The number of unique entities that were active either as a sender or receiver. (e.g. clustering bitcoin addresses into entities such as balances < 1000 bitcoin or balances > 1000 bitcoin).
Score is an indicator which reflects the relative size of entities that are actively accumulating/distributing their BTC holdings on-chain. A higher score closer to 1 reflects that over the last month, big participants (or a big part of the network) have been accumulating coins, whilst a lower score closer to 0 reflects that over the last month, big participants have not been accumulating coins or have been selling them.
Altcoins (alternative coins) is a term used to describe all cryptocurrencies other than Bitcoin (BTC). Their name comes from the fact that they’re alternatives to Bitcoin and traditional fiat money.
“All-Time High” (ATH) refers to the highest price (or market cap) that an asset has reached since its listing or inception. As the price used to define the “all-time high”, it just refers to the highest price a trader paid for an asset, regardless of how much he bought of the asset.
Bitcoin’s market cap as a percentage of the market cap of all cryptocurrencies.
A blockchain is a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.
Balance on Exchanges shows the total amount of coins held on exchange addresses
Circulating Supply shows the total amount of all coins ever created/issued, i.e. the circulating supply.
Crypto “Mining” is the process by which new coins are entered into circulation. A process where miners compete for the next block which are added to a blockchain. It’s done with hardware that solves a complex computational math problem. Miners are also responsible for securing the Bitcoin network, making it difficult to attack, alter or stop the network.
A crypto wallet is what holds cryptocurrencies and allows you to keep them safe and accessible while allowing you to send and receive to and from other wallets or exchanges.
DeFi, or decentralized finance, is a new-breed of peer-to-peer financial services that would be automated, built on a blockchain, and would compete with traditional banks. It aims to decentralize core traditional financial use cases like trading, lending, investment, wealth management, payment and insurance.
Do Your Own Research (DYOR). It is often used as a kind of disclaimer by some cryptocurrency figures when they speak on cryptocurrencies or digital assets.
Ratio of the current market capitalisation to the annualised dormancy value (which is itself a measure of how long, on average, coins are remaining dormant, or unmoved). This gives a gauge of how many old coins are being spent relative to the recent overall trend and can be used to help time market lows and assess whether Bitcoin is in a bullish or bearish primary trend.
Fiat money is legal tender whose value is tied to a government-issued currency, like the Australian dollar, while cryptocurrency is a digital asset that derives its value from its native blockchain. Top crypto exchanges allow users to swap fiat currency directly for cryptocurrency.
FUD means “fear, uncertainty and doubt.”
A hardware wallet is a cryptocurrency wallet which stores the user’s private keys (critical piece of information used to authorise outgoing transactions on the blockchain network) in a secure hardware device in comparison to an app or online exchange.
Refers to the total combined computational power that is being used to mine and process transactions on a Proof-of-Work (PoW) blockchain, such as Bitcoin. The metric is important as it assesses the strength and more specifically the security of the Bitcoin network. The more miners, the higher the hashrate, and the more secure the blockchain becomes.
Hold on for Dear Life. The term HODL originated as a misspelling of the word “hold.” Ultimately the acronym “hold on for dear life” was attached to the term.
Provide a macro view of both the age distribution of the existing supply, and of changes to this distribution as coins mature and are spent.
Refers to the digital asset being regularly used as a transactional currency and held by individuals and businesses as normally as fiat currency.
Refers to a network or protocol that is built on top of an underlying blockchain, such as bitcoin or Ethereum to improve its scalability and efficiency.
Lightning Network Capacity shows the total amount of BTC locked in the Lightning Network. Lightning Network is a second-layer technology focused on transactions. Capacity refers to the total amount of Bitcoin locked in the network.
A quantitative measure that gives insight into the behaviour of investors. It is calculated as the ratio of Coin Days Destroyed (the sum of coins spent that day multiplied by the number of days since each coin was last spent) and the sum of all coin days ever created. Liveliness increases as long term holders liquidate positions and decreases while they accumulate. A reading between 0 and 1 is used as a measure of Liveliness.
Crypto market capitalisation is the total value of a cryptocurrency. Where stock market capitalisation is calculated by multiplying share price times shares outstanding, crypto market capitalization is calculated by multiplying the price of the cryptocurrency with the number of coins in circulation.
Shows the average estimated number of hashes per second produced by the miners in the network.
Is a cryptocurrency that is based on a meme or that was created as a joke in much the same way as a meme.
The process by which digital art becomes part of the Ethereum (or an alternative) blockchain. Your digital artwork is represented as an NFT so it can be traded in the market and digitally tracked as it is resold or collected again in the future.
To describe a cryptocurrency that is under a strong upward market trend.
The MVRV Z-Score is a market indicator which is used to assess when bitcoin is over/undervalued relative to its “fair value”.
The net magnitude of profit, or loss realized by all holders spending coins. Realized Profit/Loss is assessed relative to the price when a coin last moved. NRPL provides a reflection of aggregate market sentiment, capital inflows or outflows, and trends in network profitability.
Net Unrealised Profit/Loss is the difference between market cap and realised cap divided by market cap.
Assets that are verified and stored using blockchain technology but are nonfungible, meaning they are unique and can’t be replaced with something else. The digital token represents the ownership for virtual and physical assets.
Number of Addresses with a Non-Zero Balance shows the number of unique addresses holding a positive (non-zero) amount of coins. This metric gives us a big picture view into whether the network is growing.
Looks at the number of unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted. This metric can indicate how much excitement in the market there may be for the asset.
shows the number of unique addresses holding 1,000 coins or more.
