QNT clocks in a MONSTER week - but can it reach price discovery?

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Ibis
Oct 25, 2020

While the market attention was glued to Bitcoin for most of the week, several altcoins were able to sneakily clock in massive gains and even outgrow their September tops.


One of the week’s top performers is Quant’s native token (QNT) which surged by an impressive +27.6% over the past 7 days (+64.6% on the month), completely recovering from the market-wide crash on September 1st - and then some.


Currently trading at just over $13, QNT has been inching ever closer to its price all-time high of $15.6, meeting little resistance on the way:

QNT, price, year to date (Source: Sanbase)

The last time we covered QNT was ahead of the much-anticipated launch of the Overledger network, which promptly pumped the Quant coin in a classic ‘buy the rumour, sell the news’ fashion.


This time around, however, there’s a noticeable lack of juicy rumours or price-moving announcements supporting the QNT rally. In fact, the only mention-worthy scoop since the start of the month was Quant’s sparsely-covered collaboration with Ripple, which has recently added the Overledger gateway as one of its XRP validators.


Which begs the question - what made QNT recover so much quicker than almost all other altcoins, and how sustainable is the rally ahead of the coin’s price ATH?


To find out, we took a close look at Quant’s on-chain activity, social impressions and project development since the start of October, using data and metrics available on Sanbase.


As you’ll see below, QNT’s fundamentals have shown solid growth and a number of bullish markers over the past few weeks, very much in line with the rising market.


That said, we’ve also seen several ‘yellow flags’ forming on QNT’s charts in the past 48 hours, which may delay the coin’s road to price discovery. Let’s explore.


Fundamentals support QNT’s price rally

As we’ve seen time and time again, sustained price rallies often require a high level of network activity in order to propel the price forward. This has very much been the case with QNT, whose on-chain activity has seen a considerable uptick since the start of the month.


The amount of daily addresses interacting with (sending or receiving) QNT has grown by 227% in the past month, peaking at 452 earlier this week. For context, out of 1119 ERC-20 coins in the Santiment database, only 41 have recorded more than 450 active addresses in the past 24 hours, putting QNT in the company of DeFi favorites like REN, 0x, KNC and more.

QNT, daily active addresses, past year (Source: Sanbase)

We’ve seen a very similar rise in the amount of new addresses interacting with QNT daily, which has grown by +368% since October 1st, showing signs of growing network adoption alongside the price rally.

QNT, network growth, past year (Source: Sanbase)

And while both its network and price action have surged, on-chain data suggests that many QNT holders may not be ready to sell just yet. The amount of daily QNT deposits (addresses that funnel QNT to exchanges) has largely plateaued since October 1st, suggesting a lack of sell-side pressure despite the +64.6% price growth:

QNT, daily deposits, past year (Source: Sanbase)

In fact, according to QNT’s exchange flow balance - which calculates the difference between the coin’s exchange inflows and outflows - more QNT has been withdrawn from exchanges over the last 7 days than have been deposited, which may help explain the coin’s largely uninterrupted price gains:

QNT, exchange flow balance, past 6 months (Source: Sanbase)

This is further evident in the total amount of QNT being held in known exchange wallets, which has dropped by 360,000 QNT (~$4.8M at the time of writing) since the start of the month:

QNT, supply on echanges, past year (Source: Sanbase)

We have seen this inverse correlation between the coin’s price and its exchange holdings occur frequently, both for Ethereum and various ERC-20 assets. Assuming unchanged demand, the coin’s available supply to trade diminishes (sometimes intentionally/artificially), driving its trading price up.


A lack of significant profit-taking is further supported by QNT’s Network Profit/Loss, which computes the average profit or loss of all coins that change addresses daily. For each coin that moves on-chain, NPL takes the price at which it was last moved and assumes this to be its acquisition price. Once it changes addresses again, NPL assumes that the coin was sold.


While not a perfect measure, Quant’s Network Profit/Loss ​can ​point to general trends in holder sentiment and overall levels of market FUD or FOMO. As you can see, several recent price tops have been earmarked by major spikes in QNT’s NPL, indicating strong profit taking by some QNT investors:

QNT, network profit/loss, past 2 months (Source: Sanbase)

Despite a +27.6% week, however, we have yet to see a significant uptick in Quant’s network profit to boot. Once we do, we could be looking at a wider holder exodus and - in turn - an increased risk of a short-term price correction.


To summarize, QNT’s price gain has been accompanied by a strong growth in the coin’s on-chain activity, declining sell-side pressure and commendable patience by many QNT holders, all of which likely contributed to its impressive October.


Caution up ahead

Despite the many positives mentioned above, we are starting to see some concerning signals appear in QNT’s fundamentals over the past 72 hours, which may put a sustained rally - and a new price ATH - into question.


Often a sign of future price volatility, there’s been a string of recent spikes in QNT’s age consumed, which tracks the activity of previously dormant coins:

QNT, age consumed, past year (Source: Sanbase)

In line with the above, we’ve also seen the largest-ever spike in the amount of QNT that have previously remained dormant for 2+ years, suggesting a strong shift in the behavior of some long-term QNT holders:

QNT, 2y dormant circulation, past year (Source: Sanbase)

On the whole, HODLers and veteran investors tend to execute trades based on extensive analysis or intimate market knowledge, which is why sudden changes in their behavior often coincide with shifts in market conditions and price volatility.

Another important on-chain indicator, QNT’s MVRV ratio has also reached concerning levels with QNT’s push above $13.


QNT’s 30-day MVRV ratio - which tracks the average P/L of addresses that acquired QNT in the past 30 days - is currently +29.2%, meaning that ‘new’ QNT holders are, on average, up +29.2% on their initial investment:

QNT, 30-day MVRV ratio, past year (Source: Sanbase)

As a rule of thumb, the higher the MVRV ratio, the more likely it is that QNT holders will begin to exit their positions and take profit. Because of this, analyzing MVRV levels around ​previous price tops​ can reveal at which profit margins QNT’s holders were comfortable selling in the past.


As you can see above, a 30-day MVRV ratio between 25%-40% has often earmarked a ‘danger zone’ for QNT in the past, as short-term holders become content with their gains and start to take profit.


Looking at incumbent holders, QNT’s 365-day MVRV ratio is currently +85.6% - the highest it’s been in over a year:

QNT, 365-day MVRV ratio, past 2 years (Source: Sanbase)

In a word, QNT’s MVRV ratio points to strong profit margins for both short-term and long-term QNT holders at the time of writing, suggesting a solid (and growing) incentive to sell across the board.


Finally, QNT’s social data is also starting to flash some ‘yellow flags’ as we approach the $14 mark. In particular, the amount of QNT-related mentions on 1000+ crypto social media channels has been on a solid uptick over the past 3 days, signaling increased market awareness of the pump and ongoing FOMO chatter:

Amount of QNT-related mentions on crypto social media, past year (Source: Sanbase)

In general, extreme social mentions - especially during price pumps - often point to periods of 'peak hype' and irrational market confidence, and tend to coincide with short-term consolidations or upcoming corrections. You can see this exact pattern at two of Quant’s most recent price tops, both coinciding with strong spikes in social volume.


For evidence of increasingly bullish QNT sentiment, a short journey through your Twitter feed should suffice:



I’d keep an eye on these indicators in days to come, as rising social volumes, growing MVRV and renewed activity of Quant’s long-term holders may put a wrench into price discovery for the time being. Stay safe out there!

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Ibis
Oct 25, 2020

Thanks for reading!

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