Kraft Bitcoin Supply Crunch

Hi, you're listening to Stephan Livera podcast. Today for episode two hundred and fifty-eight, my guest is Rafael Schultze Kraft, and he's rejoining me. He is the CTO of Glassnode, and we're going to talk a little bit about some of the on-chain analytics that he and his team have been doing, as well as the supply crunch that's been coming in the Bitcoin world. Because while obviously the price is pumping, you can also look beneath the scenes and see what's going on in terms of how much of the supply is liquid, how much of that is illiquid, what is the Behavior going on, so a very bullish episode for you. Now a message for the sponsors of the show. Lend at HodlHodl is a non-custodial, Bitcoin-backed lending platform, so you can lend and borrow globally and anonymously. So if you have stablecoins, don't leave that lying around, lend it and earn attractive returns. HodlHodl's lending allows you to earn twenty-five percent APR on average, which is one of the highest returns on the market. Also, there is no need to sell your bitcoins even if you are short of funds. This is a way to Stablecoin liquidity without the need to trust your money to any one party. On Lend at HodlHodl, your Bitcoin collateral always remains locked in escrow. Lend at HodlHodl is a Bitcoin DeFi allowing peer-to-peer lending and borrowing directly between its users. With HodlHodl's Lend platform, you set your own terms and put up offers depending on how long you want to borrow or lend and what interest you're looking to earn. Go and check it out, lend dot hodlhold dot com. CipherSafe dot io are producing the CipherWheel product, If you have invested in a Bitcoin hardware wallet, don't just rely on that piece of paper, make sure you are using a metal backup seed so that your seed is fireproof, waterproof, rustproof, petproof, and tamper evident. The cipher wheel comes in a wheel shape and you get some tiles, you slide in four tiles for each word, and that's how you can back up your seed and make sure that you or your loved ones have access to your bitcoins if an accident occurs. Go and order yours at ciphersafe dot io and make sure you use the code livera to get ten percent Compass is an online marketplace which makes it easier for everyone to mine Bitcoin and enhance the Bitcoin network's security. This is the anti-cloud mining option. Compass helps you buy your own ASIC and secure hosting at great facilities around the world. For years, we have all heard that mining is only profitable if you're investing tons of money, but now with Compass, everyone is able to tap into economies of scale and access reasonably priced hardware and cheap industrial power rates. And if you're unsure about how to get started with mining Bitcoin, Compass offers hardware and hosting bundles which eliminates the need for advanced technical skills. technical knowledge and allows you to quickly get started mining Bitcoin with hardware you own. Visit them at compassmining dot io and start mining Bitcoin today. On to the show. Rafael, welcome back to the show.

Thanks for having me back, Stefan. Pleasure to be here.

Yeah, so it's been a little while since we last spoke on the show, and there's obviously been a lot going on in Bitcoin, and of course, we are here to talk about what's going on on chain. So I guess first, before we get into all of that, can you maybe give us a little bit of What's going on with Glassnode since we last spoke?

Yeah, I mean, it's been, it's been a wild and, and, and exciting time, right? I think, for all of us, that have been building throughout the bear market essentially, you know, we were hoping for, for this to happen and, and, and we wanted to be ready for, for the when the bull market starts, and, and then here we are, we were, and it's, it's, it's been wild,

you know Engagement, a lot of requests, you know, finally, people getting much, much more into on-chain data as well. It's, it's super exciting to, to actually now see that, that data in a bull market in real time, before it was always, you know, only in retrospect, with respect to what happened in two thou- two thousand seventeen. So yeah, we're doing very well, very exciting times.

Yeah, and you guys have been sharing a lot of great updates. Now, let me just Maybe take a step back, just for any listeners who aren't new, just to kind of explain a little bit about what's going on here. Are you able to maybe just give a little bit of an overview? How does, you know, all this Glassnode on-chain analytics stuff work? If you could just explain a little bit around kind of the basics of how you're able to see what's going on on-chain, just for that listener who is new, they're trying to learn about Bitcoin.

Yes, of course. So, so on-chain data obviously refers to, to the data that is recorded on the blockchain, the transactional data, right? So, when, when people interact with the network, with the Bitcoin network, what they, what they essentially do is, is, you know, sign transactions, send them in the network, miners pick those up and, you know, create new, new blocks that get mined, and that data essentially gets saved, on, on the blockchain. And, and so this transactional data really, has a lot of, a lot of- Information, right? And that's, that's something that is unprecedented because, you know, things, things like that don't exist in, in, in traditional markets. And so this, this gives, this whole Bitcoin economy, a, a completely different and new way to, to actually look at it, look at the data, gawk the market, understand, you know, things like network health, network activity, adoption. Investor behavior, what are the hodlers doing, what are the, you know, the miners doing, how many funds are being moved around in what sizes, how much is on exchanges, and all of that, right, gives you just this huge amount of, of, of possibilities to, to really dig into this raw data extracted and then, you know, yeah, really create that or, or, or, yeah, get that information And out of it in order to, to, to understand what's going on in order to make better informed, investment decisions as well.

Yeah. And so then perhaps the next level of detail in is something like understanding how, you know, because when somebody's new to Bitcoin, they might think, "Oh, it's totally private or it's all totally public," and the truth is it's somewhere in the middle, depending on what kind of behavior you use. And if you act, you know, for example, if you use, you know, Samurai Wallet and Join Market and so on, your Users, that behavior is visible on chain, and there are certain heuristics, right? Most famously or commonly, it's the common input ownership heuristic. So for users, for listeners out there, when you spend your Bitcoin, it's like, think of it like you're, you know, casting down a ga-- a bar of gold and recasting it into a new size of gold. And then based on the way those move around, people can try to essentially cluster different balances and then try to track different users on the chain. would you say that's a fair summary of, in some sense, what you're doing?

Yeah, yeah, roughly. So, so the, the, the basic unit on, on the blockchain is an unspent, transaction output, right? and that holds some amount of, of Bitcoin. And so if you, if you own Bitcoin, what that means is that you have a private key that is associated with the, the address that is related to that, to that, to that Bitcoin, right? And it gives you the right to- To actually spend it, right? And so when you do that, that UTXO essentially gets destroyed, gets spent, right? and a new one gets created, and a transaction can entail, can contain many of these, of these inputs, of these, of these, you know, UTXOs that get spent together, and, and essentially, you know, why-- when they get spent, they essentially get, get, get destroyed, new ones get created as, as the outputs of, of that transaction. And, and so one of those, those heuristics that you mentioned is, is exactly that, right? If they get spent together, then you, you assume that, they are controlled by, by, by the same, by the same entity. Obviously, this isn't, always, always the case. There's, there's a lot of nuances to that, but, but in general, this is, this is one of those that, that, that is being used quite, quite, quite a lot. and so, yeah, Bitcoin in that sense Is it's not anonymous, right? it's, it's pseudonymous because, yeah, you can essentially see, the, the behavior of addresses on, on, on chain and, and try, you know, through statistical pattern recognition, through machine learning, through clustering, and, and many advanced methods, try to gawk, you know, which of those actually belong together, which are, you know, probabilistically controlled by, by the same entity. And, you know, these, these are, these are some of the things that we do, but, we don't go, down to the individual level, right? Because we're not interested in, in single transactions. I'm not, I'm not interested in, in, in, you know, knowing, what, you know, what, what a particular person, is, is sending to, to exchanges or so on. What we're interested is really the macro view, what are funds, you know, how are funds And what does that mean for the network and for the market?

