The CryptRowe Newsletter provides Math, Stats, and Data insight around the current state of Bitcoin and other Digital Assets. Whether you’re new to Crypto, have some experience, or are a seasoned investor or institutional fund manager, this newsletter is for you.
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Table of Contents
Summary (TL;DR) ✅
Long-Term Charts 👴🏻
Shorter-Term Charts 👦🏼
Price Levels 📈
Other Interesting Charts 🧐
Lol of the Day 🎉
1: Summary (TL;DR) ✅
This section contains a short-and-sweet summary for the casual investor who only has time to check their portfolio less than 30 minutes a week.
Wow, what a few weeks. Here are two highlights:
One of the largest exchanges in crypto (FTX) and its leader Sam Bankman-Fried (SBF) were exposed to have been running a shell-game/ponzi on their users and lost somewhere between 2 and 10+ Billion dollars of clients’ funds. Maybe more, maybe less. Crypto markets crashed as people started to try and pull their assets off of exchanges, potentially exposing other exchanges that don’t hold clients’ assets 1:1 (fractional reserve systems).
Inflation came in slightly lower than expected and markets reacted by frothing at the mouth and rallying higher at the hopes of a future pivot (neutral or cutting rates instead of raising them). Powell reiterated that he is committed to getting inflation down and is in no way dovish at this time. There seem to be a disconnect between what the markets want (rallying stock prices and risk assets) and the reality of the path the Fed sees for themselves (higher raters for longer, more pain until something breaks).
I have so many thoughts on both of these topics 🙃. For now, I will spare you and just try to answer, “What does this mean for you?”
First, I just want to say I hope you’ve been at least partially listening to me over the last few months and protected your capital and stayed in cash as much as possible. I know I’m not always right, but my caution has been warranted and I hope it helped put you in a stronger position.
Second, if you lost funds with FTX, I am sorry. You got taken advantage of and lied to. It wasn’t your fault. The victim should never feel shame or guilt. It can feel violating to get taken advantage of by someone you thought you could trust, be it a person or organization. You are not alone and it is and can and will get better.
Third, I encourage any reader here to spend some time learning about why I primarily advocate for Bitcoin instead of “crypto” or any alternative kind of coin. There’s plenty of resources out there on why Bitcoin is the only actual decentralized tech in this space and why I’m betting on it being the form of digital gold that wins out in the end and is a great long term investment. One article to start with might be what I wrote a while back about altcoins, Web3, and DeFi (click here to read).
Fourth and finally, I think given the FTX contagion still to play out in the weeks and months to come combined with the Fed still raising rates and performing QT I am absolutely not bullish here. Cautious, neutral to Bearish. I don’t think we’ve seen the worst yet, but as always, happy to be wrong. For those still thinking a Fed “Pivot” (from raising rates to holding them steady or cutting) will save their portfolios, think again:
I think what most folks should actually watch for is a return to some form of QE, but more on that in the future.
Long Term, Bitcoin is still in a great long term buying opportunity with a 100% historical chance of positive returns after both 180 days (see last Newsletter) and 365 days (see chart below). This time could be different, yes - and in some ways I’m betting on it being different because of the Macro landscape. I deployed some of my cash allocated to Digital Asset investing around $20k and am waiting for lower to deploy more (Ideally between $14k and $10k if we get there which is looking increasingly likely.)
Shorter Term, the bullish confidence we saw last week was crushed by the FTX news. I still think it would have been a bull rally within a broader bear market but we’ll never know now. Unless BTC reclaims above $20k I think we see further down - either in a larger capitulation or a slow bleed (more painful imo).
2: Longer Term Charts 👴🏻
Charts in this section help us identify longer term, HTF (High Time Frame) trends.
The Long Term Aggregate Bitcoin On-Chain indicator (below) combines about 14 On-Chain and Technical Analysis indicators.
Well the under-valued-ness of the Bitcoin network continues. We are (still) in a long-term, historically great buying opportunity period for Bitcoin (i.e. good long term investment opportunity). In this recent visit down here, we are hitting new lows. The question to consider is “how long could we stay here” and “how much lower can we go?”
The following (below) eval tool takes the Long Term metric above and tells us “well, how good of an investment opportunity is it right now though?” Each row is a value range, and the colored dots tell us (includes all data points from the “from date”) what the forward return was for that data point N days forward (N says in the chart title). The Red bars are the Medians and the Black bars are the weighted averages (means)
We are back into the lower row now, with the Median and Mean historical returns after 365 days around 35x and 38x, respectively.
As a reminder, historical performance isn’t always an indicator of future reality, but it can give us good probability guesses. And I’m less “sure” on any sort of estimations for “multipliers”, and more concerned with “positive / negative” return probabilities.
3: Shorter Term Charts 👦🏼
The Binary Aggregate chart I built combines some of the metrics I look at for confluence of momentum. Each of the metrics has a “above/below” signal that helps show whether it’s a good time to buy or not. I just put them all together. It uses the: Market Realized Gradient Oscillator, Hodl Wave Crosses (24h-1m and 1m-3m), Heikin Ashi’s. For sustained run-ups we usually need to see floods of green on all indicators.
