{ "episodeId": "SLP190", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "rafael_schultze": { "name": "Rafael Schultze", "role": "guest", "tag": "RAFAEL" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 8.53, "text": "Hi everyone, and welcome to the Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today, for episode one hundred and ninety, my guest is Rafael Schultze Kraft. He's the CTO of Glassnode, and we're gonna be exploring some of these questions around how many Bitcoins are being hoddled, right? Because with Bitcoin, you can actually do some on-chain analysis and try to figure out how those coins are- Moving around. But first, a message on behalf of the show sponsors. So firstly, Swan Bitcoin. Swan is the best place to auto-stack your Bitcoin in the US. It's so simple even a no-coiner could do it. Step one, autofund the USD from your bank account. 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So go and check them out, they've got incredible content on their website. And if you need a hand with setting up, they can offer that also, so go to unchaineddashcapital dot com for that one. Next up, for my Australian listeners, did you know you can buy Bitcoin with your superannuation? With a Bitcoin friendly self managed super fund, you can. New Brighton Capital have streamlined the process, it's fast, it's affordable, easier than you think, and you still hold your keys. So as long as you are comfortable making the investment decisions, New Brighton Capital looks after the accounting and reporting for the fund. They offer a Free twenty minute consultation, and if you use the code Livera, you get a credit off the monthly fees. So go to newbrightincapital dot com. Alright, and I'm just gonna bring in my guest now, Rafael. Welcome to the show." }, { "speaker": "rafael_schultze", "time": "02:24", "start": 143.89, "text": "Thank you very much, Stefan. It's a pleasure." }, { "speaker": "stephan", "time": "02:26", "start": 146.37, "text": "Excellent. So Rafael, you're the CTO of Glassnode. Can you tell us a little bit about yourself and a little bit about Glassnode?" }, { "speaker": "rafael_schultze", "time": "02:34", "start": 153.7, "text": "Yeah, sure, of course. so, yeah, my background is actually in computational neuroscience, that's how I got into, you know, data modeling, machine learning, data analysis, everything that can be sort of like grouped into the umbrella of data science. I've been working as a data scientist for the last, seven years, I think, and I co-founded, Glassnode, two years ago with, my two partners from, from Switzerland. the idea behind it was, to- To what was born actually out of our own needs, right? We wanted to get hands-on, good data, as investors, in the space, and, we really, pretty fast, we settled on and focused on, on on-chain data as, you know, a, a truly new kind of, exotic, data source, that didn't exist before, that you can't find in, in, in the finance, in the traditional markets, and where we actually- So very early on that, it contains, a lot of potential, a lot of information and insights, for us to, to make better decisions, and so, yeah, we started to build out LastNote, where we now offer, I know, I think r-right now it's more than two hundred, on-chain metrics, that we serve through our platform, and, and through our API, we recently started to expand into derivatives as well, as, you know, it sort of like goes into the realm of Of exotic data, a-as well, but, but still, still focusing strongly on, on, on chain metrics." }, { "speaker": "stephan", "time": "04:12", "start": 251.86, "text": "Fantastic. And I think it's a really interesting world because for someone looking in from the outside, it would be like, imagine money going from bank A to bank B is not accessible on a public ledger, but in the Bitcoin world, it is. So what are some of the things that we can see and ascertain in, you know, in the Bitcoin world?" }, { "speaker": "rafael_schultze", "time": "04:33", "start": 272.75, "text": "Yeah. So I think one of the, you're completely right, right? It's, it's like, it's like imagine, you know, like an economy where you can actually see movements of cash from, you know, from, from a, from pocket A to pocket B or from bank account A to B, and I think, one of the beautiful things about, about Bitcoin and, the, the simplicity of, of its design, it's, it's actually its UTxO based, system, right? what this" }, { "speaker": "rafael_schultze", "time": "05:02", "start": 302.29, "text": "We, look at each Bitcoin that lives on the blockchain, by, looking at how old, this Bitcoin is, right? How old the UTXO is, and, and this allows you to compare and to, to, to value things based on, you know, the lifespan of a particular Bitcoin, compare, you know, if it's being moved today, what is today's price is compared to when it last moved and so on and so forth. So, this, this actually results in, in, in many different metrics that you can build upon, this, this, this idea of, of, of the UTXO