Right, yeah, and we might get into how you sort of cluster specific individuals or not individuals, but rather types of entities like whales and dolphins and so on. But I think it's also interesting just to, as you mentioned, look at the macro level of this. So as we speak today, so today is Wednesday the 10th of March, 2021, and the price of Bitcoin is around fifty-four thousand USD. And so- Currently, about eighteen point six five million of the twenty-one million bitcoins have been issued or mined into existence, if you will. And so I know some of your statistics look at things like liquid versus illiquid Bitcoin supply, and then there's also, you, you also consider that some of those bitcoins have potentially been lost. Are you able to, g-shed some light on those kind of numbers and how you're analyzing that?

Yeah, absolutely. I think that network liquidity is, is, is, is super interesting, to look at. So what we do is, you, you can essentially, you know, the, the supply is held by, by, you know, in addresses, and is controlled by, by certain entities, and so you can statistically, you can assess What the probability is of the funds that a certain address is receiving, what is the probability that the, those are being spent by that entity, you know? And, and, and through, by quantifying that, you essentially categorize an entity as being, you know, a liquid, or a liquid. And these terms might be a bit confusing. What is really meant here is, you know, is that entity a strong hodler? So is the probability that that individual or- That per-network participant is going to spend the bitcoins that, that they received, are they going to spend them or not? You know, versus exact. So depending on that, on that probability, you classify them as, as, as a liquid and then, and non-liquid. And what we've seen is essentially that out of those, what's eighteen point six million that are, that are already, mined today, almost eighty percent lie with those illiquid entities, right? With Strong hodlers are really in strong hands, so those are Bitcoin that, are right not in circulation or, you know, not to the extent that they're constantly circulating and therefore, you know, are, available to be, to be, bought by someone else, and that is, I mean, that is, that is of course, a, a, a very, very crucial trend because this essentially leads to this, you know, supply squeeze. And, and to this liquidity crisis that we're seeing, which of course, you know, points a very, very bullish picture for the price of, of, of Bitcoin, and this is a trend that we have been observing now for, for a couple of months, which, you know, that has, is continuing and, and we're not seeing an, an, an end to this. so what this essentially means is that the once, the supply that, that is in constant circulation is around four million, right? That is substantially low Than the total amount of mined, Bitcoin up to date.

Right. And so just to replay that for listeners then, essentially of the eighteen point six million or so, something like fourteen and a half million of those are actually illiquid, and then really it's only that last kind of four point two or so that is actually being liquid and actually being traded around on exchanges. And I think that's a really interesting phenomenon because I think if you talk to economists and things, they'll say, "Hey, the price of things is set at the mark." Margin. And so even though, you know, it's not like all eighteen million bitcoins are available for supply, are, are, are available for sale today, there's only a small fraction of those that are actually traded, and most, you know, and especially in Bitcoin, because we have this culture around hodling and holding your coins.

Yeah, no, exactly. And, and I think, you know, for-- on those, on those fourteen, what, fourteen point five billion, you know, you can, you could potentially sub-subtract f- Three to four million that are, that are potentially lost forever, right? That will never come back into circulation. the others are then, you know, with those strong hodlers. So, so, so you really see this, this phenomenon of, the, the one that you mentioned of, of, you know, strong hands, of, of, you know, hodling, behavior, something that isn't just a meme, but that we see in, in reality, on the network, happen.

Yeah. And I think then also because- The blockchain has historical data. This is also another really cool point where I've seen you do some analysis on things like the dynamics over time, and I think you've mentioned that it's like the older hodlers, they tend to sell a little bit as the price runs up. And I guess maybe just thinking through from a fundamental point of view, some of the-- for some of them, it makes sense, maybe they wanna, you know, maybe they've been waiting for this long and they think, okay, it's finally it's time to buy a new house or new car or something like that, but Is that a similar kind of dynamic to what you're seeing?

Yeah, no, absolutely. I think, and I think it makes total sense, right? I mean, we're still in a, in a fiat-dominated world, and, and, and people need to pay bills and, and people want to, want to live, a good life. And, and, and so what you see, this, it's, is this really reoccurring pattern of, of, you know, old coins coming back into circulation once those, those bull markets, really Start, start going up. And, and, and yeah, essentially, you know, that's, that's what I think is, is, is smart money, right? They, they, they are taking profits, you know, they're taking some of, of, of, of the bitcoins to sell. And what we see then, you know, in bear markets is the opposite happening, right? There sort of, you know, there's these, this reaccumulation phases afterwards where potentially those same participants might be actually scooping up, you know, more cheaper b- Coins when, when it's, when it's, when it's more cost effective to, to buy them, to buy them back in. And yeah, I think that's, that, that's something that we saw right now as well within the, within the last couple of, of weeks and months. What is interesting, what I actually looked at just, just today, and I need to take a closer look, is that if you look at the coins that haven't been moved in, in more than a year and more than two years, those, you know, that percentage of those coins is Right? So which means, you know, that those coins are actually coming, you know, some of that supply is coming back into circulation. But if you look at the coins that haven't been moved in more than three years, that is still going up, right? a-and those are essentially, you know, the players that have been there before, you know, in two thousand and seventeen that actually went through, through, through the last bull market, and, and, and that, that for me is, is, is, is very- Very, very curious to see, right? Because that might actually show that those, you know, investors that have been there, you know, before two thousand and seventeen and have gone actually through that bull market, have learned from it and, and, and, you know, have now stronger hands and, and, and are waiting for, for even more, upside or, or, you know, even hodling for, for good.

