Author: Murphy, Source: Author Twitter @Murphychen888

On-chain data evaluation model - Shanzhai Season

One day I was in class, Mr. Xiao Chi @FC_0X0 sent me a WeChat message saying: "There is a The data is the total inflow of stablecoins into exchanges and the BTC withdrawn. There may be a direct relationship between the scissor difference in the value of the US dollar, that is, the remaining potential purchasing power, and the fluctuations of altcoins. Can we use this logic to look at the timing of the launch of altcoins? ”

What a coincidence, what a coincidence. In my courseware, I also mentioned the data observation on the potential conditions of "capital overflow", which corresponds to the launch time node of some large-capitalization altcoins. But it was just a rough outline at the time, and I seemed to vaguely think of some places that had been missed before...

After I came back, I sorted out the data and followed the ideas given to me by Xiao Chi. , reimagined a set of visual indicators that can effectively judge the "copycat season". Let me share my thoughts below:

Copycat season condition 1: Assessment of capital overflow conditions

Figure 1

Figure 1 Medium green indicates whether the total size of stablecoins flowing into the exchange within 30 days is greater than the USD value of BTC being withdrawn from the exchange. If so, it means that in addition to buying BTC, these funds may also spill over into altcoins. The higher the green signal column, the greater the theoretical overflow value, and the more prerequisites are available for the start of the copycat season.

From the data point of view, the theoretical overflow value is the largest during the two periods of 2023.10-2024.3 and 2024.11-2024.12, which means that the possibility of a "copycat season" is greater during these two periods. high. There is also a short period between August and September, but it is inferior to the above two periods in terms of scale and duration, so its influence is relatively weak.

Copycat Season Condition 2: Capital inflow of mainstream assets

(Figure 2)

Historically, BTC often leads the overall sentiment of the crypto market first, and then market confidence will flow to other large-capitalization mainstream coins, and finally tilt further towards ALT. A tool to visualize this capital rotation is to use the realized market cap of BTC and ETH and the 30-day change in the total supply of stablecoins (Figure 2). When these three major mainstream assets all experience net capital inflows, it is deemed that market sentiment has become excited and the overall risk appetite has increased. This is also one of the necessary macro conditions for starting the copycat season.

From the data point of view, the three major mainstream assets experienced net capital inflows at the same time during the two periods of 2023.10-2024.8 and 2024.10-2024.12, reaching peaks in March and December 2024. thisIt is also the time when market sentiment is the most fomo so far in this cycle.

Altcoin Season Judgment 3: The positive momentum of the market value of altcoin dispersion

(Figure 3)

Judgment The data basis for the start of the altcoin season also requires a third condition, which is to isolate positive momentum in the dispersion of the total market capitalization of altcoins. We need to look for time periods when the total valuation of the altcoin’s 7D SMA within its range is greater than its total 30D SMA valuation. Because, this can represent that the valuation of altcoins is amplifying in the short term, and the liquidity flowing into altcoins is increasing rapidly.

In Figure 3, the red is the 7D mean and the blue is the 30D mean; from the data point of view, the red line crosses the blue line during the two periods of 2023.10-2024.4 and 2024.11-2024.12, which means the flow of the currency circle Sex is beginning to tilt like that of altcoins, and the market value of altcoins is turning to a phase of positive momentum growth.

Summary

The above three conditions are considered from different perspectives. Condition 1 represents the possibility of capital overflow; condition 2 represents overall sentiment and risk preference; condition 3 represents liquidity tilt. When both are satisfied, there is a high probability that a copycat machine is coming.

The current condition 2 is met, but 1 and 3 are not met; then we can think that the foundation for starting the alt season is there, but the liquidity is still concentrated on mainstream assets (especially BTC), and the market Funds are not spilling too much into altcoins.

However, we can also see that the "negative overflow" in condition 1 is slowly shrinking, which is a positive sign. Although the copycat season that friends are looking forward to may have to wait patiently, what should come will come.