based system." }, { "speaker": "stephan", "time": "05:42", "start": 342.22, "text": "Excellent. So look, let's set up a little bit of the background and the context just for listeners, let's say they don't really know too much about how Bitcoin works, they might have seen, okay, I want to send some Bitcoin and I scan the address and I pay some Bitcoins to that address and then... What's really going on there with the UTXO and, what's, the way that you would then try to understand what's going on with that?" }, { "speaker": "rafael_schultze", "time": "06:08", "start": 367.77, "text": "Sure. So, the, the basic atomic, unit, on the blockchain is a UTXO, right? It's an unspent transaction output, and, and, and each UTXO holds a particular amount of, of, Bitcoin, right? So as a user, as one that controls the keys to, of an address, what you're- Actually controlling is, the, the accessibility or the spendability of a set of, of UTXOs, right? and because it is, the, an atomic unit, once, when I send, a Bitcoin, I'm actually spending the whole UTXO, independent of how much value, it, it contains, right? It's, it's as if, you know, I had, a, a ten dollar bill that I'm, that I'm giving you, even though I just want to, want to give you five dollars. So I spent the whole UTXO that contains, the, those, those ten dollars and, and get five back in return. And this is sort of like the similar concept when you think about UTXO. The UTXO contains a value that you spent completely, and, you get some, some in return, and that return creates actually a new UTXO. So what this allows you to do is, each UTXO was created at some point in the past, right? and you- Know whether, you know, this UTXO was created, I don't know, maybe, this UTXO that I, that I might be, you know, wanting to spend, whether it was re-- might have been created an hour ago or a week ago or, two years ago, right? and so this allows for very, very interesting analyses, in terms of, you know, what is going on, on, on, on chain and, under the hood." }, { "speaker": "stephan", "time": "07:51", "start": 471.21, "text": "Excellent. And so another interesting thing that is- Perhaps to an outsider isn't so clear is this concept of addresses versus entities. Now, I guess technically speaking, you send to an address, but you don't actually spend from an address, and this is kind of just like a- A mental, a kind of like a model that block explorers have taught people, but it's not actually the case. It's actually you're spending from a UTXO, right? And so can you just tell us a little bit about that idea and then how you try to understand the difference between an entity and then the UTXO piece?" }, { "speaker": "rafael_schultze", "time": "08:33", "start": 513.24, "text": "Yeah, sure, of course. I, I think that's, that's a very, very important concept to understand. So if you think about Bitcoin, if you think about the network Bitcoin, one of the fundamental questions that you, you want to answer is, you know, how many, how many users does it actually have? You know, how many participants are actually interacting with, with the, with the, with the network or, or how many, people actually own Bitcoin, right? How many, how many are actually hodling? And, That, that has been very difficult to answer because, what the approximation has been until now is simply to look at addresses. The problem with that, we all know, is that, you know, you can control, more than one address and, there's also addresses that hold funds of multiple, users. Think about an, an, an exchange address, for, for instance, right? and so what we set out to do was to, to come up with this concept of, of- Of, of an entity where we apply industry standard heuristics, clustering algorithms in order to identify which are the addresses that are controlled by a single entity. this has very, very crucial implications on, on how you look on chain, right? So if you, if you think about simple things like, like, volume, right? On-chain volume, and, and you're actually interested in real economic- Economic activity, right? I'm not, I'm not really interested whether, you know, a, an exchange is actually moving, right, funds from one of their wallets to, to another of the wallets. That's, that's, I mean, yes, they have spent fees on to do this, but this doesn't really, right, account for real economic activity, right? So what we're interested in is, you know, how much of what is being moved on chain does actually change hands, right? and, and This is the way that we try to approach this. I think it's important to note that, this is of course an, an upper bound of, of, you know, the amounts of entities, which is an up-subset of the amounts of, of addresses, the real number much, might, might be much, much lower, but we're now much, much closer to the actual number than, than the actual entity, the actual, addresses can ac- can tell us." }, { "speaker": "stephan", "time": "10:56", "start": 656.12, "text": "Excellent. So what can you tell us in