Cointime Economics : Glassnode framework for Bitcoin on-chain metrics

[fillippone]

Ark invest, together with Glassnode just released a monumental paper to develop a new economics framework for analyzing Bitcoin on-chain metrics, called Cointime Economics

We introduce Cointime Economics, a new framework for the analysis of the Bitcoin economy. It relates the concepts of time and supply to derive dynamic metrics of Bitcoins economic activity which account for both supply and demand forces.

This 128-page report has been in the working since two years by the joint effort of Glassnode Lead On-chain Analyst James Check  (@_checkmatey_) and ARK’s David Puell (@dpuellARK)

The report analyzes a series of new on-chain methods for evaluating bitcoin price and activity.


On Glassnode Website you have a dashboard dedicated to this research:



You can request a 14-day free trial.

Discover more with those additional resources:

• Glassnode Blog Post Introducing Cointime Economics
• A primer by Ark Cointime Economics: A New Framework For Bitcoin On-Chain Analysis
• First deep-dive from Glassnode:  A Groundbreaking  Economic Framework for Bitcoin
• a YT video:
  

I will dig into this report trying to outline the most significant indicators.

[SamReomo]

Ark invest, together with Glassnode just released a monumental paper to develop a new economics framework for analyzing Bitcoin on-chain metrics, called Cointime Economics


This 128 pages report has been in the working singe two years by Glassnode Lead On-chain Analyst

The report analysed a series of new on-chain methods for evaluating bitcoin price and activity.

I will dig into this report trying to outline the most significative indicators.

If that report can predict the price of Bitcoin with the help of those indicators in a accurate way then that would be a really nice addition in Bitcoin-sphere. That report truly seems to be a nice addition for the investors who want to invest in Bitcoin because it may offer them various details about the price of Bitcoin and also about the time to invest in it. The best thing about the report is that it will get its data from on-chain activity of the blockchain as well as used methods to gain details of those on-chain data to predict the price of Bitcoin with the newly formed indicators which is new in the world of Bitcoin investing.

I don't think that many people will be able to take advantage of that report in its early days but after some time they will continue to realize that there's something like such a report that could be used as a valuable tool to begin investing in Bitcoin. I have read a little about the report and have known that it may work on various factors like transaction volume, number of addresses that hold some coins, fees of the miners and other such factors. But, still we must have to delve deeper into this report to know every known factor that it may look at before predicting the price of Bitcoin with the help of those indicators. 

[Ucy]

Well, in decentralized p2p trading it's difficult to know and predict things if you don't have the order book or know how much most buyers and sellers are willing to buy or sell Bitcoin. The best kind of orderbook for decentralized trading would be the ones that do not show what people are willing to buy or sell Bitcoin... that info should be confidential or private... which should make it difficult for price manipulators from knowing the general strength of demand vs supply in order to manipulate the price.
The price should move naturally, according to the Bitcoin economic/market forces... The market forces exclude people/things that tend to create false demand/supply based on the overall information they have on demand and supply.

[@sriyan]

I can see that there are good points for the bitcoin investors to read before investing in bitcoins. But the main thing is history will never always repeat. Bitcoin price depends on the news of the crypto market. But we can follow some on-chain metrics to get an idea about bitcoin prices.

Eg :

1. Exchange volumes
2. Btc addresses

[un_rank]

If that report can predict the price of Bitcoin with the help of those indicators in a accurate way then that would be a really nice addition in Bitcoin-sphere.

I will not be that optimistic. There is no model that has accurately predicted the price at every attempt, we all make educated guesses based on historical data and expected trajectory which can be correct some of the time.

I took a look at the YouTube video and it was a concise piece which offers some promise that the model will be useful to the average bitcoin user.

- Jay -

[fillippone]

But we can follow some on-chain metrics to get an idea about bitcoin prices.

Eg :

1. Exchange volumes

2. Btc addresses

Exchange volumes are not an on-chain metric. Exchange Volumes are typically off-chain, as transactions happen off-chain at exchanges.
You might find exchange holdings on-chain, even if it requires a certain effort in the Heuristic of determining which address belongs to an exchange.
Mayor on-chain tools provide for "entity labelling", but nothing can ever assure us exchanges have other reserves.

