Addresses
You can invest the smartest way on Bitcoin or other Cryptos when you follow the smart money and avoid doing like retailers. Since the beginning of the blockchain, professional investors and financial institutions (we call them the whales) always earn money whereas the small retailers (we call them the shrimps) usually lose their initial investments. That’s sad but that’s how the financial world works unfortunately.
In this small eBook I give you the indicators I use so that I know plenty of metrics about addresses. Thanks to them, I guess when retailers are massively buying (worst buying periods) and when whales are accumulating (best purchase times).
Bitcoin is a logarithmic growth asset, it works on a long-term scale. Invest during quiet and calm moments but distribute your tokens during the greedy end of the bullrun !
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Blockchain Data
Every transaction on the Bitcoin blockchain goes through it. As a consequence, number of daily transactions, fees, bitcoins transfers from a wallet to another, etc, are easily measurable.
These data are very useful to detect when we are in a bullmarket (ascending fees, high activity, lots of transactions) or in a bearmarket (low fees, low activity, a few transactions).
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Coin Days Destroyed
The Coin Days Destroyed (CDD) measures the economic activity that highlights the fact that bitcoins have not been spent for a long time (LTH coins). It’s an important alternative to looking at total transaction volumes, which may not precisely represent economic activity if the value hasn’t been stored for a significant period.
So, bullmarket tops always happen when CDD shows a huge activity is very high and vice-versa.
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Crypto Fear & Greed
Warren Buffett said that he always invested when the street were bloody and he sold his bags when the market was too greedy.
Avoid making like the retailers, the newbies & the ones thinking they’re going to be millionaire within a month. Imitate the smart & professional guys.
An index was made to measure the fear and the greed on social medias, where the retailers spend their time & share their sentiment. To be honest, it works very well !
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Exchanges Reserve
Exchanges are the main places where you can trade and sell you tokens. You have two types of behavior :
Either you buy your coins for the long term and generally choose to put them on external harware wallets (out of exchanges). This is an accumulation & bullish behavior.
Or you transfer your cryptos on exchanges, mostly for selling them (of course you can stack or farm them on exchanges, but the main bitcoins available on exchanges are often for trading). This is a distribution & bearish behavior.
As a consequence, knowing what’s the trend (accumulation or distribution) will help you to make your choice.
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Funding Rate, Open Interest & Leverages
With Bitcoin & Crypto assets’ democratization, the derivatives & futures markets have been created & everyone can now trade with leverage in the crypto market.
Unfortunately, these products often induce opposite effects to the spot market & cause movements of high volatility since the market makers cannot make everybody win.
So, if we manage detecting these periods of excess, we can potentially predict the next movements of BTC.
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UTXO
What’s an UTXO ?
Assume Simon (me) needs to pay you 10$ in BTC for a special task you did for me. For the moment, I don’t have the money but I’ll receive 3 transactions from 3 different people. One of 2$, another one of 6$ and a final one of 4$.
These 3 payments are my inputs in order to pay you. They all have a different UTXO. From these inputs I’ll make an output to pay you.
But, I need to use the 3 inputs in order to pay you, as neither of them has enough. I’ll put you as the output. An UTXO with 10$ will be created for the payment and another one will be created for the 2$ remaining. As a consequence, the 3 previous UTXO are deleted.
Finally, you’ll have an UTXO entry (10$) and so on. This is the solution to avoid the double spend of bitcoins into the blockchain.
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Technical Analysis
Technical analysis uses Price Action probabilities over time. It uses indicators such as Ichimoku Kinko Hyo, Bollinger Bands, MACD, RSI and other tools that are highly regarded in trading rooms. Thanks to them, we can accurately anticipate potential peaks and bottoms in the bitcoin market.
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Supply
The bitcoins supply indicates a lot of interesting things about the age of btc in motion, whether investors tend to hoard cryptos, or sell them, etc. Tokens that no longer move will tend to dry up the supply, which mechanically increases the price and vice-versa.
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Stablecoins
Stablecoins are fiat-currency-backed cryptos. For instance, the USDT (Tether) is back to the US Dollar meaning that for every USDT loan there is the same amount of $ that exists and that is saved.
Stablecoins movements, inflow and outflows give many informations about the investors behavior. Are institutions afraid, massively converting their cash into Bitcoin or other crypto assets, leaving the market.
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Reserve Risk
The Reserve Risk is equal to the Bitcoin Price divided by the HODL Bank. It measures the confidence of investors in Bitcoin over time.
When confidence is low and BTC price is high, risk/reward is unattractive. When confidence is high and price is low, there is an attractive risk/reward to invest in Bitcoin at that time. Investing in Bitcoin during periods where Reserve Risk is very low (meaning Bitcoin is underestimated) has produced outsized returns over time.
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Puell Multiple
This indicator mainly focuses on BTC miners as well as their mining earnings. Moreover, it also explores Bitcoin market cycles from a mining revenue perspective.
The Puell Multiple is calculated by dividing the daily mining revenue (in US Dollar) by the 365-day moving average of the daily mining revenue (in $).