terms of what are the entities that are out there and how, how are you coming to some of these ideas around how many Bitcoins are being hoddled?" }, { "speaker": "rafael_schultze", "time": "11:08", "start": 667.85, "text": "Yeah. So I think, you tr-- what we try to do is not to look at the network as a whole, right? There's, I mean, there's many, many metrics that, that you know, just take the whole set of UTXOs and, and then, you know, com-- compute some aggregate, some metric on top of it. what we really aim to Two is with this concept of entities and, these can be, you know, known entities such as exchanges, such as miners or unknown entities such as, you know, entities that have, at least, you know, that, that are controlling at least one thousand Bitcoin, which, you know, we, we, we then, identify as whales. for us, looking at Bitcoin from a macroscopic perspective and really understanding, you know, how much of all- All of these, are, are, are holding how many bitcoins and what is actually the, the, the flow of coins between those different, entities, I think can, can reveal a lot of very, very interesting insights that, that can have, and, and, you know, like, potentially predictive power in terms of what is, what is happening in the markets, and the same holds for, you know, which are the ones that are short-term holders? Hodlers, right? Or short, short-term investors that are sort of like showing this short-term, investor behavior versus, all of those, entities that, that, that, that are more here for, for the long haul." }, { "speaker": "stephan", "time": "12:40", "start": 760.11, "text": "Yeah. And so how do you then distinguish between somebody who is, say, self-spending, right? So I guess there might be- Be-behaviors that a person does within Bitcoin that may confuse this kind of metric. As a quick example, it may be that they are maybe upgrading their storage, maybe they had a single signature Trezor and now they want to put it into a multi-signature, and they would send all their coins out of their, you know, Trezor into their multi-signature setup. That might potentially confuse the metric a little bit. How, how do you try to-- Do you try to account for that, or how, how does that work in your, methodology?" }, { "speaker": "rafael_schultze", "time": "13:18", "start": 798.5, "text": "Yeah, absolutely. I think, I think this is one of the, the, the core implications of actually looking at not addresses, but, but at, at entities, right? I think volume is, is, is a very good example. if, if a, an exchange is, is, is, is, you know, transferring, or is creating a new hot wallet, right? This might actually add a lot of noise and, and actually false positives to many of the metrics that, that, that we might be looking at if we don't account for kind of things, right? It's like me, you know, putting my money from my left pocket into my right pocket. That's, that's not real economic activity, right? So, so what you try to do is really account for these kind of things. So now that we know that, you know, a cluster of addresses is, controlled by the same entity, we can actually adjust for that, right? We can say these in-house, transfers, as we call them, we will just discard them, right? there's different things that you can do on So-called relay addresses, for instance. So if I'm sending you a Bitcoin, then, this might actually not go directly from my address to your address, but, but there might be an intermediary address that is a, a, a one-time use address, that just receives the funds and spends them immediately or, you know, within a couple of blocks, and if you don't account for these kind of things, then that kind of volume might be, might be counted twice, right? and so what we have seen is that, and, and we, we This year, that, up to seventy-five percent of all the volume being moved on chain isn't, doesn't really change hands, doesn't really move hands, so it's all internally within the entities, that, that, that are sort of, you know, shuffling, their, their, their funds or, or, or when, where, you know, relay addresses, are being, are being used or change addresses as well, right? That's a big one as well. So, so if, if, if I get- Change back, but that change is actually going into a newly created address because that's the wallet's behavior, which most of, of, of, of those, work actually nowadays, then, then we account for all of those and, and then we, we can adjust the metrics and not only volume, right? It can be coin is destroyed, so per anything that's, that, that is based on, on spent bitcoins, we can actually adjust for." }, { "speaker": "stephan", "time": "15:42", "start": 942.31, "text": "Excellent. And so when it comes to Bitcoin on-chain transactions, would it be fair to say that a lot of the actual volume is inter-exchange? It's from one exchange to another, and so that's kind of that there's like a lot of traders moving coins back and around, back and forward, and then I guess the other pattern would be