Yeah, interesting. And I suppose this is always going to be somewhat- Of an in-inexact science, and it's about heuristics and trying to get it right on average as opposed to get it right every time, because I can think of examples where, as an example, let's say somebody is an older hodler, but-- and they are moving their coins, but what if they're moving their coins into a more secure setup? So as an example, maybe they've been sitting on a single signature for a while, but now the value has gone up significantly. Obviously, we're sitting around fifty-four thousand USD. I mean, it was what a year ago that we Five thousand USD or something. So they might be thinking, "Well, I need to get my coins into multisig and I need to be more secure with my coins." So I guess that's one area where, you know, maybe that cuts against that heuristic a little bit, but maybe on your side, you might be looking at, "Oh, okay, look at all these coins that are going into an exchange, so obviously they must be being sold."

absolutely. I think, I think, you know, this is, this is all statistics, right? This is all sort of, you know for, for which, you know, these, yeah, these, these metrics don't hold, you know, and ex-exactly those examples that you mentioned, right? I can, I can totally see someone, you know, that have, you know, having bought a Bitcoin a year ago or so at, at five K and, and now, you know, maybe left it on the exchange or so, and now at fifty, you know, fifty, fifty K or fifty plus K, they're thinking to themselves, okay, you know, this is, Risk it to actually keep leaving it and, you know, on an exchange or, you know, or pulling it off to a hardware wallet that they bought or something like this. So that coin that, you know, potentially, has, more than a year since the last move is now coming back into circulation, but it's nothing that, you know, where, where someone is realizing profits, but, but really just bull markets draw attention to something that you might have forgotten about or, or something that you- You know, you might not have been paying too much attention to, right? People, you know, maybe just wanna assure themselves of, of, you know, the accessibility of their coins, when the price goes up. There's, there's many things here I think that, that, that, that play a role that don't have always, don't have to do with, with, you know, someone selling, their, their coins.

Yeah, there's a lot of interesting aspects around that, and I think it's also worthwhile pointing out here that the coins exist Eighteen point six million coins exist, and really what we're talking about is the distribution of those coins changing, because, you know, no matter how many new people come into Bitcoin, there'll never be more than twenty-one million, right? But it's like, how do you-- I guess what, what we're trying to do here is try to look at what's going on on the chain and understand, okay, there's all these new people coming in, and what does that actually look like from an on-chain perspective, right? Because it's not like there's new coins, I mean, other There's not new coins being made, it's about what's the distribution.

Yes, absolutely. So I think, you know, the, it, I mean, yeah, the new coins is, is the issuance, which currently is what, nine hundred a day or so, roughly. That, that of course is, is, you know, is, is being added, o-on a daily basis, but, you know, the, the bulk, what eighty-eight percent or so, have already been mined, so it's, it's all there, right

Coin supply that lives on the blockchain and then trying to assess what is happening with that, right? How is it being redistributed? What is happening to old coins? What is, you know, what are, what are the, the exchanges, all these kind of things that you can actually gawk from, from looking at that transactional data, which is, as you say, whatever has already been, issued.

Yeah. And I'm also curious as well the- Impact of, okay, so there's address reuse, and I think in the earlier days, that was more of a common phenomenon where people might just have in their forum, you know, signature or online they might say, "Hey, you can donate to me at this address, or you can give me bitcoins at this address." And then over the years, more and more people are using what's called HD hierarchical deterministic wallets, where they actually generate a new address to receive into. And so has that changed the analy-the analysis for you, or are you still mostly relying- Applying on common input ownership heuristic there.

So the, the, the common, the common input heuristic is, is for, for when you spent them, right? When you received them, there is, there's different, there's different things to this. So first, we have, we have this metric that we call, you know, accumulation addresses that is actually all the addresses that have never spent funds but have received at least two transactions, right? And we use two because, because if you use one, then And there's, you know, there's a lot of these relay transactions on chain, right? Sometimes when someone is sending, you know, a Bitcoin from A to C, then it goes, through an intermediary address for whatever reasons, that is very short lived, and then, then, you know, it, it, it actually is just a one-time use disposable address. And that's why we look at, at, at those that have received at least two transactions, and we see that this, the, the, the quantity of these addresses is still growing, right? There's a- I think half a million of those that hold almost three million Bitcoin, so it's, it's substantial, it's, it's, it's quite a lot, but, but of course you're right, there's, there's, you know, these, these dynamics that we've seen as well, where, you know, wallets are, are, are more sophisticated with respect to, you know, which I think, you know, is needed, isn't, and important with respect to security and with respect to, to privacy, and that holds for, you know, things like change addresses, If I send, if I send Bitcoin, and I, I need to spend, you know, a certain amount of UTXOs, and I receive change from, from that transaction, nowadays, I think it's very, very uncommon that that change goes into the sending address, back into the sending address, even though it still exists to a large extent, like you wouldn't believe it's still there, right? But more and more wallets actually make use of, you know, creating a new one in which, you know, those Bitcoin flow, flow back in, and, and there are other heuristics, you know, where you can, with a certain probability, detect those, right? That's, it's, it's simple, statistical pattern recognition, it's, so, the, the methodologies, they need to become a bit more sophisticated, in order to, to maintain the same level of accuracy with respect to these metrics.

Yeah, it's really fascinating stuff, and I suppose one angle that does kind of come to my mind, and maybe this is, you know, the influence of my friend Matt O'Dell and the privacy angle, I'm curious, does that play on your mind, that, you know, some of these heuristics are kind of cut against people's privacy and that some of these, you know, clustering algorithms to some extent, now I, I understand you're not doing it to the same level that, say, you know, a chain surveillance company might be doing it, but does that play Hey, Bitcoin users out there.

It does, it does, absolutely, you know, and that's something that we've, we've, we've been thinking about a lot as well, right? I think, I think, and this is why I always try to emphasize it and why I try to mention it, that, that, you know, we, we are interested in macro flows and, and not, not in, in, you know, in individuals. you know, we're, we're, we're interested in those, those driving forces of the markets that is the big

Absolutely an angle where, you know, we, we try to be, as, as, yeah, as, as, as careful as, as possible and not, not go down the, the forensics road, right? Not go down the, you know, this, this particular transaction, you know, belongs to, you know, X or Y or comes from, you know, a dark market or whatever that is, so I think, I think this is, for us, it's that, that's something that it's very important, to, Because, we're, we're really interested in, in, in, in the macro view of, of what is happening on chain related to the markets mostly.

I see. So if I could press on that thread just once more, it could be that, I mean, in order to find that macro view, you kind of have to cluster somebody's wallet, don't you? I mean, in order to know, oh, see, that's the dark net market or this is the Hydra market bitcoins or this is some, you know, these individuals are using CoinJoin as an example, and then Apply clustering or apply some analysis to that, right?