Well the green did turn out to be a fakeout. Back to the desert folks for now.
The % Change Accumulation Trend (below) divides up Bitcoin entities and addresses into quantity-owned based cohorts. So, the 10_100 cohort owns between 10 and 100 Bitcoin. We then look at the % change from N days ago (says in chart title) and then color that based on the % change (red for selling / distribution and green for buying / accumulation).
As a reminder for this chart I prefer the Entity section over the Address section (Addresses are raw and can include exchanges shuffling coins around - false positives, but for Entities you have to trust the Entity algorithm and also be aware that some transactions might change categorization over time as data further solidifies).
Small fish (<1 BTC) and larger whales (10k-100k BTC) are stacking hard but 1k-10k whales are selling off. Interesting…
The Cohort Divergence chart below compares two cohorts (named in the title) and checks whether they are both adding to their holdings, both subtracting from their holdings, or doing one or the other (so four possibilities). Dark Blue means both are buying, Red means both are selling, Orange means the “smaller” cohort is buying and the “bigger” cohort is selling, and light blue means the" “smaller” cohort is selling and the “bigger” cohort is buying.
Back to orange-esque which historically hasn’t been bullish. The blue dots were a top signal this time and sign of momentum that didn’t work out. I imagine if the FTX fiasco didn’t break we probably would be trading higher for now, but who knows.
4: Price Levels 📈
The Price Levels chart (below) shows relevant On-Chain and TA (Technical Analysis) Price Levels. Included is the Realized Price to Liveliness Ratio (rpl), the Short Term Holder (< 155 days age group) Cost Basis (rp_sth), the 200 Week Simple Moving Average (200w_sma), the Long Term holder (> 155 days age group) Cost Basis (rp_lth), the Cost Basis of holders aged 6 months and older (6m+), the Cost Basis of holders aged 1 year and older (1y+), the Cumulative Value-Days Destroyed (cvdd), and the Delta Price (delta_price).
We flirted with the Short Term Holder Cost Basis and 6m+ Cost Basis Cohort, but it did not last. We settled for now around the 1y+ cost basis with support at the CVDD and Delta Prices below.
Below is a Carpet Contour plot for the URPD Entity-Adjusted data. The darker the color the higher % of Bitcoin supply that last moved at that price range (divided into 1% buckets from ATH).
Price got rejected from all of that dark lava area above (i.e. where lots of BTC traded hands in the past). It currently is pausing where those yellow lines are, another one around $14k and then we hit more lava around $12k. I imagine we will visit there eventually with this downward momentum (unless we reclaim the lava area above).
Below is my attempt at Technical Analysis for you all.
Well we are entering the soft landing phase. I am skeptical we stay here but we might! You can see from the VPVR bars on the right we have low transaction volume between here and the hard landing areas 😬.
5: Other Interesting Charts 🧐
In this section I’ll share a chart that’s interesting / of note. Some of them may already be incorporated into the Long Term risk metric above. As always, these are one-off charts and should be taken into consideration with the entirety of the network, macro economics, etc.
Below shows the spent (sold) cost basis of Long Term Holders.
This chart shows us that Long Term Holders that are spending, are, on average. spending at a cost basis above where Bitcoin is (spending at a loss then, on average). The average cost basis for spent outputs right now is at about $32k buy price, so almost a 50% loss being taken on average. Not a great sign but usually happens in bear market. The question is how much more can Long Term Holders take? There has been quite a bit of HODLing going on, but it might become too much over time leading to further capitulation.
6: Lol of the Day 🎉
A lol just in case the economy or whatever else has you down.
I mean c’mon 🥰.
Closing
And that’s it! As always, if you have questions, desires for clarification, or thoughts on how to improve this letter for yourself or others please reply and let me know or reach out on Twitter.
Also, if you are interested in any kinds of individual consulting services regarding your own Bitcoin or Crypto journey (getting started, trading, analytics, learning, advising, etc.), feel free to respond to this email or follow / reach out to me on Twitter, where I also post more nuanced / individual metric-specific charts there more often.
As always, this post is free and if you enjoyed it or learned something feel free to share it 😊 🎉.
Thank you for reading!
Sincerely,
Matt Rowe
Library (Resources)
Macro All Stars
Lyn Alden, Ecoinometrics, TXMC, and Mr. Alf
Useful Threads and Articles
Data Provider: Glassnode (free on-chain charts, paid tiers available, I have T3).
My Twitter: @mattrowsboats (often provides on-chain analysis)
Crypto Learning Twitter Lists: On-Chain, Macro-Econ, and TA.
Disclaimer 1
Exercise caution, don’t lose it all. Please don’t trade on this newsletter assuming it is perfect information. Everything here is probabilistic and based off of past patterns, which may prove to be invalidated. Short time frames are subject to less accuracy as markets can change on a dime due to a variety of factors and events in the world. Use risk management as much as possible.
Disclaimer 2 (the all caps one)
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Thanks for your update Matt, always great to get your thoughts on where you think the market could be headed. Keep it up!