people who are stacking, right? They're holding, they're, they're, accumulating bitcoins into their wallets. Would you say those are typical behaviors that you can see when you're looking on chain?" }, { "speaker": "rafael_schultze", "time": "16:16", "start": 975.7, "text": "There, there's a lot of that. There's definitely a lot of that, we're actually now, working on a metric that actually, defines that, you know, what we would call exchange dominance, right? How much of, of the volume is actually, you know, either, in-house exchanges, that is something that happens a lot, right? So one, an exchange moving their funds internally, the other one is inter-exchange, right? So really, across different exchanges and, and then everything that goes in and out, that and I can't tell you, a percent to this percentage at, at this, at this stage, but that accounts for, for a lot of, of, of what is actually happening on chain in terms of, volume, absolutely." }, { "speaker": "stephan", "time": "16:56", "start": 1016.11, "text": "Yeah. And I suppose the headline number in terms of what we were talking about today, how many bitcoins are being huddled, I guess the main metric there is how long are people holding for, and what are some of the ways that you try to assess that? So for example, you might look on the chain and try to understand, Moved for two years, something like that, right?" }, { "speaker": "rafael_schultze", "time": "17:19", "start": 1038.9, "text": "Yeah, yeah, I think those are the, the, the, you know, the very straightforward ways, to, to assess the amount of hodl bitcoins, right? You look at, at the age of, of, of all the UTXOs that have not been moved, you know, over a year, over two years, over three years, and that those are metrics that are essentially based on, on, on the hodl waves, and, and those give you Very straightforward, assessment of, of how, you know, how much is actually being, being huddled, right? and if you look at the current numbers, then, then you, you'll, you'll see that, right? all the ones that haven't been moved, in over a year is, is currently at all-time high, I think, sixty-one percent or so, which, is, is, is quite a lot, right? and, and those that haven't been moved in, in two years," }, { "speaker": "rafael_schultze", "time": "18:13", "start": 1092.6, "text": "is forty Right, so nine million or so, haven't been moved, in, in the last two years, which, which really shows you, a really good indication of, of how much, is, is, is actually huddled, and, and of course, those aren't the only one, not the only ways in order to assess, that amount, but, but that's, that's sort of like, you know, gives you a very straightforward and quick assessment of, of how large those numbers are." }, { "speaker": "stephan", "time": "18:42", "start": 1122.06, "text": "Yeah. And so that figure, how did they compare historically, and is that starting to reach a point in the cycle where you could arguably say this is, a high percentage historically?" }, { "speaker": "rafael_schultze", "time": "18:58", "start": 1138.02, "text": "It is a high percentage. So, so, so the, the, the plus one year, supply not spent is actually at all time high, right? So roughly at this point, is, is when the previous, bull market started, started to go up, right? Which doesn't mean that, you know, the same will happen, now, but, but, but I think that, it gives you, gives you a very good indication of, of how, you know, how much confidence there is. Of, you know, a, a, a, a movement up from now on, right? Whether this is next month or in a couple of months ahead, I think there's, there's, there's a lot of, of, of investor confidence there. same thing with, the, the two years, right? Which is currently at forty-five percent, I believe, I think the, the all-time high is, is a bit below fifty percent. So in currently it, it is increasing, so there is def-definitely, increased" }, { "speaker": "stephan", "time": "20:00", "start": 1199.88, "text": "Excellent. And let's chat a little bit about the behavior of whales, right? So I saw you had a great post about this recently. You have defined whales as over one thousand bitcoins. And so can you tell us a little bit about what other whales doing and how do you figure them out versus whale versus exchange?" }, { "speaker": "rafael_schultze", "time": "20:18", "start": 1218.38, "text": "Yeah, yeah. So, so I think, the exchanges, for, for the exchanges, you know, we have a database where we, over time, we're capable of labeling addresses that are controlled by, by exchanges, right? That is in part, that is public information, but a lot is actually based on, you know, heuristics and, and, and clustering algorithms that, that we apply internally. And so setting those aside, we look at, all other entities, that, actually holds, or- That are controlling, one thousand Bitcoin or above, right? And those are the ones that we actually define as, you know, whales, that are, that are, that are, you know, controlling