Yeah. So, so the, the only entities that we look at are miners, exchanges, and OTC desks, maybe custodials, right? So I don't, I don't even, I don't even know, you know, about, the dark markets, and so I'm just mentioning them because I know that there's companies that do these forensic analyses, and, you know, that might, you know, say this, this Bitcoin is tainted or, you know, like, whatever it is And, and so these, these, these heuristics that, that we apply, we just apply them, you know, automatically in the background, you know, through the clustering algorithms without us knowing, you know, like whose addresses those actually belong to or, you know, where those reside or, you know, what- you know, whatever, whatever that is, the, the only, the only ones that we actually have labels for are, I mean, obviously the miners, you get them because, you know, those, those come, come from the coin transactions and, a-and the, and the, a-and the exchanges because those are, those are the, the interesting ones when you're looking at, at market behavior.

Sure, and I think, yeah, I think that's fair, and, a-and as you mentioned, you're not going to that same level of a chain surveillance company

And, other people doing this kind of work is that really for people who are more concerned, the answer isn't to kind of shout at the people doing analy-analitics, but it's to actually be more private on chain, and that means learning to use CoinJoin, learning to use these techniques for your own privacy, if, if that's what, you know, if you as a listener, that's what you're interested in, make sure you're doing some research into those privacy techniques, and you're, you know, you're using non-KYC methods of acquiring your bitcoins. But certainly Very interesting for those of us who are interested in the macro perspective of what's going on on chain and, you know, how many people are hodling and so on. I've seen you chat about some of these different metrics. There's one called N U P L, net unrealized profit and loss. So, Rafael, what, what is that?

so the, the N U P L, is, is a metric that essentially, tells you the percentage of, of the, the mar-- of the market cap that, that is in profits or losses. Loss, right? This is a metric that relies on a concept that is the realized cap, and, and the realized cap is, is, is essentially valuing each Bitcoin at the, at the time that, that those Bitcoin last moved, right? So as compared to the market cap, where you say, "These are all Bitcoins, this is the supply, you know, each of those is multiplied by the mar- by the, by the current price," for realized cap, you do it, by the price at which the, the Bitcoin's last month and so, taking these two concepts, you can actually, you know, quantify how much of the market cap, what is the percentage that is, in, in profit or loss, and, and, and, and, and UPL essentially gives you exactly that metric, right? so what happens is that the metric then goes up in bull markets when essentially investors are realizing their profits at a, at a lower, at a lower rate than the- Then, the market cap is going up, right? And so, you know, currently we're, I think, at seventy percent as, as far as I, I remember the last number, you know, which actually essentially means that seven hundred billion, of the market cap are, are, you know, with respect to, to this on-chain analysis in, in a state of, of profit. And this can, you know, you can map this then to essentially these different, investor sentiment, bands within cycles and, you know, as you go above seven 55, 80. This is, you know, when, when sort of like the, the market gets very, very greedy because no one's realizing prices, everyone's, you know, like really, you know, hoping for, for, for more and more and more, and, and this is, you know, where historically it has been a very good indicator for, for those, for those tops.

Yeah, I see. So it's sort of like a, it's like a local top indicator, kind of. I mean, obviously these are all heuristics, none of

That way, correct?

Yeah, I mean, I use it more for, I use it more for, for, for global tops, I think it has been a very good global top predictor, you know, these, these biggest m- Bitcoin cycles that we've seen and, and, and the bottoms as well. So it's, it's, it's a very, very nice metric that helps navigate these cycles and, and actually give you a good feeling of, you know, where we currently are, right? Whether it's a good entry point, whether, you know, we are entering or, or, or leaving a bull, bull market, whether, you know, it's, it's becoming dangerous and, and we might be hitting one of Those tops anytime soon.

Yeah. So as you view NUPL then, where, where, as you said, it's about zero point seven, so I guess what were, you know, just to give listeners some context, what was like a good accumulation point and what's kind of like a, we're, we're nearing the top point?

So the accumulation points is essentially when most holdings are underwater, right? So that, that essentially goes below zero, and then, you know, below zero essentially means if you have, you know, minus twenty percent means a twenty percent of, of the, of, of the, of the market cap is, is underwater. and so these are globally always very, very good, entry points historically, and when it goes, above, when, when we enter essentially seventy-five is, is when we, you know, en-entry that euphoria greed zone. So this is where you kind of start, you know, might wanna start thinking about that, you know, a top is, some- One year. So we're currently at seventy, but, it's, you know, there's still, there, there's still a lot of upside if you think about, if you look at two thousand and seventeen, for instance, I think we entered that, that seventy-five range in early December two thousand and seventeen. So we still had three weeks to go, and, in those three, three weeks, I think Bitcoin did another, I don't know, fifty, sixty percent or so, right? And so we're still, we're, we're still way below that. Right, even, even if we start entering at, at, into, into seventy-five, we might still have, you know, again, if it looks, similar this time, those, those fifty, sixty percent, and, you know, and depending on, on the price at that point in time, I think there is, there's still, still some way to go.

Yeah, so it's like, I guess the other question is, can it sort of stay in that range for some time, like, and then just over time as new Stays around that point seven range or does it kind of have to move?

No, no, I think it can, I think it, I think it absolutely can, right? The question is how long, right? I think at, I think at some point it really gets overextended, right? And, and then, as the price goes up and up and up, people will start, you know, will start eventually realizing the profits, and then that, that of course, you know, can, can, can cascade and then, and then, and then it comes, comes back Range. I, I don't know how it was for the previous markets, but, but as I mentioned, I mean, we were almost a whole month, in, in, in that range, and, and usually, you know, that's, that's towards The, the, the ends of, of, of, of those cycles where, where prices really accelerate again, quite a bit. but, you know, we were close to it, we were close to entering that, that seventy-five percent, now we're back at seventy, so, you know, until we get back to seventy-five, and then, you know, depending on how long we stay there, I think it's, it's, it's something that I am looking at, but nothing that I'm worried about, yet.

I see. And of course, as people who were around the o-last few times, they know that there were thirty percent drawdowns on the way up, so it could well be that we're just going through a few of those on the way up, right?

It could very well be, absolutely. And I think that's, that's just something to, to keep a close, close eye on, right? That, that, there are these drawdowns, you can go back thirty percent, right? And, and, and that's why, why I think that it's, it To just, you know, look at a single metric, but you start really getting the whole picture by looking at, at, at, at many of them, right? Because each of them gives you a different perspective, each of them gives you a different quantification on, on, you know, where we are, what investors are doing, and, and whether we're really, you know, close to something that might indicate a top or not.

I see, yeah. And I've also seen you were chatting about this metric called UTXO realized price distribution. So I guess they're a little bit related. Can you outline what, what is UTXO realized price distribution?

