Willy Woo Profile picture
Pioneering on-chain analysis; the art of extracting investment signals from the Bitcoin blockchain. My forecasts available on https://t.co/H7cQs873aW
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21 Nov
Old hands have been selling into this rally since the start of Nov (BTC @$13k).
Here's a more precise view of it:

Dormancy tracks the how long on average the coins have been latent in wallets per coin that was transacted.

This chart filters for only transactions between different investors. (@glassnode data)
It used to be that peaks in destruction or dormancy would be a bad sign for the market as old coins have more experienced masters, thus smarter money; this would predict a price drop. These days not always, OG whales also sell bottoms. Smarter money has arrived.
Read 4 tweets
6 Nov
#MarketUpdate THREAD

The most organic pump I've seen in years.

This was not a squeeze from derivatives traders but from solid organic buying.
Exhibit A:

A ridiculous amount of coins were scooped up and moved off to individual wallets.
Zooming out, putting this into perspective, it's the largest one day scoop up in this 5-year chart.
Read 10 tweets
29 Oct
First signs of de-coupling behaviour spotted between BTC and stocks.

Buying from an influx of new users provides price support preventing speculators from trading the correlation downwards.

NVTP approximates a valuation for BTC with organic investor velocity on the blockchain. Image
Another explanation of this, from 2 months ago when we were doubtful it would happen:

Read 5 tweets
27 Oct
#analysis THREAD

Here I'll show that investors already consider BTC a safe haven under on-chain capital flows.

Common wisdom that BTC is "risk-on" is a fallacy; solely a consequence of trader liquidations on derivative exchanges.
During the 2 months of the COVID "correction" BTC price went from $9k to $9k with very quick and deep price rejection below $7k. Even traders rejected sub $7k valuations.
As fears of COVID swept the economy, investors moved into Bitcoin. You can see this in the NVT Price Chart which values BTC according to on-chain investment velocity.
Read 9 tweets
22 Oct
On-chain HOLDers: 23.4m
Unique users on exchanges: 101m
Total on-chain participants: 187m (upper bound)
PayPal userbase: 487m

So yeah, PayPal is bullish AF.

Full commentary and datasources threaded below, worth reading 👇
There are 23.4m clusters of addresses that represent active (non zero balance) HODLers currently seen on the #Bitcoin blockchain. There is an upper bound of 187m participants that have come in and out of Bitcoin.
Nobody exited Bitcoin before the advent of Mt Gox, the first Bitcoin exchange with traction.

The red line tracks participants, blue line actively HODLing coins. You can see some people sold out after MtGox provided the means.
Read 10 tweets
21 Oct
User base:
PayPal 346m+
Bitcoin 187m+

This is a big deal.

Estimating how many HODLers of BTC from on-chain forensics is from the incredible work of @glassnode.
I love how this log chart starts off as total user count of 1; Satoshi Nakamoto ♥️.
Datasource: new participants coming into Bitcoin (accounting for clustering of wallets belong together), then cumulatively add it together.

@glassnode link (premium data which is pay-walled): studio.glassnode.com/metrics?a=BTC&…

Read 5 tweets
18 Oct
I was going to tweet something tongue-in-cheek about #gold's inflation bug where new supply rains down on the planet unchecked by their miners.

Instead I'll do a researched thread on space mining, it's talked about, but gold-bugs don't understand its viability and timeline.

10% of near Earth Asteroids are more accessible than the moon. Accessibility is measured in energy terms (delta-v, a unit of speed), essentially it's the speed a rocket needs to hurl a probe / mining equipment to intercept the destination.
Delta-v energy requirements (km/s):

9.6 Earth -> LEO (low earth orbit)
6.4 LEO -> Lunar surface
10.7 LEO -> Mars surface

Less than 6.4 from LEO to 10% of near earth asteroids. And to 1.0 - 2.0 to get materials back to Earth.
Read 10 tweets
17 Oct

This is short term technical analysis instead of my normal fundamentals; be warned short term analysis is much lower reliability, more for casino players.

SUMMARY: I suspect the last CME gap (what's left of it in green) may get filled.
Peering into price action happening at spot exchanges, I'm seeing hidden distribution. There's volume sell off that's not yet reflected in price.