their, their own, bitcoins. And, and so, what we've seen recently is that this number traditionally, you know, has, has been going down, the number of, of, of bit- of, of, of whales over the last couple of years since two thousand and sixteen or so, has been, you know, slightly going down." }, { "speaker": "rafael_schultze", "time": "21:18", "start": 1278.38, "text": "since this year is, is, is the shift in the strength of, you know, more whales actually, actually appearing, right? but I think the, the more interesting part of all of this is that this is, essentially, what we've seen is that this is essentially inversely related to the amount of, bitcoins that is being withdrawn from exchanges, and, it's, it's not just, you know, that that those are inversely related, but that we actually see that those bitcoins are going into entities that, you know, hold that are essentially classified as whales, right? and that number is, right? Is i-i-it's, it's not increasing significantly, but it's a clear, change in, in, in, in, in the trend, and so this is something that we're closely observing." }, { "speaker": "stephan", "time": "22:12", "start": 1331.99, "text": "So Rafael, if I understand you correctly, there could it be then that, in the past whales were leaving their coins on exchanges and now they're learning to self-custody? Is that one way to interpret that, or how would you, interpret that?" }, { "speaker": "rafael_schultze", "time": "22:25", "start": 1345.04, "text": "It, it, it can be. I think, I think, you know, that, that, there is, it, it's probably too easy to just, you know, to just, reduce it to, to that, but, but I think," }, { "speaker": "rafael_schultze", "time": "22:42", "start": 1361.57, "text": "That, that withdrawal of, of, of funds from exchanges, is, is potentially now a setup of, of really confidence that, you know, they will be holding their coins for a large amount of time, you know, in anticipation potentially of, of, you know, of a bull market, right? I think potentially there is also a lot of, you know, education going on of, of people understanding. Actually that's, that the, the key, the, the keys that they don't control, that, you know, that essentially means that it's not their Bitcoin, you know, how to, to what extent, this is actually the case with whales, in, in this case, I, I, I, I can tell, there's potentially a percentage of that that plays in, in there as well." }, { "speaker": "stephan", "time": "23:33", "start": 1412.62, "text": "Sure, sure. and also from your article I noticed you were essentially spelling out that it looks like there are more whales, but their number, I'm sorry, rather the amount of coins they hold is coming down over time." }, { "speaker": "rafael_schultze", "time": "23:49", "start": 1428.91, "text": "Yeah, yeah, so it's, it's more like, the, the, there's more whales exactly, but, those whales are smaller as compared to, to, to previous periods, right? so, so this is-- there's sort of like a, a slight shift. It's not a very, very signi-significant one, but, but, but again, it's, it's one that we're, closely looking at, in, in, in, in order to see, you know, where, where, where, where" }, { "speaker": "stephan", "time": "24:19", "start": 1459.27, "text": "Right, and I guess this stuff is quite interesting because there's the technical kind of quantitative aspects of it, but then you might have a qualitative thesis around that also. So for example, we probably, we should expect over time, just naturally, that, you know, when Bitcoin started, it was just Satoshi and Hal, right? So obviously it was very centralized in those days, and then over time you would expect it's, it's decentralizing out. And so I guess this kind of aligns a little bit with that idea that we've got more whale- But each of them have less of a share of the overall pie of Bitcoin, right?" }, { "speaker": "rafael_schultze", "time": "24:54", "start": 1494.49, "text": "Yeah, yeah, I think, there, there, there might be indications, towards that, right? And, and, and you would hope that this holds, you know, for the, for the network, a-as a whole. but, but, but then on the other hand, right? This, this, this very extreme holding behavior that, that we're seeing really shows that there is simply a lot of confidence, a lot of investor confidence in In, in, you know, in future price appreciation, right? and that of course, well, leads to, to, you know, to investors not wanting to spend their bitcoins if they're, they're, they don't want to spend it, then, you know, there's probably less chances for others to, to, to get into, at least, you know, within the, within the same, same, same amounts of, of, of Bitcoin, and, and, and, and what, what, what we see with, Sort of like show the, the other hands of, of all of this is that, right? So we, we identified roughly one thousand eight hundred, whales, and those are holding, over five million Bitcoin, right? So there is, there is quite, quite some centralization within, you