Yeah, they're, they're very much related. They're, it's very much related to, to realized, price actually, right? So the realized price is just the, the, the average, like By price, so to speak, from an on-chain perspective, because, it just, it just gives you the average, the average price at which, you know, bitcoins moved on chain, and, and what the UTXO price distribution does is, you know, simply break that up into a histogram where you have these buckets, and then you see, you know, how many bitcoins moved at, you know, twenty K, twenty-one K, twenty-two K, and so on and so forth, and this actually gives you A really nice overview of, of, of that landscape on where there is a lot of activity, of a lot of volume, and therefore also, you know, potentially a lot of capital inflow. So these usually can form these, these, these, these thresholds of, of, of, of, of essentially support for, for the price because there is a substantial amounts of people that have signed Bitcoin that partic- Particular price at that, at that moment, right? and so that's, that's what we, what we recently saw, right? A lot of activity between, I think roughly forty-five to forty-eight K, which, which, which has held very strong now within the last couple of weeks, and, and, you know, people, people seem to, seem to see that as, as a, as a strong support there.

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Yeah. Or for whatever reason they, they, you know, they decided to buy at forty-five, forty-six, right? So and, and, and a lot of people did It's, right? That's why there's, there's a lot of on-chain volume and, and those are, you know, those aren't the ones, that is, that are going to sell once, once the price gets back to those levels, right? Those are the ones that are expecting more upside and, and so this is where, where this, this, this capital sort of like concentrated on these regions in the price that we see on-chain that then become potentially these, these support levels.

Yeah. In terms of Clustering and seeing what entities are doing on chain. What about miners? What are you able to analyze in terms of mining activity on chain?

Yeah, so, so miners of course are, are cru-crusial players in, in the space as well. And, you know, one, one thing that, that I like to debunk always is, you know, the miners are selling out, right? This is something that comes up a lot as well, which, you know, it's not something that we actually see. W- there is Because again, you know, these periods in time where miners, the, the, the funds that they hold, they flow out in, in larger quantities, and we've seen something like this now in November, December, up to, to January maybe, which has flattened out again, so they're, they're back at, at neutral, they're, they're, they're not moving a lot or not moving, the, the, the coins out of their wallets, and, you know, potentially took some profits there, but it's, it's, it's It's nothing that is significant, right? It's not this, this, this minor sellout narrative, it's, it's, you know, probably, you know, more on, on the side of, of their eco-economics and, and, you know, bitcoins that they have to sell for, for, their, their mining operations, but, but that, you know, that, that short term, you know? Cell that, that as I say was not s- very significant, has, has depleted now again, and, and we're back sort of like to the neutral level. That's, that's what, what the current status, is with, with miners on chain.

Yeah. So I think it, the, the narrative has been that, oh, see, miners have all these operating costs, so they need to be spending down the coins to be able to fund that. But I think now we're starting to see some miners come out and say, "Well, actually, we

And therefore keep on hodling, or at least hoddle more coins or hoddle for longer than we otherwise would have had to, because we were able to get fiat financing.

Yeah, absolutely. I think that's, that's part of that, right? hodlers are incentivized to, to, to, to hoddle as well, and, and, and they will, and now they have the possibility to, to do so to a larger extent, by, by, you know, just, you know, using Bitcoin lending services or so, And, and I think it makes a lot of sense for them, right? I think that, that is part of the narrative, that's nothing that, that we can see from on-chain data, but from, you know, from, from conversations that we're having, I think that's, that, that's one of the, the, the path that they're, they're taking at this point.

Yeah, another interesting phenomenon is obviously the collateralized loans space is growing rapidly. Now, disclosure for my listeners, Unchain Capital and Hodl

There is an interesting phenomenon here, and I wonder, now maybe this is a little bit, not as much on-chain analysis, but it's a little bit more just kind of fundamental analysis or just looking at what's going on in the market. I wonder whether that also contributes a lot more to the, you know, hodling and the restriction of the available supply, because there may be, you know, whether that's an, an older hodler who wants to, you know, get, use, get for living expenses, or it's a miner who wants to be able to hold longer. What kind of Over these coming years.

You know, I think, that's, that's something that I, that, that I, that I've, that I never looked into it until, until actually only recently, and that I, I find very fascinating what is happening in that space and how much, how much traction that has actually gotten, like how much has happened on that, right? That's, that's really, you know, one of those manifestations that I'm seeing where this, this new economy is being built on top of Bitcoin, right? Because now you have, you know, these- These debt lay-lending, borrowing services, on, on, on top of this new economy. So I find this very interesting, and, and the reason that I do, especially, is, is You know, yeah, one with respect, you know, to miners or everyone wanting access to fiat, without wanting to sell their, their bitcoins, I think that's, that's, you know, that's a very clear, narrative there. and the second one is, especially, you know, when it comes to the markets as well is That, I mean, you know, those are over collateralized loans, for which you get, you know, six plus percent, and, and that is something that, that you won't find in traditional markets. So, so, so what I'm thinking, right, and what I believe is that I can't imagine anyone, you know, in, in, in Wall Street or, or in, in, in traditional finance anywhere to- You know, just look at that and ignore it. and, and I think that, you know, this, this could be driving, a lot of new capital inflows if people, you know, can actually rely on a, you know, six percent, seven percent, eight percent yield a year. that's, that's an APY that, that, that's not easy to find, somewhere else, and, that, that I find, very, very fascinating. Curious, very curious to see how that plays out now in the, in the upcoming months.

Yeah, right. And I see it like, so in, for example, in the case of someone like HodlHodl, they are actually finding APY is even higher than that. But we should consider though that they are doing it's stablecoin lending, so the interest paid on that kind of example is interest on, say, USDT, whereas in the case of, let's say you, you are borrowing against your Bitcoin, you're paying the interest in that example, but I think To, to the broader point around helping people huddle for longer using these loans, that's, that's an important dynamic, but also on the downside, there is a double-edged sword here because if there's downwards price movement, then we can see a lot of liquidations. So that's where also listeners have to be responsible and prudent, because, you know, if they enter into a loan where they are, you know, not having enough coverage for that, then the margin call can come and you can get liquidated, and obviously that's a risk for people, and then that That can also bring the price down quite rapidly as well. So it kind of is a double-edged sword in that way.

Yeah, absolutely. I think, you know, and it's, it's still, something that is very nascent, although, you know, many of these lending services were, were, alive before, before the Black Thursday events, last year, and, and, and, and I think, you know, at least from, from what I know, many of them did a good job of, of, of getting through

It's, it's definitely something I'm very curious about, and I, I'll be, I'll be, having it, looking at very closely, to see how that plays out in the upcoming months, especially given that, you know, the, the AUMs of these services within, within the last year have, have really exploded. So I think that there's, there's quite some activity happening there.

