Author: Murphy, on-chain data analyst
On-chain data evaluation model - Shanzhai season
One day, while I was in class, Xiaochi @FC_0X0 sent me a WeChat message saying: 'There is a piece of data, which is the scissors difference between the total inflow of stablecoins into exchanges and the dollar value of BTC withdrawn, that is, the remaining potential purchasing power and the volatility of shanzhai coins may have a direct relationship. Can we look at the timing of shanzhai coin launches through this logic?'
Coincidentally, my presentation also mentioned observations of potential conditions for 'capital overflow', which corresponds to the timing of certain large-cap shanzhai coins. However, at that time, it was just a rough outline, and it seemed that I vaguely thought of some previously overlooked areas...
After returning, I整理了数据, inspired by Xiaochi's guidance, and rethought a set of visual indicators to effectively judge the 'shanzhai season'. Here I share my thoughts:
Shanzhai season condition 1: Assessment of capital overflow conditions
(Figure 1)
In Figure 1, the green indicates whether the total scale of stablecoins flowing into exchanges within 30 days is greater than the dollar value of BTC being withdrawn from exchanges. If it is, it means that besides buying BTC, there is also the possibility of these funds overflowing into shanzhai coins. The higher the green signal bar, the greater the theoretical overflow value, and thus the more it has the preconditions for the start of the shanzhai season.
From the data, during the periods of 2023.10-2024.3 and 2024.11-2024.12, the theoretical overflow value is the highest, which means that the possibility of a 'shanzhai season' occurring during these two periods is greater. Additionally, there is a small segment between August and September, but in terms of scale and duration, it is not as significant as the above two periods, thus having relatively weaker influence.
Shanzhai season condition 2: Capital inflow of mainstream assets
(Figure 2)
Historically, BTC often leads the overall sentiment of the crypto market, followed by market confidence flowing to other large-cap mainstream coins, and finally shifting further to ALT. The tool to visualize this capital rotation is the 30-day change in the realized market capitalizations of BTC and ETH, as well as the total supply of stablecoins (as shown in Figure 2). When all three major assets experience net capital inflows, it indicates that market sentiment begins to become exuberant, and overall risk appetite increases, which is one of the macro necessary conditions for the start of the shanzhai season.
From the data, during the periods of 2023.10-2024.8 and 2024.10-2024.12, all three major assets simultaneously experience net capital inflows, peaking in March and December 2024. This is also the most Fomo moment in the market sentiment so far in this cycle.
Shanzhai season judgment 3: Positive momentum of shanzhai coin market capitalization dispersion
(Figure 3)
The data basis for judging the start of the shanzhai season also requires a third condition, namely isolating positive momentum in the dispersion of shanzhai coin total market capitalization. We need to find the periods when the total valuation of 7D SMA within the shanzhai coin range is greater than its total valuation of 30D SMA. This can represent that the valuation of shanzhai coins is expanding in the short term, and the liquidity flowing into shanzhai coins is rapidly increasing.
In Figure 3, red represents the 7D average, and blue represents the 30D average; from the data, during the periods of 2023.10-2024.4 and 2024.11-2024.12, the red line crosses above the blue line, indicating that liquidity in the crypto circle is beginning to tilt towards shanzhai coins, and the market capitalization of shanzhai coins is shifting to a stage of positive momentum growth.
Summary
The above three conditions are considered from different perspectives. Condition 1 represents the possibility of capital overflow; condition 2 represents overall sentiment and risk appetite; condition 3 represents liquidity tilt. When all three are satisfied simultaneously, it is highly likely that the shanzhai season is about to come.
Current condition 2 is satisfied, but conditions 1 and 3 are not; thus, we can consider that the basis for starting the shanzhai season is present, but liquidity is still concentrated in mainstream assets (especially BTC), and on-site funds have not overflowed much into shanzhai coins.
However, we can also see that the 'negative overflow' in condition 1 is slowly narrowing, which is a positive signal. Although partners may have to wait a little longer for the anticipated shanzhai season, what is meant to come will come.
The content shared in this article is for communication and research purposes only and does not constitute investment advice.