know, those big players, right? which, you know, you can argue, well, yeah, that, that, that doesn't show the, the, the de-centralization that we would want to see going forward. But, that at the same time really shows, this, well, this, this, this confidence in, in, you know, this, this big players to actually hold on to these large stashes of, of Bitcoin that they're, they're controlling." }, { "speaker": "stephan", "time": "26:33", "start": 1593.39, "text": "Great. Let's chat a little bit about Coin days destroyed. So what is that and what does it mean if it's going lower?" }, { "speaker": "rafael_schultze", "time": "26:43", "start": 1602.66, "text": "So coin days destroyed is essentially defined as, the amount of, the volume of Bitcoin that is moving, on chain, multiplied by, the days, since, since those Bitcoins that are moved, are now being moved, were moved last time, right? So, as a simple example, if I have bit, two Bitcoins today That I'm spending, and those tier two bitcoins were, moved last time ten days ago, then coin is destroyed is twenty, right? so coin is destroyed is really a nice metric that shows you the, essentially when large stashes of old Bitcoin are, are being moved on chain, right? And so, the, the, the, the current, metric is essentially showing that But this is very low, right? Which goes hand in hand with, you know, this narrative of people are hodling because, most of what is being moved, on chain is, is very recent, Bitcoin." }, { "speaker": "stephan", "time": "27:52", "start": 1672.17, "text": "Right, I see. So for instance, that would mean if coin days destroyed is very low in that instance, then it means it's only the recent coins moving, not old coins." }, { "speaker": "rafael_schultze", "time": "28:06", "start": 1686.09, "text": "exactly. It's, it's, it's not the old stashes that are being moved, but, but very recent, bitcoins, right? So there is essentially two components that go into, into CoinID's destroyed, the volume and, the age of, of the bitcoins, right? and, and those sort of like the interplay of those two is what makes, CoinID's destroyed high, or low. and so, yeah, but, but if you look at the, the, the And of, of the, of bitcoins that are being moved, and this is something that is very low as well. So, so coin is destroyed. The, the reason why it's so low is because, mostly is because, it's, it's very recent bitcoins that are being moved, and not, not all stashes." }, { "speaker": "stephan", "time": "28:50", "start": 1729.72, "text": "What is hodler net position change?" }, { "speaker": "rafael_schultze", "time": "28:54", "start": 1734.08, "text": "Hodler net position change? Yeah, that is, an interesting metric that was essentially put forward by Tour de Meister and, and Adam and Capital, a while back. and it, it is one that is, related to, to coin days destroyed as well, and, where the intermediary step is liveliness. So I think when we talk about hodler net position change, we first need to talk about liveliness. So liveliness is, is a metric that, that was, created by Thomas Blumer, a while back, and, and what this tells you is, is it compares essentially coin days destroyed to, all, all coin days that have been ever created, right? It's a metric that, oscillates between zero and one and, that increases as, as a lot of coin days get destroyed, right? Which is sort of gives you a sense of how the vividness Of a blockchain or the, the, the, you know, how active it is, how lively it actually is, right? But another way to look at, at liveliness is, is, from a hodler perspective. So as liveliness goes down, this means that, that the, that, that more, more, coins are actually being huddled because it means that, you know, less coin days are being destroyed, right? and, and, and so if you, if you take liveliness, you know, you subtract it Applied by the circulating circ-- circulating supply, you get to a number which actually tells you the amount of, of huddled and lost coins, which is currently, at seven point five, million BTC, right? And that amount of, of, of huddled and lost coins, you know, which is then moves essentially inversely to, to, to liveliness, because, as a lot of coin days are being destroyed, that metrics actually goes down, and as hodlers acu- That metric goes up. if you now take, the, the monthly change of, of, of that metric, this is the net hodler position change, which, which, which actually gives you an indication based on, on coin is destroyed and based on liveliness, how much, hodled, how much coins are, are being hodled, right? So again, you know, before we had how much supply hasn't been moved in, x amount of years, this is another way, to, to look at," }, { "speaker": "rafael_schultze", "time": "31:21", "start": 1880.82, "text": "through, through this metric." }, { "speaker": "stephan", "time": "31:23", "start": 1882.6, "text": "Another aspect of all of these things is to look at also what the price was at the time these coins were moving, and then try to understand, are people sitting in a profit or are they sitting in a loss as well? And I understand you, you at Glassnode also do some of these sort of statistics. Can you tell us a little bit about that?" }, { "speaker": "rafael_schultze", "time": "31:41", "start": 1900.96, "text": "Oh, absolutely, and there's, there's many of those that are, that are very interesting. And, you know, one of the objections that I've been hearing about, you know, this whole coins is, is that, you know, people actually, saying, \"Well, those are mostly, you know, investors that got in, when, you know, at near the top, and so of course they're now, you know, at a loss and they're waiting for the price to go up.