Miners are the only entity that requires constant cost such as running electricity. Thus, miners’ behaviors are always linked to price to certain degree. Puell Multiple compares 365 days average estimated revenue with short-term revenue of miners.
As a consequence, the lower the ratio, the more underestimated the Bitcoin price.
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Profits & Losses
Investing in Bitcoin is quite simple in fact, but you need to control your emotions and fon’t fall in the FOMO trap.
Just like the smart money, you need to accumulate bitcoins and cryptos when the main part of the Bitcoin supply is in loss (meaning that investors that bought bitcoins are mainly losing money).
Trust me, professionals and institutions always sell when too many bitcoins are in profit (during FOMO/Bullrun times) and restart accumulating when too many bitcoins are hold in loss (during a bearmarket).
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Premium
Premiums are easy and safer ways for institutions and hedge funds to invest into Bitcoin. They can subscrib to them via famous exchanges like Coinbase for instance, or via assets manager like Grayscale (the most famous one in the USA).
It exactly works like the price. When Bitcoin is in a Bullrun, the Premium increases as the demand rises. But, when it’s over, when the demand declines, the Premium significantly decreases.
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NVT
The Network Value to Transaction is calculated by dividing the Network Value (market capitalization) by the daily US Dollar volume transmitted through the blockchain.
When NVT is high, the network’s valuation exceeds its transaction volume which might indicate Bitcoin is overvalued.
When NVT is low, it means even if interest increases, the Network Value is lagging. This is a sign that the Bitcoin price is undervalued.
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Net Unrealized Profit & Loss
Investing in Bitcoin is quite simple in fact, but you need to control your emotions and fon’t fall in the FOMO trap.
Just like the smart money, you need to accumulate bitcoins and cryptos when the main part of the Bitcoin supply is in loss (meaning that investors that bought bitcoins are mainly losing money).
Trust me, professionals and institutions always sell when too many bitcoins are in profit (during FOMO/Bullrun times) and restart accumulating when too many bitcoins are hold in loss (during a bearmarket).
Sign up & receive your free eBook. You’ll get important updates & content about Bitcoin & Cryptos. You’re obviously free to unsubscrib whenever you want.
MVRV
The Market Value to Realized Value is the total market capitalization divided by the realized capitalization.
The realized cap is a variation of the market cap that takes all the UTXO into account.
If MVRV increases, it indicates the market capitalization is outpacing the realized capitalization. There should probably be an increase of selling pressure.
If MVRV decreases, the market capitalization is going under the realized capitalization. There should probably be an decrease of selling pressure.
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Most Famous Indicators
Among the most famous Bitcoin indicators, there is the Stock-to-Flow Model, the 2-year MA Multiplier, the 200-week Moving Average Heatmap, Pi-Cycle Top Indicator, the Golden Ratio Multiplier, the Logarithmic Growth Curves, the RHODL Ratio, the Balanced Price, the Realized Price, the VWAP Ratio and many others.
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Miners' Data
You can invest the smartest way on Bitcoin or other Cryptos when you follow the smart money and avoid doing like retailers. Since the beginning of the blockchain, professional investors and financial institutions (we call them the whales) always earn money whereas the small retailers (we call them the shrimps) usually lose their initial investments. That’s sad but that’s how the financial world works unfortunately.
In this small eBook I give you the indicators I use so that I know plenty of metrics about addresses. Thanks to them, I guess when retailers are massively buying (worst buying periods) and when whales are accumulating (best purchase times).
Bitcoin is a logarithmic growth asset, it works on a long-term scale. Invest during quiet and calm moments but distribute your tokens during the greedy end of the bullrun !
Sign up & receive your free eBook. You’ll get important updates & content about Bitcoin & Cryptos. You’re obviously free to unsubsrib whenever you want.Mining Bitcoin is a real business. They spend electricity (charges) in order to mine bitcoins (revenue).
These huge companies often know something we don’t about the supply and the demand. So, when they’re inactive and don’t sell their bitcoins they’ve minted, it can indicate they’re waiting for a more interesting price for selling. As a consequence, periods the miners blockchain activity is low often correspond to great accumulation & purchase zones.
Finally, when they start massively selling their coins, like during a bullrun, it’s because they know the demand will increase and increase until the final top. These periods coincide with high miners activity.
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LTH & STH SOPR
There are 2 investors styles : the Long-Term Holders (LTH) & the Short-Term Holders (STH). Both don’t behave the same way & don’t have the same impact on the Bitcoin price.
The market will look for lots of STH losses and the most LTH losses possible even if the LTH holders are hard to make them sell their coins.
LTH supply is strong enough to influence the price. I mean if the LTH supply increases (meaning accumulation), it’s bullish for the market ; whereas if LTH supply decreases, it’s bearish.
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HODL Waves
It’s essential to know what the old coins are becoming. Are they sold, moving, saved in harware wallets ?
HODL means “HOLD” in fact. The HODL Waves represent the Bitcoin confidence trend. If the waves rise, it means old bitcoins are being stored & saved (no selling). Obviously, this behavior dry the bitcoins supply over the time.
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