Upper pane is price, lower pane is my own view of what's really happening on spot exchanges.
Then there happens to be this fractal resemblence to a Wyckoffian Distribution (sell-off pattern).
Read 5 tweets
16 Oct
A case for SPX bull.

SP500 tracks the top 500 large cap stocks.

All highly successful companies are tech companies of their day, new tech gains a leveraged advantage over competitors.

Internet tech is increasingly dominant...
Let's look at the make up of the top 10

1 Apple
2 Microsoft
3 Amazon
4 Facebook
5 Google (A shares)
6 Google (C)
7 Berkshire Hathaway
8 Johnson & Johnson
9 Visa
10 Procter & Gamble

Notice the dominance of tech? Visa is tech also in that it facilitates Internet transactions.
The current pandemic has the impact of driving businesses into HIGHER efficiency, not lower.

Zoom vs Jet travel
Your lounge vs the business lounge
Digitisation of business processes needed for location independence

Even if you're bricks and mortars you now get more efficient.
Read 5 tweets
13 Oct
NVT Ratio, measures Bitcoin's ratio of investor activity to capitalization. I first described it as Bitcoin's equivalent of a PE Ratio.

Presently NVT is at undervaluation levels equivalent to the COVID19 white swan price bottom. Very bullish.
“Investor activity” is predicated on on-chain volume. This is because when BTC moves between wallets between two different participants, we assume there was a payment for it off-chain (fiat or alt-coin). It’s an imperfect measure but approximates what’s going on.
As more volume continues to trend off chain into layer-2, NVT drifts higher as investment activity becomes invisible to the chain. I tried many methods, the best was simple long term moving averages to track the new zones of buy and sell. It works if the L2 trend is gradual.
Read 4 tweets
9 Oct
This is my study of Bitcoin's market cap gain per dollar of net capital captured. It's presently sitting at $3.30 of price gain per dollar invested.

Some interesting findings below...

Reflectivity is increasing over each macro cycle! This is the tendency of HODLers to hold onto their coins harder as price increases.
I had expected reflexivity to increase during the mania phase of BULL markets, but it looks quite constant from the last two cycles.

This tells us that mania phases are driven by equally significant capital instead side effects of supply drying up.
Read 6 tweets
9 Oct
I'm retracting this statement. It was originally based on estimates by @fundstrat for every dollar going into "crypto" in 2018.

It doesn't look like the right number for BTC from a quick glance at the data. BTC is very liquid.

Here I'll lay a method to estimate it.
Realised cap approximates the total capital current investors paid for their coins by peering into the blockchain and using the time (and therefore price) at which the coins moved into their wallets.

Right now Bitcoin's cap is $202b for $116b of capital invested.
So all-time impact is $1.70 per dollar invested.

For the impact of the latest dollar, we need to take the current slope of the market cap (change in cap) and divide by the latest slope of the realised cap (change in money invested).

Depending on market phases it changes a lot.
Read 5 tweets
7 Oct
When coins on spot exchanges drop, it's a sign that new buyers are coming in to scoop coins off the markets and moving them into cold storage HODL, we are seeing new HODLers right now. Very macro bullish.
It's even more exaggerated with global exchanges.
First scoop up of coins coincided with WSJ press coverage of Bitcoin as a legitimate investment vehicle off the back of the Winklevoss ETF news. It fueled the 2017 bull market.

The latest coincides with @michael_saylor's timeline of research into buying Bitcoin for $MSTR.
Read 5 tweets
5 Oct
1) Spot price: $10k. Futures price: $10k. Resistance is $10k.

2) Traders squeeze futures past resistance, shorts liquidate; cascade of buying. Futures jumps to $10.5k.

3) Market neutral arb: I buy $10k spot & short $10.5k futures until they balance. Spot markets get bought up.
It's important to understand that what goes up, must come down (vice versa), as there's no net capital flowing in from this zero sum game.

Only spot investors injecting new capital can impact the organic valuation of BTC.

Derivative traders only add short term price whipsaws.
Squeezes define most aspects of BTC's price chart as we are in the era of derivatives volume dominance.