\" But if you actually look" }, { "speaker": "rafael_schultze", "time": "32:06", "start": 1926.35, "text": "at, for instance Those numbers are currently, you know, oscillating between seventy-five and eighty percent, you know, if you think about it, like seventy-five percent of the supply is in a state of profit, if you compare, you know, when the time at, at, at which the UTXO was last created and, and, the, the price at that point and the current price, then, then, then that's, that's pretty crazy, right? I mean, if, if, if people, if all of those were to, to-- all of those people could be Today, and they would be cashing out in, in, in profit, but they're not doing so, right? So I think this, this gives more, even more weight to this, this, to this hodling behavior by really, looking at, at, at the amount of supply or the amount of UTXOs or the amount of, of entities that currently are, in a, in a state of, of, of profit, and, and I think those, those are, yeah, the, those are very bullish, indicators, if" }, { "speaker": "stephan", "time": "33:10", "start": 1990.08, "text": "Absolutely. I think it's, really phenomenal and just really fantastic to think about when you think that seventy-five percent of coins, of those coins are in a profit and they don't wanna sell right now, even though they could. And I mean, with all these other things going on right now, they could be selling right now, but they're not, and that's an interesting insight. Exactly. Yeah." }, { "speaker": "rafael_schultze", "time": "33:30", "start": 2010.44, "text": "Yeah, yeah. I think there's a lot of that, that shows just a lot of confidence, people are, you know, are, are really, you Opportunity costs of saying, I, I am confident that the, the price will, actually, you know, see some, some appreciation, and that's why I'm not willing to, to, to spend my Bitcoin today." }, { "speaker": "stephan", "time": "33:55", "start": 2034.6, "text": "Excellent. also wanted to ask, what is reserve risk?" }, { "speaker": "rafael_schultze", "time": "33:59", "start": 2039.09, "text": "Reserve risk is a very interesting metric as well, put, forward, a couple of months ago by, by Hansauge and Eikgai fund. it's, it's a very interesting metric, again, related to, to coin as destroyed. so, so, and, and the, deriving it is a, is a, is a bit complicated, a lot of nuances there, but, let me- We try to, to, to explain it on a high level, to give you the intuition. So if you look at coin days, destroyed, and you compare it to the circulating supply, the coin, coin days destroyed most of the times is, is below the circulating supply, right? and, or if you look at the value of coin days destroyed, which is, you know, just coin days destroyed, denoted as USD, it's mostly, below the current market cap, and there is only a few- locations where there is actually where coin is destroyed actually exceeds, the market cap, and this is where we're sort of like, you know, moving towards the top of market cycles. now the way to think about this, if you now compare market cap and, and, and the value of coin is destroyed, is, is you can, you can view this from a, from a, from the opportunity costs of an investor to say, I'm not willing to spend, you know, my Bitcoin Or to sell my Bitcoin today, right? So the, the opportunity costs for me, today would be, you know, nine thousand three hundred dollars or whatever that is, right? I say, I, I, I'm confident in, in a price appreciation, and so these, these are essentially, you know, the, the opportunity cost. Now what you do? Is you, you take the difference between market cap and, and, and the, the value of coin is destroyed, and you, you, you have, you create a cumulative sum over all the opportunity costs ever created across, you know, Bitcoin's history, right? This is what, what is called the, the HodlBank, and, and if you now compare the ra-- if you now take the ratio of the market cap and, and the HodlBank, this is what actually gives you the reserve risk, and what the reserve risk really tells you Tells you is, you know, how confident are investors that the price will appreciate. So if the reserve risk is low, means that the price is, you know, comparatively low and hodler con-confidence is very, very high, so the risk-reward, re-reward ratio is, is, is very good. So these are