Bold Predictions, Week XV - Oh, How Much Things Change in a Week...

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brianq
Jul 29, 2020

SANBASE SIGNALS

July 28, 2020


What a difference a week makes... Just a day or two after the release of Bold Predictions, Week XIV discussed how DeFi projects were getting perhaps a bit too much hype, market-wide volume drastically shifted toward large cap projects. Ethereum in particular began receiving a ton of FOMO after it skyrocketed past $300 for the first time in nearly a year. And when ETH began approaching its local top of $328, money began funneling into BTC, where it made its own 10-month high, surpassing $11,000 for the first time since September, 2019. As of the time of this writing, we are again seeing altcoins dominate Tuesday's trading. It's been a wild back-and-forth week, and we'll do our best to make some sense of it through our metrics as always!


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With every weekly volume we release of our Bold Predictions series, we are taking a look at the most recent three-day averages (or percent changes) for each metric we're covering. As a reminder, these signals are for intra-day traders to assess local tops and bottoms based on historically solid leading indicators. Our rating system is simplified for this week. A 0 to 10 scale, with 0 being as bearish as possible and 10 being as bullish as possible. This would mean that a 5 would be neutral and imply sideways movement estimates over the next week. Whether we call a project bullish or bearish for the next week or two, please remember that this has no relevance to what we think of the asset's long-term viability as an investment.


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This Week’s Assets:

  • BTC, ETH, REN, SNX

This Week’s Metric Breakdowns:

  • DAA vs. Price Divergence (2-Year Deviation From Mean), MVRV (30-Day), NVT

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Bitcoin ($BTC) - #1 Ranked Market Cap

  • 3-Day Movement: +11.2%
  • 30-Day Movement: +19.9%
  • 90-Day Movement: +27.2%

DAA vs. Price Divergence (Long-Term Deviation)

Bitcoin's price soared above $11,000, where it stayed for about five hours before dropping back off after many profit takers saw it as an opportunity. But when it did inevitable drop back into $10k range, it didn't stay long. At the time of this writing, the price is back above $11k and gaining volume. Daily active addresses, on the other hand, have neutralized on this surge, as network activity hasn't quite kept up with the speed of this price surge. It's genuinely a very tough call, and our model for the top crypto asset can't predict whether FOMO will kick in to allow DAA to catch up. So this is a complete wait and see in terms of DAA divergence.


Rating: 5.0




MVRV (30-Day)

The average Bitcoin investor that hit the buy button one month ago is sitting quite nicely, currently averaging around a +15% return. There may be a fakeout that could cause traders to drop out and sell low. Or the price may just fall back down. But either way, this is a bit of a concerning sign for a metric that generally will average right around 0% in the long run. Until the average trader isn't so far into the green (and for BTC, +15% in 30 days is quite significant), this metric indicates bearishness.


Rating: 3.0




NVT

NVT looked good yesterday, but the overall month of July saw a concerningly low amount of token circulation. It will most likely finish as a bearish month heading into August, even with a few more nice outputs of unique tokens transacting on Bitcoin's network to close out the month. It's not as bearish as it looks due to the outstanding previous day, but we still tick this a bit under average, as this model is measured on a monthly scale for a reason.


Rating: 4.0




BTC Average Rating: 4.0 (Slightly Bearish)



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Ethereum ($ETH) - #2 Ranked Market Cap

  • 3-Day Movement: +3.8%
  • 30-Day Movement: +40.8%
  • 90-Day Movement: +54.8%

DAA vs. Price Divergence (Long-Term Deviation)

Ethereum is seeing its largest sell signal since the night before Black Thursday. This isn't to say it's a major sell signal, but after the huge push to its current $324 market valuation, it appears that daily active addresses have lagged behind enough to create a very modest deviation of -4% below its mean. We still like the upside of it pushing higher next month, but this model indicates there could be a very short-term local top looming.


Rating: 4.5




MVRV (30-Day)

Ethereum's 30-day MVRV shows an even higher average return in this timeframe for investors than Bitcoin. Investors are averaging +20% in this span, meaning there haven't been a whole lot of weak hands here. Eventually, we'll need to some traders get flushed out in order to see a retrace of the MVRV back to 0% before getting too bullish here.