Yeah. Also, in terms of looking at behavior on chain, one other metric I've seen- The last note mentioned in some of the weekly, analysis is, supply adjusted coin days destroyed. So this is a way of looking at all the coins moving, correct? What, what is supply adjusted coin days destroyed?

Yeah, so, so coin is destroyed, is, is simply, looking at the age and the volume of the coins that are moving today on chain, right? So if, if I, if, you know, if there's, a Bitcoin that moves today, that- Last moved seven days ago, then that's seven coin days destroyed, right? If I have two bitcoins, that are moving today, and the last time those moved was thirty days ago, then that's sixty coin days destroyed, right? And so it gives you a metric, of, about, you know, the, the age and the volume of, the coins that are moving, on chain today. supply adjusted here simply means It means that, you know, as time goes by, as there's more supply, then, you know, the baseline goes up for coin days being destroyed because there's simply more coins and there's simply more days. So, it, it simply trends slightly trends up, and so by just dividing it by the supply, you kind of bring it down to the same baseline historically, to make it more stationary. and so yeah, coin days destroyed is, is a Super, valuable metric, also in order to go, what are, are long-term holders doing, right? Are, are old coins that have been dormant, for, for, for many months, for many years coming back into circulation?

Yeah, really fascinating stuff, and I think it, it kind of, that is probably another one that comes into, if you think through fundamentally, what are some of these people doing? Well, it, it might be an old hodler who is taking some out or they need some for living Expenses because they've still been hodling and so on, but very interesting in the way that you can perhaps look at some of these and maybe combine some of the different pieces together to give yourself a bit of a, a more accurate view or at least some try to validate a thesis that you might be having about what's going on in the market. So that's certainly an interesting thing there. I think also the other really big one that a lot of people are talking about now is how the number of coins on exchanges is dropping very quickly. So can you give us your analysis? Analysis on this, what's, what's the story there?

Yeah, I think that ties into this, this liquidity supply crisis, that we're seeing, right? So what we've observed is that we're in, we're seeing this huge depletion of, of, liquidity on exchanges that has now extended, roughly a year, I would say, so it's very, very long, very, very deep. I think, exchanges have lost around twenty percent Sense, of, of their supply and, and, and it's an interesting phenomenon because, yeah, it, it has, it hasn't happened to this extent quite, yeah, in, in, in, in, in previous years, and, and, and I think that, that it's something that- Fits in very, very well with the institutional narrative, right? Because institutions coming into the space, they're, they're not buying, you know, these huge amounts on, on spot exchanges, right? So they, they do custodial services, OTC trades, and, and these kind of things. So, I think, that this has very much to do with that as well, you know, potentially. Also things like lending services, right? So, now we're, that we're talking about that, you know, that being moved, there. then of course also, you know, simple education and self-custody, people having, you know, long-term conviction, pulling their coins from exchanges into, into, hardware wallets, or, or cold storage. So, yeah, there's, there's the supply squeeze, and, and I think, That's, that's very related to, to the price action that we've, we've seen recently.

Yeah. And so to give some context on the numbers, maybe you, you probably have a better grasp on this than I do, but it seems that it's gone from something like three million bitcoins on the exchanges collectively, and it's down to maybe two and a half, and it's still kind of falling a little bit further, like two point four million or so.

Yeah, exactly. It's, it's roughly, r- from the peak, I think it's, it's roughly

So since the peak, yeah, from, exactly from three, three million, it's, it's roughly twenty percent, and that's, that's substantial, right? That is, that is very substantial, given that, that, you know, yeah, the, these exchanges are where actually the, the markets are happening, so it's, it's, it's super, super interesting what is, what is happening there.

Right, because if we consider that the price is set on the margin, then it means the only way this, this resolves is if the price Because at any time some, you know, big company or some billionaire or some hundred-millionaire or, you know, just a lot of retail individuals are out there trying to buy Bitcoin and pull it to their own cold storage, then it means, on the exchange side, you know, or on the OTC broker side, they're trying to get out there and source some coins, but there's just not that many left to sell.

Yeah. No, no, exactly. I mean, even the, the OTC desks, they need to pull their liquidity from somewhere, right? yeah, I, I think w-we're actually currently, Deep diving a bit more into this, into, into this analysis to, to really, you know, get a better grasp of, of what, what is going on. you know, there's some unpublished data where we, where we do look at, OTC desks where we have seen, you know, their balances going up in the same period of time. you know, I think a lot of that is, is, is actually moving into, into, into, you know, custodial services for institutionals, and, and That's, that, that's, you know, that's exactly that. It's, it's this liquidity depletion, it's not, you know, retail, that formal retail kind of, dynamic that we saw in two thousand and seventeen, but, but this fits very, very nicely with all the announcement, the, the announcements that we're, that we've, heard, over the last couple of, of weeks and months of, of, you know, public companies coming in and, and scooping up. Up, those bitcoins, and those are only the public ones, you know, how many funds and family offices and, and, and so on and are out there doing similar things.

Yeah, because in twenty seventeen, it really seems that was much more of a retail driven market, and at that time, the whole institutional money was more of a meme at that point, and it seems that this time, in twenty twenty one, it really is a lot more institutional people coming in, and I guess the typical pattern for them is they might be buying on some OTC desk or one of the The big exchanges, and then they might be pulling it out into one of the larger custodians. So we're talking, you know, Fidelity, as a custodian, Coinbase custody, BitGo, Anchorage, maybe Knox custody, these other, you know, these other players. So essentially, even though the amount on exchanges is dropping, it could still be with a custodian, but just a non-exchange custodian.

Yeah, exactly. and I think that's, that's, that's a large part of the narrative. and non-exchange custodians.

Right. Because historically, I think the space wasn't as developed, so a lot more people might have left their coins on an exchange.

Exactly. not at all in two thousand and seventeen, right? I think that's, that's, that's what's, what, what is actually making this whole institutional capital inflow, possible. The infrastructure now in two thousand and twenty, in two thousand and twenty-one is there. That infrastructure didn't exist to that extent in, in two thousand and seventeen, right? I mean, there's other factors, but, but, but that's, that's now, like, the accessibility for them, the infrastructure that they need in order to really, you know, go deep into this market that they didn't exist before, and so, so yeah, I think that's, that's one of the, the very big differences between these markets, that in two thousand and seventeen it was clearly retail, focused and retail driven, while, now at least, you know, that first part, that first push of this, of this market, was, was institutional, and we have only recently, seen that, that, that retail, is-- has actually arrived within the last couple of weeks.

Right. So up until now, it's been mostly institution-led, and if anything, now retail is also coming into the game. So now it's just gonna be retail and institutions all trying to stack over the next few months as we kind of approach, you know, as- As this, bull market develops?

