After 10 years development the crypto industry has accumulate a large number of data on the chain, these data formed a variety of crypto indicators through induction and graphical processing, and they record the change of the crypto industry over the past 10 years, on the other hand they describe the prediction of the crypto market, provide practitioners the theory basis to study and prediction. If strictly divided, crypto data can be divided into two categories, namely on-chain data and price date. Based on the former practitioners develop Bitcoin UTXO age distribution map and on-chain activity monitoring, etc., and based on the latter, there are countless indicators developed, such as the S2F and ARH999 we often see, and the Bitcoin Ethereum rainbow chart, Altseason index, RHODL Ratio, CFTC asset management positions etc. Which we rarely see but extremely important.

Bitcoin UTXO age allocation

UTXO stands for Unspent Transactions Outputs, which is simply the number of bitcoins last transferred into the account that have not yet been spent. Because all transfers are recorded on the chain and publicly available, the UTXO age allocation can be used to monitor activity on the Bitcoin chain.

According to the age allocation of UTXO, it can be divided into 10 periods, which are: < 1D; 1 d - 1 w; 1 w - 1 m; 1-3 m; 3-6 m; 6 to 12 m; 1-2 y; 2-3 y; 3-5 y; > 5 y. In the figure below, different colors represent the changes in the number of bitcoins allocated at a certain age. For example, the orange-yellow band with the highest saturation at the bottom represents the changes in the number of bitcoins with UTXO age < 1D.

Among them, bitcoins with UTXO age allocation < 1d-3M are considered to be active and tend to participate in short-term trading; otherwise, Bitcoins are inactive and tend to be held for a long time. Therefore, for price monitoring, the most instructive thing is the change in the number of bitcoins when the UTXO age allocation is <1d-3m.

How can the number of bitcoins with UTXO <1d-3m be combined with price action? There are three notable features.

First, at the end of the bull market, UTXO changed in real time with bitcoin price movements. Take the peak of the crypto bull market at the end of 2017, when the price of bitcoin hit near $20,000 and the number of bitcoins with UTXO < 1D-3M reached a period high. Take the Bitcoin trend from March to May 2021 as an example. At that time, the price of bitcoin peaked near $65,000, followed by a monthly line pullback, and the number of bitcoins with UTXO < 1D-3M hit a high at the same time. It's not hard to see why. As Bitcoin's price continues to rise, it has attracted a large number of investors to hold digital assets, and trading on the chain has been extremely active.

Second, the market in the process of bull market volatility after the response lag. That is, during a bull market, it takes a long time for the number of bitcoins with UTXO < 1D-3m to recover after the market is hit hard. Take the "312" market in March 2020 as an example. Although the price of bitcoin recovered quickly in the following time, the number of bitcoins with UTXO < 1D-3m did not recover quickly. This rule was confirmed in the "519" market in 2021. The reason is that confidence in the crypto market has been severely damaged due to the violent price volatility. Although the price of the currency has recovered quickly, it will take a long time for the market sentiment to repair.

Finally, in the course of a bear market, the number of bitcoins with UTXO <1d-3m changes behind the price. Take the fall in the price of bitcoin from $6,600 to $3,300 at the end of 2018, when the UTXO distribution lagged behind the price. The reason is that short-term holders tend to sell bitcoin when the price suddenly falls, but their actions lag behind the rate of decline.

The Bitcoin rainbow chart

The Bitcoin Rainbow Chart index was first introduced by Bitcointalk user Trololo in 2014. Each ribbon in The Rainbow Chart refers to a different meaning. The top-down "red, orange, yellow, green, blue, purple" of bitcoin corresponds to the current price stage of bitcoin. The red at the top refers to "Maximum Bubble Territory," a range that indicates a bitcoin Bubble is about to burst. If you look at the history of bitcoin prices, there have been three times in 2013 and 2017 when bitcoin touched this area, followed by bear markets without exception.

The blue color at the bottom represents a "discount Sale," meaning that the bitcoin price was at the bottom of that period. In the bitcoin prices history, every time this area has been touched, it has marked a stage bottom or even the start of a bull market. Take the "312" extreme run in early March 2020, when Bitcoin hit a low of $3,800 and began a more than year-long bull market that peaked at 1,600%.

In addition, people developed the Ethereum rainbow chart based on the Bitcoin rainbow graph, and its principle is basically the same as the Bitcoin rainbow graph.