Rating: 2.5




NVT

Unlike Bitcoin, Ethereum's NVT token circulation has looked fantastic. It will be closing out its third straight month with a bullish signal, and we like the prospects of ETH making a serious run at $350 and beyond in August. Whether it happens in the next week is anyone's guess. But the network activity here is clearly implying there is enough health for a serious sustained run-up.


Rating: 9.0




ETH Average Rating: 5.3 (Neutral)



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Ren ($REN) - #65 Ranked Market Cap

  • 3-Day Movement: +8.6%
  • 30-Day Movement: +7.6%
  • 90-Day Movement: +147.0%

DAA vs. Price Divergence (Long-Term Deviation)

REN's DAA looks exactly like what you would want to hunt for when trying to identify gems using our model. Three of the last four days have been in the top 10% highest divergences for the past two years of data (as resembled by the neon green bullish colors). Note that for assets outside of the top 25, the effects of these divergences aren't always immediate. For example, the neon green signal in late June was associated with a local top. But a week later, it foreshadowed a higher high taking place. The 65th ranked asset may not pop immediately, but given time, we should see a nice bounce based on this high level of daily active addresses on Ren's network.


Rating: 9.5




MVRV (30-Day)

REN's 30-day investors are actually -6.5% as a result of many buying close to a local top in late June. This provides an excellent opportunity, as many may believe that the long rally that has seen this asset surge +147% the last three months, is coming to an end. But when MVRV's are below 0%, this often is an indication of great entry points as we've historically seen over the past year.

Rating: 8.0




NVT

REN is enjoying its best NVT month in its fairly brief history. It shouldn't be any surprise that this has helped trigger an all-time high being set in the beginning of the month of $0.197. Recent days have shown no slowing down on unique tokens being transacted on the network, so this is yet further indication that the rally likely isn't anywhere near being over for one of 2020's darling projects in crypto.


Rating: 9.5




REN Average Rating: 9.0 (Bullish)



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Synthetix ($SNX) - #41 Ranked Market Cap

  • 3-Day Movement: +2.2%
  • 30-Day Movement: +93.5%
  • 90-Day Movement: +338.7%


DAA vs. Price Divergence (Long-Term Deviation)

It may surprise you to see so much red for Synthetix during its monumental run since bottoming out on Black Thursday. But the reality is that the price has surged high, so quickly, that it would have taken an incredible amount if daily active addresses to keep up with this kind of rally. The signals did a pretty fantastic job of turning neon red when it finally hit the top, and for an asset that is only about two years old, it is still "setting the bar" for what its average daily active addresses historically will look like. Over time, these reds will start to neutralize, but for now, we are still looking a bit bearish despite the already pretty striking correction that has taken place.


Rating: 3.5



MVRV (30-Day)

SNX holders over the past 30 days since buying are about back to even, and this is a good level for polarization to take place. We will likely see a trend emerge over the next week or two, and whether returns begin to move in the positive or negative direction, the correct play would be to sell on crowd profit and buy on crowd losses. For now, this metric is a dead-even neutral signal.

Rating: 5.0



NVT

All of the green on SNX's NVT model may be a bit misleading here with it being a young asset that has increased its token circulation significantly since rebranding from Havven. But the reality is that July has still been its all-time best month of token circulation, and this has what has realistically been propelling its price into the stratosphere. Notice that the recent day hashmarks are a bit above the average height of the bar for the month, indicating that there has been a mild dropoff. But not enough to be of any real concern to change this from being a clear bullish signal still.



Rating: 8.0




SNX Average Rating: 5.5 (Neutral)



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If this week is any indication, it's that the overall crypto market cap continues to gain steam. This is great news for all assets, as tokens have been consolidating and profits cycling from asset to asset at a strikingly rapid pace pretty much since the bottom hit three and a half months ago. Our Sansheets models have been progressively improving, and adjustments have been made to improve their predictive performance, so we'll see how these models look come next week when we have our next edition!


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brianq
Jul 29, 2020

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Assets from this insight

Bitcoin logo

BitcoinBTC

$ 11584.52

4.05%in last 7d
Ethereum logo

EthereumETH

$ 388.31

3.95%in last 7d
Ren logo

RenREN

$ 0.221049

27.63%in last 7d
Synthetix Network Token logo

Synthetix Network TokenSNX

$ 4.33

7.65%in last 7d

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