures data reviewed in 2H19.
17/ As we think about “Web 3.0” infrastructure highly speculative raises such as @dfinity @Algorand @hashgraph @kadena_io @polkadotnetwork , and @cosmos all are set to go live in a race for $ETH 2.0.
18. These competitors are all well funded (add live mainnets such as $EOS & $XTZ) and have created even more money out of thin air via Treasuries other ecosystem incentive funds used during their respective ICO's. Look for them to compete with $ETH for developer talent.
19/ While '18 was supposed to be the year of dApp traction we saw next to none despite the highly anticipated $REP launch. Many dApp developers blamed $ETH scaling for their poor usability. Look to see a lot of money thrown out any thing with the remote progress (e.g., $FUN).
20/ We continue to be skeptical that anything needs to be sovereign grade censorship resistant outside of money and there are natural benefits of centralization see @random_walker thread on this.
22/ On that note there's been an increased focused on "Open Finance" and "DeFi" both of which are more pipe dreams than reality but we should continue to track projects such as $ZRX, $MKR, @DharmaProtocol @dydxprotocol for traction.
23/ The reality is financial service firms are some of the most regulated globally and for any significant capital to be invested the infrastructure must be compliant as well. Not to mention ultimately interacting with fiat rails.
24/ '18 played out just as no one expected it to at YE '17 and would expect '19 to be the same way. Continue to focus on 1) Scalability Initiatives 2) Regulatory Initiatives (enforcement & approvals) 3) Institutional Infrastructure 4) UI/UX developments 5) Customer Acq Strategies