essentially, are really good points in to, to, to get into, you know, entry points, to get into Bitcoin, if you will." }, { "speaker": "stephan", "time": "36:45", "start": 2204.6, "text": "Yep. And so looking at reserve risk, where we are today, where does it sit, just, just for our listeners to get a rough idea?" }, { "speaker": "rafael_schultze", "time": "36:52", "start": 2211.62, "text": "It's, it's, it's very low. So it's very, and it pin-- it has been within, you know, the, the last couple of months, it has been very low. one of the reasons, of course, is because- A coin that's destroyed is really so low, right? So all of these metrics to some extent are somehow, you know, they, they, they sort of like, like are related to each other, and we've been in this area of, of, of, of, you know, of, of, investor confidence for quite some weeks, now throughout, twenty twenty. So, it, it really shows that, that, that, you know, investor confidence is, is extremely high and, and hodlers are expecting prices, to go up from here. looking a little" }, { "speaker": "stephan", "time": "37:38", "start": 2258.06, "text": "bit- Yeah, of course, of course. looking a little into the future, imagining, let's say, more people started using, say, Liquid or Lightning, would that impact your ability to do these kinds of analytics or, is it just, as in currently today, these Lightning and Liquid are a little, little bit smaller and so you can't do it, like, it's not gonna impact your work as much, but would that impact your work in the future?" }, { "speaker": "rafael_schultze", "time": "38:02", "start": 2281.78, "text": "It will, I think it will. I think, there is, you know, as, as, as Liquid or as Lightning gains adoption, the dynamics of, of the chain, will change, right? The, the, the people, the, the way people and, and users, will be interacting with the blockchain, will change. So, so, I am, I, I think right now in, in terms of, you know, metrics that are, market related, and they- We, we've started to look into, we believe that, you know, the influence, at this point is, is, is not very large, so there doesn't yet make sense, but, but I think as, as we see adoption within, you know, those, those, second layer, then, then we, we might have to, to, you know, to, to evaluate the impact of, of those with respect to, to on-chain activity and what that actually means for the metrics, that, that, that we actually offer and that we create and, and the way we actually look at, Bitcoin, at this point in, in time." }, { "speaker": "stephan", "time": "39:08", "start": 2348.41, "text": "Excellent. And so just, I guess, with Glassnode in general, what are some things that listeners should look out for in terms of things coming or things that you guys are sharing?" }, { "speaker": "rafael_schultze", "time": "39:17", "start": 2357.12, "text": "Yeah, sure. I think, we're, we're working on many exciting things, many of those are actually related to really identifying, you know, these different, markets Participants, when it comes to, you know, exchanges, miners, hodlers, whales, and, and, and, and really understanding on a more granular level what are the dynamics between those, how do they evolve over time, what is the flow of funds, actually, between all of those, and, there's, there's so many ways in which you can, you know, adapt these metrics and adjust for them in order to get a more and more clear picture Of, in, in better signals, right? Really that separation between the signal and the noise from, from on-chain metrics. So this is something that, that we're putting a lot of, of effort onto, and, and I think there's, yeah, from things that we're working on, a lot of, really exciting, stuff that is, that is coming up, within the next couple of, of weeks and, and, and months, and we usually, release," }, { "speaker": "rafael_schultze", "time": "40:29", "start": 2428.59, "text": "you know, This is so, much, much more coming there, within the next couple of, of weeks." }, { "speaker": "stephan", "time": "40:35", "start": 2435.43, "text": "Excellent. So Rafael, where can listeners find you online and find Glassnode online?" }, { "speaker": "rafael_schultze", "time": "40:41", "start": 2441.02, "text": "Yeah, I think, the best way, as, as it is in the Bitcoin world, is, is on Twitter. So at Glassnode and, for, for, for our company and at Neocortex, with a three instead of an E, for myself, yeah, just hit us up there, give us a follow or just, a DM." }, { "speaker": "stephan", "time": "41:01", "start": 2461.37, "text": "Excellent. Well, thank you very much, Rafael. I really enjoyed chatting with you." }, { "speaker": "rafael_schultze", "time": "41:05", "start": 2464.83, "text": "Likewise, Stefan. Thank you for the invitation. It was a pleasure to be here today." }, { "speaker": "stephan", "time": "41:09", "start": 2468.78, "text": "Awesome. And listeners, you can find me, as always, at stefanlivera dot com. That's it from us. We'll see you guys in the Citadel." } ] }