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We measure the sentiment of the investors; it is called unrealized relative profit / loss ratio. HODLer Position Change (HPC) may be more interesting. Adamant finds the HPC by measuring the "liveliness" of the blockchain.
They explain the concept as such:
"A blockchain where all the parts move within one block has at this moment a liveliness of 100%. A chain of blocks of two years without new rewards en bloc, and exactly one year ago, all the pieces moved in a block and no transaction moved since, would have a vivacity of 50%. In other words, the measure fluctuates with respect to the total life of the blockchain. "
The tool badigns a lower value to crypto-currencies when the number of pre-exploited coins is high. The paper says of these types of strings:
"Vivacity can be used to weight market capitalization by comparing cryptocurrencies, as it will be close to zero for currencies that have inflated market capitalization with pre-minted coins or negative transactions on the same units. "
The real value of cryptocurrencies is extremely difficult to measure. There are many factors to consider. What is the true value of Hodler coins? And if a human error destroyed it? Is it an infinite value, no value, or somewhere between? The blockchain can not provide such data. Tools such as Adamant's "change of position" are needed to help humans fill this gap in knowledge.
Coins move during price increases
Adamant's research makes it possible to draw some interesting conclusions, especially about the fact that large Hodler coins actually move during price spikes. They call this "insider's offense". They also discovered that Coinbase had a significant influence on their statistics, writing:
"For example, an anomaly in the chart is the recent negative position change of significant savings in Bitcoin (December 2018). At first glance, it is worrisome, we found evidence that a significant portion of the move was a result of the Coinbase reshuffle of approximately 5% of all BTC outstanding. "
Large price movements are hitting new merchants, they conclude. Could it be that the coins change their address and stay there after the sale? This seems more likely than a mbad of incoming buyers and buyers becoming hodlers. The "hodl" mentality is not universal. While many people view speculation on Bitcoins as a long-term hedge – as Adamant Capital thinks – many others enter the market during periods of extreme volatility, with a view to buying and selling.
Adamant believes that they have "significantly contributed to the debate on the evaluation" through the provision of these new parameters. However, the market is still too nascent to really value it. The liquidity of the market is a real question mark: it is literally impossible to sell the entire offer of Bitcoin.
Featured image of Shutterstock
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