You can see these barts on every time frame. I've marked in yellow the stop-loss levels, look at the volume bars showing the cascade of buys as shorts get liquidated.
Read 4 tweets
30 Sep

We're seeing a spike in activity by new participants coming into BTC not yet reflected in price, it doesn't happen often. This is what traders call a divergence, in this case it's obviously bullish.

Chart by @glassnode
We're seeing another impulse of coins changing hands completing.

My interpretation is that the last pulse was take profit, halting the downward move; this impulse should be the one that drives us upwards.
The other interpretation is it's an impulse to push us downwards, but that seems unlikely given OBV (an indicator looking at volume movements) is showing quiet accumulation is taking place.
Read 6 tweets
28 Sep
My 3rd and last tweet on BTC's de-coupling from traditional markets via it's own adoption s-curve of HODLers.
We're at the early adopter phase in Western countries, some higher inflation countries are now broaching early majority according to this chart from Statista.

(And yes, the high monetary inflation the world is undergoing right now is growth steroids for BTC HODLer adoption.)
There's more active onboarding happening now than at the mania phase of the 2017 bubble. You can look on-chain, you can talk to wallet providers, you can talk to exchanges.

Read 10 tweets
23 Sep

This latest pull back did not come with the usual movement of coins on-chain, the sell-off therefore was fueled from coins on exchanges. Without large volumes of coins moving from wallets I cannot see sufficient sell-side supply to push prices down with much gusto.
It was wise to move to USD over the weekend just on the view that stocks looked very week in its technical setup, which did play out and did pull BTC downwards, but certainly the large swing trades happening with coin movements from wallets is still in bullish mode.
While I've heard talk of bearishness down to even 7k, I don't see fundamentals supporting this as a likely event.

On spot markets (Binance listed below), we have plenty of bids below this level and a liquidity gap above through to 10.8k-11k.
Read 4 tweets
18 Sep
Some takeaways from @APompliano's interview with @michael_saylor, CEO of MicroStrategy, after their 38,250 BTC buy ($425m).

Plot goes: "I'm a good thinker and a large financial player, this what I found researching Bitcoin coming from outside of the industry"

Read on...

Michael trained as a rocket scientist, MicroStrategy sells business intelligence software for large clients.

A very engaging interview. He reminded me of this character (The Big Short).
They had a $0.5b of spare cash on the books with no need to deploy it in the foreseeable future.

Meanwhile the assets you really want (real estate, ivy league education, etc) were inflating against their USD stockpile at a real rate of 7% per annum.
Read 12 tweets
16 Sep
Simple 128 Day MA back test since 2012.

1 BTC turns into 10.5 BTC.

Assumes spot selling to USD when crossing below MA and 0.2% fees.

I'm just answering the Q, not recommending HODLers trade.

You would have had to stomach a loss of up to 38% of your BTC at times doing this.
Correction. This is a 1x margin long-only strategy.
This is the correct model. Sell spot to USD when 128 DMA crosses under.

The original chart was a 1x margin long on BTC when crossing over. Few could have done that as margin trading was unavailable in the early days (unless you did it via a cash loan by traditional means).
Read 4 tweets
15 Sep
This is an on-point Q right now. Short answer is yes on-chain is relevant as whatever investors are doing, whether it dumps or pumps, for reason A, B or C, then it shows up on-chain.

Let's do a long form thread on this topic, let's call it "The history of BTC price correlation"
A couple of years ago Bitcoin was marketed as the new uncorrelated asset, thus fund managers really needed to have it as part of their portfolio else they would not have a portfolio that would be hedged for all situations.
BTC was uncorrelated because there was a firewall between traditional macro investors and Bitcoiners. That's to say cypherpunks, tech-heads, purveyors and consumers of illicit drugs, and die hard libertarians are NOT typically the guys moving money in macro markets.
Read 10 tweets
14 Sep
Macro update:

Another impulse of coins changing hands has completed, the next directional move over the coming weeks is likely upwards. It's very unlikely we'll see any kind of a catastrophic dump in price from here.
BTW, the previous chart was an expansion of this tweet from over a week ago. "Local on-chain switching bullish"

I'm still cautious of another short term dump to fill the gap but so far it's looking like it's been front run for liquidity which is strongly bullish if we break resistance here. There's a lot of bids in the spot orderbooks wanting to snap up the gap in the mid-high 9000s.
Read 6 tweets