Yeah, yeah, exactly. I think, I don't know when we started seeing in, retail, I think, maybe, maybe a month ago, six weeks ago or so, right, where it started to slowly coming in, I think there's a lot of off, off-chain data that shows us as well, right, with respect to, you know, sign-ups, and sign-ins on, on, on exchanges, you know, these website visits, but then also in, on The, the amount of new entities entering the space and that has, you know, just like surged crazy in the, the last couple of, of, of weeks. so, so that's, you know, those are, those are, you know, the, the smaller players that are coming in. So I'm really curious to see, how this plays out, and how that, you know, changes, you know, the, the, the, the market and, and then the volatility. Potentially as well, within the next couple of, of, of weeks and months.

I'm curious as well, because just, you know, individuals, some of them can be weak hands and some of them can be strong hands with high conviction. I'm wondering whether you've seen anything on chain to indicate that in, from an institution point of view, whether, you know, the ones coming in now are weak hands or strong hands, or do you think it's more like, we won't know until they get tested? So let's say, I don't know, just for example's sake You know, fifty thousand or a hundred thousand, you know, a-a-are we only going to know at that point how many of them are strong hands?

Yeah, I think so. I think it's a bit early, especially from a non-chain perspective, because, I don't think that, you know, institutionalists with, with the whole, with all the overheads, that, that they need in order to come into the space to actually, you know, invest, I mean, those are processes and preparations that, you know, as far as They take, they take a couple of months, right, in order to, to be able to execute, to the amount that they want. and so, I believe that it's a bit early yet, to, to actually, get a feel for, you know, their conviction and whether, you know, they're here for, for the long haul, or whether, you know, there's among them, you know, actively managed funds that, that are, You know, essentially trying to just maximize the profits and get out, as soon as possible again. I don't believe that's the case, especially if you look at the names of, of, you know, of, of companies, that, that have announced, their investments, that, that to me sounds more like, you know, we're, we're here to stay for, for at least, for, for, for a good while.

Yeah, and it's fascinating because I think the narrative has really shifted in Where there's really much more of a long-term store of value conversation, so potentially that would lead people to be stronger hands even coming into it rather than kind, kind of historically where people had to go through a cycle to become a strong hand. But then on the counter side, you might see the more professional level investors and institutions who are trying to rebalance on the way up, where typically a lot of individuals don't bother rebalancing on the way up.

Yeah, yeah, and make, probably make use of, of the volatility as well, right? That you get, you don't get anywhere else. So, so yeah, I think, I think we, we still have, have, have to wait and see, what, what this does, it's, it's something that I'm very curious about because it's, you know, Bitcoin up to now has, has moved very mechanically, right? Has moved, you know, very predictable. I mean, it's, it's- It's insane if you look at these market cycles, right? How, how, how beautifully they, you know, they just, just come and go and, and, and, and, and you know, now you have this new stream of, of, of investors that, you know, have, you know, potentially different conviction, potentially, you know, like different, i- different ways of, of, of behaving in this market, you know, like what this potentially does structurally. to the, to, to, to the space. I'm super curious, to, to, to see how this plays out, and if, whether, you know, all those, a quote-unquote predictions and, and, and, and models that people have, Play out or whether, you know, they kind of get disrupted by, by this, by this new, mature money that, that has flown in. Yeah. I'm, I'm really, really curious to see that.

Yeah. Also, the other interesting topic I wanted to discuss with you, and I know you've done some analytics and data science work on this too, is concentration of ownership. Now, there's this kind of often quoted sort of mainstream media argument of, "Oh, two percent of accounts," which, first of all, that's That's wrong. Two percent of accounts control ninety percent, ninety-five percent of all Bitcoin. Is that true or is that wrong?

Yeah, no, that's, that's, that's obviously wrong, and I think, you know, some of the analysis that, that we did, was, was essentially to, to debunk that, right? And that number, these, you know, two percent of accounts control ninety-five percent of all Bitcoin, is something that has been popping up all the time. I mean, you know, the sentence itself is wrong because there's, what Accounts. So, so, right? It's, first of all, if you're talking about addresses, then that's, that's a different story. But so the whole thing of, about this is that if you look at the blockchain and you naively do this computation, right? And you take all the addresses that exist and, you know, you look at all the bitcoins that all of these addresses hold, then, you know, you arrive to exactly those numbers, right? And that- That sense, you know, they could be correct, right? Two percent of the addresses are holding ninety-five percent of Bitcoin. But of course, the, if you're doing these analyses, you need to be much more nuanced because this just leads to these Very, very wrong narratives that are, you know, are then being picked up by the media, and this is, you know, what's, what, what, what stays in, in people's heads. And so what we did? Is we tried to, to get down to, something that comes closer to the truth than this, right? And, and I think one of the important things is that not each address on the blockchain is to be treated equally when you do these kinds of analysis, right? Because we all know, a, if you have an exchange address that holds the funds of millions, of hundreds of thousands Of mil or millions of users, then that's very, very different from, you know, my hardware wallet address, right? And, and, and so, or, or, you know, or look at, miners, this is the same thing and, and so on and so forth, right? So there's these distinctions that you need to do on, on the one hand, alright? And then also, you know, when, when we get back to, to, now, to, to clustering and then heuristics and so on, Of course, I, I, I can have, you know, multiple addresses that are all controlled by me, right? So, so these, these should-- if, if there's possibilities to assess whether, you know, they are controlled by the same participant, you know, we can make use of that information as well. I mean, so that's essentially what we did, right? and, and, you know, of course, our, our methods aren't, aren't, aren't perfect. We're talking again here about, you know, statistics and heuristics and class- Address labels and it's not a hundred percent correct, but you immediately see that, you know, you're shifting that number that, you know, shows that high concentration way, way, way further down, right? so two percent don't control ninety-five, our upper bound is essentially the two percent might control, seventy percent or so. And That does, that a, that's what I mentioned that, that is an upper bound. So, so we are very, very conservative there with, with the, the methodology that we apply, right? If, if, if we aren't sure, you know, that, that, that, that something is actually, you know, should be clustered, then we're not doing it, and, and we believe that that number, is, is way less, Especially if you take into account, you know, numbers that, that you can't get from on-chain data, which is the amount of users, on an exchange, right? I'd, like, I don't know, like the exchange on a, on, on-chain is essentially, well, a black box, right? It's just a set of addresses, that hold funds, and then, you know, they have their own, you know, accounting on top of it, but that's something that, that we can't see. and so yeah, this, this, this whole analysis was, was in order to, to, you know, to, to, to, to debunk this, this, the statement that, that was popping up all over the place.

