Basic Market Insights to Lower Your BP
Using simple data analytics to understand current market conditions
As we all know, crypto has had a tough month and, for guys like me who work full-time and heavily-invest in the market, it can be easy to get down about the situation.
However, there is also a lot of data out there that shows underlying strength in the industry, and I’ve been pretty happy with $BTC price action compared to the traditional global markets. The entire global economy is down for a variety of reasons. Most have some connection with the Russia-Ukraine conflict obviously, but other issues like COVID and government policy are also playing major roles.
While it would’ve been even better to see crypto break out as a solid hedge against traditional markets, we have seen reduced comparative volatility, and that’s a good sign in my opinion.
Now, it’s also important to note that I am BY NO MEANS A DATA SPECIALIST. Feel free to use my insights as a starting point for your own research, but do NOT use them to make an investment decision.
Also, if I’m way off on anything, please hit me up and let me know. I’m always looking to learn!
Total DeFi users
Although we know the market is in a lull, you can see that the DeFi space is still growing and, in my opinion, DeFi and web3 user adoption are some of the most important metrics for the future of crypto. To reach the next true bull market, like we saw in early 2021, we need to onboard more users in these areas as well as in the metaverse.
Seeing steady growth over-time gives me a lot of comfort in crypto long-term.
$BTC Exchange Reserve
No matter how much some of us want it to change, Bitcoin is still the primary market driver for crypto, and it’s not even close to be honest.
Knowing that, I always try to keep an eye on the $BTC Exchange Reserve data. CryptoQuant does a great job with this metric and a ton of others.
This chart shows how much Bitcoin is currently held in exchanges and, therefore, not in cold wallets. While this metric, like all others, is not perfect, it does give us an idea on how much selling pressure is in the market, especially among whales.
In general, more coins on exchanges means there is higher selling pressure, as this indicates that investors are staying more liquid and may be planning on selling soon. A lower exchange reserve signals that more coins are being moved to cold wallets and other off-exchange locations. This generally indicates more confidence in the market.
As you can see on the chart, the exchange reserve has continued to steadily decrease over the past 8 months or so. This is a good sign of strength among crypto investors.
$BTC Miner Reserve
The $BTC Miner Reserve is similar to the Exchange Reserve, but it’s just as important in my opinion.
It shows the amount of Bitcoin held by miners over-time. In other words, the value of the Miner Reserve indicates the amount that miners have not yet sold and, since miners are always dialed-in to the market, it’s smart to keep an eye on how they are acting.
For example, if you notice a drop in the reserve and see other signals showing that miners have started selling, it may be a good time to take some profits as prices may be dropping soon.
“The Data Never Lies”
Again, I’m far from a specialist in data analytics, but I do believe it’s important to understand the basics from a macro perspective.
As they say, “the data never lies.” Without a basic understanding of the data, you can easily find yourself swayed by sentiment, influencers, marketers, etc, and THAT can be a HUGE problem.
My recommendation: never stop learning, always read both positive and negative articles when it comes to market predictions, DYOR, and only make decisions you can live with for years to come!
References:
https://dune.com/rchen8/defi-users-over-time
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