Exploring Active Deposits in Relation to Overall Active Addresses to Find Price Divergences
Our new 'Daily Active Deposits & Non-Deposit Activity' Sansheets model has just kicked it up a notch. Last week, we released this model to positive reception, and discussed all about how it works here. You can see when a crypto asset is seeing more active deposits, or more non-deposit activity than usual with some helpful auto-generated charts in real-time.
This week, we've added a chart to make active deposits even more useful for our Sanbase PRO community to identify which assets are seeing the highest percentage of active deposits (indicating that selloffs could be imminent) in relation to its total active addresses on a given day:
Here, we see the percentage difference between the most previous day's daily active deposits vs. active addresses ratio, and the resting 90-day average of this same ratio. In essence, we're seeing when the percentage of deposits vs. all activity on a network is going up. This can be much more helpful than simply seeing that an asset is having its active deposits spiking (bad), but also seeing its overall addresses spiking (good).
This ratio reads between the lines to tell our users whether the proportions of the current address activity for 35+ crypto assets are something to be concerned about, or whether the ratio reflects a simple healthy amount of utility.
Long story short, every asset has a different ratio of daily active deposits vs. an overall activity ratio that it generally sits at. Aelf sits at a whopping 24.8% of its address activity being sent to deposit addresses over the past 3 months, while Ethereum generally sits at a much more conservative 5.1%. But this information, represented by the blue (1-day deposit ratio) and orange (90-day ratio) dots on the model doesn't tell us much on its own.
If Aelf's deposit activity ends up being a third of its address activity (instead of a quarter), as it was yesterday, then this would be much more of a concern theoretically, regardless of whether the coin had a significant amount of overall activity. It implies that there was a much higher percentage of activity done with the intention of moving to deposit addresses (therefore, potentially selling off).
And looking at Aelf's price performance on Sanbase, we see that the price did see a notable drop on March 15th, the day that saw a notable separation between daily active deposits and daily active addresses.
So yes, the aforementioned model will do the math for you and identify when there's a ratio spike between active deposits and active addresses, and it should function as a great indication for warning signs when this ratio gets high, resulting in red bars on the model.
On the flip side, if daily active addresses are high and active deposits are low, this should be considered a positive sign for that asset, as it means utility is high, but coins moving to exchanges are low.
An example of one of the most bullish separations, according to the model, is MATIC. The most previous day, according to the above model, indicates that there is a 48% better ratio than average favoring daily active addresses over deposits in the last full market day. We can see it illustrated in the below chart (ignore the current day showing a big drop in addresses in deposits, as it's an incomplete day at the time of this writing):
Active addresses jumped up on March 15th, while active deposits dropped down. This was a good sign, and the 16th ended up seeing a nice rebound day.
Now, of course, setups like this won't always be as night and day as these two above examples indicate. But with some patience and careful analysis, you should be able to use this model to your advantage. Download a copy of it here, plug in your Sanbase PRO API today, and enjoy the benefits of having this information at your fingertips as long as you're a PRO member with us!
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.