Yeah, I see. And in your analysis, you actually, categorize or, I guess, stratify the different holding levels. So you say, as an example, shrimp with less than one Bitcoin, crab with one to ten, you know, all Hundred and then, you know, sharks with five hundred to one thousand, whales with one thousand plus coins, and then humpbacks, five K and over, you know, the, the Michael Sayers of the world. and then you got like exchanges as well. So, that's a really interesting, analysis, and I think, I guess it, it, it gives some rough level of what size holders there are on chain, that is, obviously not talking about people who leave their coins on an exchange or with, I guess, some large- Yeah,

yeah, absolutely. Yeah, I think that categorization comes, you know, was, was initially in, in some very early forum as well, and then I got into a conversation with, with Willy Wu, actually, we talked about this, and this is, you know, and then when, when, when, when we then decided, you know, that's, let's do this analysis and let's, let's, you know, categorize all these different players, these, you know, participants Sizes, into these different, different, yeah, marine fauna and, and, and, and put it out there. So just, you know, as, as an educational piece to, to, to show that, you know, it's, it's, it's not as, as bad as people try to paint this. So, yeah.

Yeah, and also interestingly, I thought it was fascinating that you were saying the amount of Bitcoin supply held by the smaller groups, the, the shrimp and crab has actually increased and that some large entities, so dolphins, sharks, whales, and humpbacks, so we're talking, what is that like, which ones, dolphins again, sorry? dolphins are one hundred plus. So basically, the amount being held by those dolphins through to the, you know, the whales has actually decreased a little bit. and also you mentioned that there have been new whales birthed, in a sense. Could you explain what that means?

Yeah, so, so essentially there is, there is two, two different insights here, roughly. So over time, over the years, what we see from this data is that, you know, Bitcoin gets more dispersed, right? From, from larger entities into the smaller ones, right? Which is a beautiful thing to see because, that, that sort of like ties into this ethos of Decentralization of, and, and a-again, like against, you know, Bitcoin is, you know, highly concentrated. No, it's actually spreading, over time. That's, that's, that's one of the, one of the trends that we saw in the data. But then interestingly, on a more short term, and that is, you know, throughout twenty twenty and twenty twenty-one, what we saw is that the supply or the amount of whales has risen a lot, right? Again, you know, you can- Can make the connection to institutionalists, the connection to, you know, the depletion of liquidity on exchanges and, and so on and so forth, right? So very, very nicely to, you know, put all those data points then together to actually see, oh, yeah, these are, you know, these are related to these big players that have been entering the space. And so we've seen this, this rise in, in, in, in, in, in whales and, yeah, we, we framed it as you know- The, the, the whale birthing, because it's, it's the amount of, of, of entities that hold more than, one thousand, bitcoin, and, and that has, I mean, I think in December, in January, it just surged a lot. It has come down a bit now, over the last couple of, I don't know, two, three weeks, but, but we really saw that, that huge, increase, throughout the, the last couple of months on-

Yeah, this is all very fascinating stuff. So I guess maybe if you were to, you know, have your outlook over the, let's say for the rest of this year, what are some of the indicators? What are some of the things that you are looking out for?

So I think there, there's, in general, there's a couple of themes that, that I look at. So, so one, one thing that I never take my eyes off is, is, you know, network activity, network health. you know, network security, right? These really these fundamentals, I wanna know what is happening there and what, what is the hash rate doing? What is, what is, you know, the, the amount of, of, of, of activity in, in the network? Is it healthy? what is the adoption? How many people, new users are coming in? That's something that I, that I look at very, very closely. Then I think this, this whole liquidity narrative is, is something that I'm keeping my eyes on, very, very Closely, to, to see actually how that plays out, how that structurally maybe changes over the next weeks or months, or whether that trend, that trend actually continues. I'm looking at, at whales as well, so these larger players, you know, whether, whether it's, whether, you know, there, there's more of them coming in, you know, whether we can gawk, if they're, if, if they're transacting, then really, you know, make the connection. Again, there to off-chain data to something like, you know, what are the grayscale holdings, what is the Bitcoin ETF doing, right? So everything that, that goes into the direction of, of institutional and the data points that are available for those. Right now, I have a very close eye on, on, on retail. I really wanna see, you know, how, how this plays out, if, if this keeps uptrending, if, if, you know, if we can actually see, you know, a lot of- FOMO and FUD within this bull run, you know, potentially a bit more volatility, whether we s-really see increased activity of, of transactions into and out of exchanges, that's, that's definitely something that I, that I look at. And then, I think the, the really these, these market indicators, right? These, these market cycle indicators, like, you know, we talked about Nupol, there is, you know, things like- So per the reserve risk, the MVRVZ, a lot of these fundamental cycle indicators that, you know, give you a good sense of, you know, which of those indicate that you might be getting into the danger zone of, you know, reaching a top. And then I think what will be really, interesting to see is, you know, whether this is potentially a, a double top. Cycle, you know, where we get up to whatever eighty, ninety, a hundred, you know, have, have a big correction and then, and then start ramping up again. That's, that's something that I'm, that I'm, that I'm looking at as well. and something we didn't talk about, which is off-chain, is, is the derivative space, right? I think futures and, and, you know, the open interest there is, is something that I, that I really like to look at a lot with respect to To, you know, and then also combine it with, with, with on-chain because, yeah, der-derivatives are, are something that, that, that have, have gained a lot of traction. In fact, you know, there, there have been now times where they showed more volume than, than, than spot exchanges and, and, and so, you know, and at the same time it also means that, if you have, if you have these futures contracts, that there is, you know, margin locked up in these contracts that- That, that, you know, then again, ties into the, the whole kind of, you know, supply and, and, and liquidity narrative. So yeah, I would say roughly, those are the, the, the big, big things that I'm, that I'm, that I'm looking at, and I probably haven't got many. There's so many. Because it's just, it's just so, there's so many and so much that is interesting there, yeah. Yeah,

well, it's been really fascinating, yeah, just,

So, Rafael, before we let you go, where can listeners follow you and where can they find Glassnode online?

Yeah, so on Twitter it's, glassnode dot com for, for, from, for the company. I'm Neocortex on Twitter, first E is a three, and otherwise on studio dot glassnode dot com, this is our, our suite, where, you know, we have all the metrics that we talked about here today as, as a live version for, for people to explore.

Excellent. Well, look forward to Soon. Thanks, Rafael.

Thank you very much, Stefan. It was a pleasure.

So let me know what you think of the discussion about on-chain analytics with Rafael there. My DMs are open on Twitter. You can find me at Stefan Livera, and my website is stefanlivera dot com slash two five eight for the show notes on this episode. Thanks, and I will see you in the citadels.