We’re looking at on-chain and futures data. So, the big story, of course, was futures data from the last couple of months, maybe, a year. So, the diminishing of the future spread was and the movement of the future spread was very predictive of the price and, especially, the difference in how fast that went, for example, in different other coins as well. So, there are also features on the other coins and Bitcoin, Ethereum, etc.
And they move in different cadence, so the pattern between futures premiums on the different coins and the futures premiums in normal markets is very interesting and very useful in predictions, especially if you combine it with on-chain. So, we’re suckers for simple stuff. So, no big model with 100 inputs and complex stuff, we like to keep it very simple. But it takes a lot of numbers crunching like Willie said. The data sets are huge like half a terabyte right.
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The blockchain cadences then crunch it. We do all that ourselves, but you can even do something simple like realized price or realized cap. It’s so interesting to watch what’s happening there not only by looking at, for example, the short-term holders and long-term holder stuff but also by separating the coins that are in profit and the coins that are in loss and you get those very different perspectives on the same market. That as a person we would recognize as well. If you started a couple of years ago, you’re in profit two times three times 10x in profit. And you don’t mind, if the market falls twenty percent, forty percent even sixty percent, you’re still in profit. But if you just bought and you’re at a loss.
You’re looking at a 10-20 percent loss for a lot of people that are especially institutional investors. By the way or traditional investors, that’s a big loss and some of them are forced to close their positions. At a loss level like that. So, those are two very different perspectives and you can track the dynamics so you can see how many coins are there in loss, how many coins are in profit and what are they doing well. You’re doing the same stuff, but you can go in a lot of different directions with even something simple as a realized gap and I like that very much.
What we still see there in predictability? Although, I have to be frank, of course. We didn’t see the downturn from 60 to 30. We totally missed that at the risk of being called a Moon Boy which I’m called. All these signals whether you look fundamental and I mean stock to flow, for example, with that or on-chain realized cap or other metrics, or in the news. The micro news, the number of countries that are opening up to Bitcoin. Everything is positive, of course, there can be a black swan, of course, something can happen that we haven’t seen in the past or that this is a real black swan. But its volatility is low. Like Willy said that the future’s premium is low. I watch that like a hawk. If that will go up again if the leverage will enter the market again. But, even the dormant coins, the people in profit, the people in-laws. I can’t imagine unless a black swan or any other scenario that this is one of the best buying opportunities that we have seen in the entire history of Bitcoin. it’s compatible with the beginning of 2016-2011-2013 or 2012 even the beginning of the bull run.
So, it sounds like Moon Boy stuff, but that’s how I look at it. We went through a full cycle in one year right, we had the bull market in May. Then we went through a full bear market from an unchained perspective, but it doesn’t fit and not in price, of course, because we didn’t go down minus 80. So, I get that some people still waiting until Bitcoin drops to 20 or something but from all other perspectives. We are at rock bottom a normal answer is that if you would have asked that question five years ago, I wouldn’t have thought of everything that happened since. So, it’s probably something we don’t know right now that will propel us to the next levels. But if we just extrapolate from what we know a second or a third El Salvador would really change the game. If El Salvador is a small country would not be alone in Latin America, but Mexico, Brasilia or Argentina would join them that would make the case so much stronger and more difficult for the IMF to crush.
So, that’s something I really watch and then just normal demands from normal people that go through the institutions. People putting their pensions in Bitcoin, people buying Bitcoin themselves from an exchange I see it all around me. There are a lot of people that think this is a good time to buy Bitcoin and they DCA in, of course, you have to be very careful with that but I see it around me. A lot more people are asking how to set up a wallet and I think that very small adoption is also very important. That’s what we’re seeing as well. So, as more people invest in Bitcoin that’s just maybe on the institutional level. The arbitrage I think adoption is one thing mostly retail but arbitrage just getting that juicy cash and carry returns. That is not so juicy at the moment but volatility or it’s something else every time. It’s better than being on a fixed income at the moment. It’s better than minus one percent of your bank accounts or your treasury accounts.
This article is a transcription of a video made by Jamie Tree
Original video: https://youtu.be/mk-szUBNZjw
