Logarithmic growth→

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Logarithmic regression has proven itself to be the best forecasting tool for BTC. Exponential regression overshoots actual growth rates over long time horizons, and logistic analysis requires very strong assumptions regarding the inflection point and estimated max price. Again, any type of analysis should not be used in isolation. Rather, it should only serve as a fraction of evidence to come to a sound conclusion.

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UXTO Analysis→

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Bitcoin uses a curious accounting structure called a UTXO — an Unspent Transaction Output. All UTXOs are timestamped by the transaction/block in which they were created. Since all bitcoin in existence is contained in some UTXO, this means that all bitcoins have an age: not the age/time when that bitcoin was first mined, but when it was last used in a transaction.

Since Bitcoin stores its full transaction history in the blockchain, it is possible to look backwards and analyze the age distribution of UTXOs over time. Unchained Capital first analyzed Bitcoin’s UTXO history a few years ago and what we learned encouraged us to start our crypto-lending product. We are now sharing our analyses publicly because we think they are fascinating and informative. Let us know if you agree.

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Liveness→

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Liveliness is new quantitative measure that gives insight to shifts in HODLing behavior.

Whenever someone moves Bitcoins there is a record of that on the blockchain. The blockchain records the move’s time point, the amount and the source of every Bitcoin involved, which again discloses the length of the recent holding period. Such an insight is unique to an asset tracked on a blockchain, and is not attainable in traditional financial markets. Let’s use this information to derive a quantitative measure that gives more insight to investor’s behavior than those available in traditional markets.

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Mayer Multiple→

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Introduced by Trace Mayer as a way to gauge the current price of Bitcoin against its long range historical price movements (200 day moving average), the Mayer Multiple highlights when Bitcoin is overbought or oversold in the context of longer time frames. It`s worth noting as the market becomes larger and less volatile, the peaks are becoming less exaggerated. This is because a 200 day moving average baseline is a static yardstick against an ever growing, more stable, Bitcoin market.

The Mayer Multiple is calculated by dividing the price of Bitcoin by its 200 day moving average.

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Adamant Capital Bitcoin Report→

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We suggest two new ways to measure changes in Bitcoin saving behavior:

  • Relative Unrealized Profit/Loss Ratio (≈investor sentiment)

  • HODLer Position Change (≈insider buying/selling)

Also introduced is the Liveliness measure, which reflects the extent to which a cryptocurrency is meaningfully used by savers.

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Network "Momentum"→

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There have been some exciting developments in blockchain analysis over the past few months. Highlights include:

  • Willy Woo’s NVT Ratio and Dmitry Kalichkin’s NVT Signal

  • Recent work presented by Nic Carter at this year’s Honey Badger conference

  • The subsequent MVRV (Market Value to Realised Value) paper written by Murad Mahmudov and David Puell

This sort of analysis is valuable and unique to the world of cryptoassets. For the first time, absolutely anybody who is investing in a particular asset can observe its underlying activity and performance — by using blockchain analysis.

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NVT Ratio - Willy Woo→

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In traditional stock markets, price-earnings ratio (PE Ratio) has been a long standing tool for valuing companies. It’s simply the ratio of a company’s share price to its equivalent earnings per share. A high ratio describes either over valuation or a company in high growth.

What would be the equivalent in Bitcoin-land? We have a price per token, but it’s not a company so there are no earnings to do a ratio. However since Bitcoin at its essence is a payments and store of value network, we can look to the money flowing through its network as a proxy to "company earnings”.

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Introducing Realized Cap→

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The motivation for the creation of Realized Cap was the realization that “Market Capitalization” is often an empty metric when applied to cryptocurrencies. Market Capitalization, borrowed from the world of equities, is calculated for cryptocurrencies as:

circulating supply * latest market price

However, unlike with equities, large fractions of cryptocurrencies tend to get lost, go unclaimed, or become otherwise inert through bugs.

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Kalichkin NVT→

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In a traditional PE ratio, the earnings metric in the denominator is used as a proxy for the underlying utility of the company created for the shareholders. While cryptoassets don’t have earnings, one can argue that the total value of transactions flowing through the network is a proxy for how much utility users derive from the chain.

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Puell - Delta Cap→

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Delta Capitalization

Delta cap is, as seen next, a hybrid of sorts — half “fundamental,” half “technical.” It is calculated through the following formula, measuring the difference between two long-term Bitcoin moving averages:

DeltaCap = RealizedCap - AverageCap

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Black Scholes Adaptation For Crypto→

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Many have written on cryptocurrency valuations as “bubbles”, implying that token network valuations are inefficient. Instead of the price reflecting future potential value, they believe that people are investing blindly and the price is going up simply because others believe it will continue to increase. The natural conclusion of this phenomenon is a sudden downturn as the bubble pops.

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Clearblocks - Metcalfe's Law for Crypto→

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In the 1980s, Robert Metcalfe, the inventor of Ethernet, proposed a formula:

“The value of a telecommunications network is is proportional to the square of the number of connected users of the system (n²).”

Since its inception, “Metcalfe’s Law” (M) as it is now known, has become an influential formula for studying network effects and valuing online networks.

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Blockchannel On Velocity→

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Valuation methodologies have historically lagged behind the development of the assets they represent. While the Dutch East India Company became the first entity to sell stocks on a public exchange in the early 1600s, it was not until the 20th century that a comprehensive framework for deriving the fundamental value of equity securities was developed. What Graham and Dodd benefited from in 1934 that their predecessors perhaps lacked was a broadly-accepted philosophy of disclosure (eventually codified in the Securities Act of 1933) and, more importantly, a reliable accounting system with unified measurement standards and practices—a common language for discussing value. Without rules of disclosure and requisite accounting conventions, current attempts at studying cryptoasset fundamentals will descend into the Confusion of Confusions that described seventeenth century stock market investment advice.

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Ken Alabi - Metcalfe For Crypto→

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Digital blockchain networks have been around for nearly a decade. Digital contracts and cryptocurrency transactions between users on a blockchains, for instance, result in a de-facto network of those users connected in digital space. Due to the fact that these networks are online and published on public ledgers, the blockchain, data on the network is more readily available than most prior networks. This allows us to analyze these networks in unprecedented ways, and derive macro-mathematical relationships or models between entities on the network.

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Burniske - INET & MV=PQ→

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Recently, an increasing number of crypto market participants and observers have become interested in a framework for valuing cryptoassets. Over the years many a dinosaur has proclaimed bitcoin valueless, an asset worse than tulips (at least with tulips you got a flower). Now they’re trying to figure out how valuable these assets really are. That’s a big win for the magic internet money community.

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