[Yamane_Keto]

For years I have seen Glassnode analyzes and some on Twitter give forecasts and analyzes based on On-chain Analyst, but have we got a philosophy or theory that gives useful results for these analyzes? I see that technical analysis gives better results and predictions for the direction of supply and demand than On-chain Analyst.
If you could simplify the concepts Glassnode is showing or point me to a place I can read more about it I would appreciate it, many times I tried to understand their analysis and ended up without any knowledge.

[SeriouslyGiveaway]

For years I have seen Glassnode analyzes and some on Twitter give forecasts and analyzes based on On-chain Analyst, but have we got a philosophy or theory that gives useful results for these analyzes? I see that technical analysis gives better results and predictions for the direction of supply and demand than On-chain Analyst.
If you could simplify the concepts Glassnode is showing or point me to a place I can read more about it I would appreciate it, many times I tried to understand their analysis and ended up without any knowledge.

A philosophy includes having a long vision and focusing on fundamentals.

Whales have to set up their manipulations with a long time, months and years so if you read an on-chain analysis today, smell some signals and think market will move up and down tomorrow, it won't happen.

Fortunately, it is not because on-chain metris are useless or incorrect, it is because you are impatient and think market will move up or down after on-chain metrics show some signals of whale plans.

[franky1]

all these analytics are based on historic data involving historic prices. so of ofcourse if they use the price of a metric of one stat.. and the price of a metric of another stat ofcourse there will be a correlation of price. because both use price as part of their bases

but this is just historic data shadowing the same historic data and is not going to predict future prices

the only non market price stat that i have found that indicates a future strength of a better market in the future.. is mining cost.

the most efficient mining cost on the planet sets the base wholesale VALUE, to which the spot market retail PRICE then speculates above(ontop)

[Yamane_Keto]

Fortunately, it is not because on-chain metris are useless or incorrect, it is because you are impatient and think market will move up or down after on-chain metrics show some signals of whale plans.

If it is not useful for predicting a time frame of weeks and months, what is its benefit? Long-term forecasting for years is almost impossible due to the occurrence of many variables, and if it is not useful in making decisions on the scale of months and weeks, then it is useless.

the only non market price stat that i have found that indicates a future strength of a better market in the future.. is mining cost.

the most efficient mining cost on the planet sets the base wholesale VALUE, to which the spot market retail PRICE then speculates above(ontop)

Can you add more or clarify your point, I did not understand the correlation of the cost of more efficient mining with the retail price in the spot market.

[fillippone]

I might be joining too many dots here.
But ARK has been sponsoring this Bitcoin on-chain effort by Glassnode.
ARK has filed for the listing of an actively managed fund based on on-chain analysis:

Amid spot BTC ETF effort, Ark and 21Shares seek to launch other crypto funds

As Ark Invest and 21Shares remain in pursuit of a spot bitcoin ETF, they’re also looking to bring three other crypto funds to market.

The new product proposals were submitted to the Securities and Exchange Commission the same day the regulator chose to delay its decision on the companies’ ETF that would hold bitcoin directly. 

Empowered Funds, a subsidiary of white-label ETF platform Alpha Architect, is listed as the investment adviser of the proposed funds. 21Shares and Ark Invest would serve as sub-advisers.

One of the ETFs would invest in cash-settled bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), according to an Aug. 11 filing. The planned offering — to be called Ark 21Shares Active Bitcoin Futures ETF (ARKA) — can also hold US Treasury securities, money market instruments and repurchase agreements.

A second proposed fund, the Ark 21Shares Active On-Chain Bitcoin Strategy ETF (ARKC), would similarly invest at least 25% in bitcoin futures contracts, or ARKA — and the remaining assets to cash and cash equivalents.

But unlike ARKA, the so-called on-chain fund uses a proprietary trend indicator to formulate its allocation strategy by determining whether the bitcoin (BTC) market trend is bullish or bearish. Inputs to the trend indicator could include historical price data or on-chain data, the document adds.

I might be speculating too much here, but maybe ARK will use Glassnode's new metrics to monitor the on-chain activity used to run that fund?
 

[Beerwizzard]

I might be speculating too much here, but maybe ARK will use Glassnode's new metrics to monitor the on-chain activity used to run that fund?

ARK could sponsor Glassnode for a million of reasons. They are probably confidential.  But even if ARK is going to use the new metrics it will still be used along with over a hundred of another indicators.

Just IMO, but financial aspect always comes first. Decent earn opportunities will always create the atmosphere for positive on-chain metrics.