Your handy guide to some selected indicators
>Stable Coin Supply Ratio (SSR): Measures the value of’s market cap relative to the market cap of all stablecoins. A low ratio suggests a lot of “dry powder” waiting on the sidelines ready to spur a rally, vice versa for a high ratio. 11.15 is bullish.
>>Spent Output Price Ratio (SOPR): Offers insights on profitability/losses experienced by coins moved on-chain over a given time interval. A ratio above 1, means that coins (on aggregate) are being sold for profit, vice versa for a ratio below 1;0.99is bearish: coins still being sold at a loss.
>>Stock to Flow Ratio (S2F): Bitcoin’s status as a relatively scarce commodity enables this model to gauge the current amount of Bitcoin available (stock) in relation to the amount of bitcoin mined annually (flow). Dividing the former by the latter tells us how many years it would take to produce the current stock; a higher number indicating scarcity which should theoretically lead to price appreciation. The S2F ratio currently sits around $102,212, displaying an upside of around 180%.
>200 Day Simple Moving Average (SMA): Equally weighted average of daily pricing data from last 200 trading periods. Often serves a key area of support/resistance. BTC being, staying below $41851.21 is seen as bearish.
>>Moving Average Convergence Divergence (MACD): 12-day EMA minus 26-day EMA. Paired with a trend line, representing 9-day EMA of MACD; cross above signal line taken as bullish, cross below taken as bearish; -3026.22 seen as bullish.
Open Futures Interest (All Exchanges): Total number of open futures contracts on all exchanges. Provides insight into the actions of large, institutional traders. At
$4.21 billion, the value has increased sharply since late May, seen as bullish.
Exchange Net Flows: Difference between number of BTC flowing into exchanges vs out of exchanges. Counterintuitive measure, Net inflows (positive value) normally taken as bearish sentiment, vice versa for outflows.Thus-12,788.46 BTC is seen as bearish.
Network Value to Transactions Ratio (NVT): Compares the current market capitalization of BTC in relation to the total dollar volume of on-chain transactions conducted on a daily basis. NVT serves a similar functionality to the notorious P/E ratio by assessing whether price action has outstripped transactional activity (a proxy for earnings generation). The metric currently sits at 65.7. This reading happens to be located in NVT’s normalized range, indicative of price consolidation.
What Are We Looking At?
Bitcoin only being down 1% was something of a relief on June 1 as we begin a new week/month with all sorts of mixed signals spinning our heads ‘round.
We turn firstly, foremostly (desperately) to that “on-chain” beacon of perpetual hope, PlanB’s stock to flow (S2F) model(s) which, borrowing from an old metals metric, attempt to estimate a long-term value of “digital gold” based off estimated future supply; over the past year, this measure (created by a pseudonymous fortysomething Dutchman) has been driven by the most recent quadrennial miner-rewards-halving cycle (that began last May and will wind down/renew again in May 2024) and, suffice to say, a quick check of this signal can be easily summarized like this: still quite bullish.
To recap, our favorite on-chain signal, themodels, is STILL EXTREMELY BULLISH.
Next, we’ll take a gander at some technical signals.
As long as there’s a, there’ll be a Bitcoin price Simple Moving Average (SMA).
BTC Price SMA is the average of the closing price of the largest digital coin over a variety of time periods.
Take, for example, the 200-day BTC SMA, one of the most-watched measurements in all of chartdom.
Two basic signals for the gleaning:
If the price is above the rolling SMA, this would seem to signal a bullish movement.
If below, that seemingly signals a bearish movement.
For going on more than a week, BTC has traded below the 200-day SMA.
Which is about $40,000; and now goes by another alias: Resistence Zone.
Derivatives data could be lumped into a signals category one might call “fundamentals” but we have not found much use in, say, tracking the total open interest across all of the BTC futures contracts trading hands at the CME because there are ways to parse the data such that it is not always clear what kind of signal if any is to be divined other than the market seemingly looking more or less volatile; and with BTC we go ahead and assume “always volatile.”
An options-based metric, the “skew” indicator, sometimes gets called the “professional trader fear and greed indicator;” that’s because it reflects confidence levels of market makers through the prism of the premiums that they place on puts and calls.
BTC buyers looking to hedge against a price drop will snap up put (sell) options; which, in a put-buyer’s market, become more expensive (the more traders seek downside protection).
Premiums in the options markets are expressed (wonkily) as “30-day options 25% delta skew.”
A “positive 25% delta skew” will be observed when traders drive up the cost of downside insurance. Historically, this becomes taken as an indication of bearish conditions.
On the other hand, a bullish marketplace is often accompanied by costlier premiums on call (buy) options, creating a “-25% delta skew.”
Stay with us.
A 25% delta skew oscillating between a -10% and a +10% is (usually) read as neutral.
This Zen-like equilibrium reigned until mid-May, when Bitcoin fell below, and could not reclaim $47,000, and this was after BTC had enjoyed a two-and-a-half-month residency above said support level.
And as the markets deteriorated, so did the 25% delta skew indicator – the cost of protective options spiked. The closely scrutinized metric, as of the end of May, remained well above +10%.
Any sense of “okay, that’s the bottom” therefore would ring hollow at least until the skew establishes a more neutral pattern, below the +10% level ().
Eager for some, any indication that Bitcoin might have a rally in its bones, we devoured a bullish-sounding report in late May regarding Bitcoin exchange outflow. At first, it didn’t seem so promising. But outflows, as we learned, can be taken as a harbinger of weakening bearish market sentiment.
Thus, the seven-day average of net BTC inflows to exchanges going negative – for the first time in over a month, per Glassnode data – isn’t cause for despair; no, to the contrary, it shows that investors are starting to take direct custody of their holdings, possibly anticipating a price increase, as opposed to what happens when there is widespread anticipation of a price decrease, and coins flow into exchanges. So that they can be sold; ah yes, the fewer coins available for sale on exchanges means, presumably, there’s that much better of a chance that the market goes up, goes the theory. Well, that sounded good to us.
Between May 28 and May 31, BTC fell from nearly $38,000 to about $36,000.
Let’s keep an eye on exchange flow and give this one another week to play out.