An emerging field aimed at extracting and scrutinising the plethora of data available about public Blockchain transactions to facilitate better decision-making. Its tools and techniques are often applied for trading and investment purposes.
Percent Balance on Exchanges measures the percent supply held on exchange addresses. The trend can indicate the sentiment of investors, rising when sentiment is bearish and declining when investors are more inclined to hold for the longer term.
Percent of Supply Last Active 1+ Years Ago shows the percent of circulating supply that has not moved in at least one year.
Percent Supply in Profit looks at the percentage of circulating supply in profit i.e. the percentage of existing coins whose price at the time they last moved was lower than the current price. This metric can potentially help identify market tops and bottoms, where historically a figure above 95% has coincided with market tops and below 50% coincided with market bottoms and attractive entry points.
Proof of stake protocols are a class of consensus mechanisms for blockchains that work by selecting validators in proportion to their quantity of holdings in the associated cryptocurrency. This is done to avoid the computational cost of proof of work schemes and is considered less harmful to the environment.
Proof of work (PoW) is a decentralized consensus mechanism that requires members of a network to expend effort solving an arbitrary mathematical puzzle to prevent anybody from gaming the system. Proof of work is used widely in cryptocurrency mining such as bitcoin, for validating transactions and mining new tokens.
Shows the number of bitcoin in the Purpose Bitcoin ETF. This ETF is the largest spot bitcoin ETF in the world, and flows into and out of the fund are sometimes used as a gauge of retail sentiment.
Is the sum of value when all Bitcoins last moved. Realised value and realised cap are used interchangeably.
This metric is measured by looking at the value of coins at the time they were last moved. As an example, 10 bitcoin trading at a price of $49K has a market cap of $490,000 but those same coins if last moved at a price of $20K, has a “realised cap” of $200,000.
Realised HODL Ratio is a market indicator that looks at the ratio of transactions between short term holders (1 week) versus long term holders (1-2 years).
Realised Price or average cost basis is the realised cap divided by the current supply.
Denotes the total loss (USD value) of all moved coins whose price at their last movement was higher than the price at the current movement.
When the owners of a cryptocurrency project steal all the investor money and abandon the project, effectively making it worthless.
Staking offers crypto holders a way of putting their digital assets to work and earning ‘rewards’ or passive income, without needing to sell them.
A digital signature produced by the Schnorr signature algorithm that was described by Claus Schnorr. It is a digital signature scheme known for its simplicity, among the first whose security is based on the intractability of certain discrete logarithm problems.
A seed phrase is a series of words generated by your cryptocurrency wallet that give you access to the crypto associated with that wallet. As long as you have your seed phrase, you’ll have access to all of the crypto associated with the wallet that generated the phrase — even if you delete or lose the wallet.
A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network.
Is assumed to be cash invested or wagered by those perceived to be experienced, well informed or “in-the-know”.
A publicly traded company created for the purpose of acquiring or merging with an existing private company. The SPAC turns the company it acquires into a publicly traded firm without the firm having to go through the lengthy and expensive process of an IPO. Although SPAC strategies can be complicated, they tend to take less time to complete than traditional IPO listings and can be cheaper.
A metric that bundles spent coins into categories depending on their age and presents them in colour bands as a proportion of total coins moved. The indicator helps identify whether the on-chain transactions are coming from younger or older coins and highlights whether market movements are influenced by long-term HODLers, newer market participants and/or traders.
An indicator which reflects the degree of realised profit and loss for all coins moved on-chain for a specified timescale (daily, weekly, monthly, etc.). If SOPR is trending higher, it implies profits are being realised with previously illiquid supply being returned to liquid circulation. If SOPR is trending lower, it implies losses are being realised and/or profitable coins are not being spent.
Shows the percentage of spent volume from each age bracket of coins measured from the last time it was spent or changed hands.
Source: Glassnode. Illustration only.
A stablecoin is a class of cryptocurrency that attempts to offer price stability and is backed by a reserve asset such as US Dollars or gold.
Defined as wallets with less than 10 bitcoin.
Defined as wallet addresses with 1000 or more bitcoin excluding exchange balances, ETFs, and funds such as the Greyscale Bitcoin Trust.
This metric shows the amount of bitcoin held by long-term holders, which are coins held longer than 155-days.
Refers to the amount of digital currency someone has left remaining after executing a cryptocurrency transaction such as bitcoin.
Is a metric which is based on volume distribution and illustrates how much bitcoin has moved at different price levels.
The term “whale” is used to describe an individual or organization that holds a large amount of a particular cryptocurrency. There is no exact cut-off threshold for this definition, and usually depends on the percentage of the total supply, however for Bitcoin is defined as someone holding more than 1000 BTC. A whale selling off their holding can impact prices of the cryptocurrency.
Investing in crypto assets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto asset markets.
Investing in crypto assets is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment.
Any investment in crypto assets should only be considered as a very small component of an investor’s overall portfolio.
BetaShares Capital Limited (ABN 78 139 566 868, AFSL 341181) (“BetaShares”) is the issuer. This information is general only, is not personal financial advice, and is not a recommendation to make any investment or adopt any particular investment strategy. It does not take into account any person’s financial objectives, situation or needs. Investing involves risk.
Written by
Justin Arzadon
Director, Adviser Services & Head of Digital Assets.
C4 Certified Bitcoin Professional (CBP) and Blockchain Council Certified Bitcoin Expert™ with over 18 years’ experience in the ETF market. Passionate about the future of money.
