Wellness gurus talk up the value of slowing down. That might work for mental health, but slow indicators are worthless, right? Not so fast. Some slow indicators offer something better: (higher levels of) certainty. This is the idea behind our Bitcoin Case Study. Use a slow but (historically) high-confidence indicator to trade in and out of Bitcoin for better returns. Today, that indicator is on the verge of trending up. Let’s have a look.
1 On Chain Data
There is a “cheat code” for trading cryptocurrencies, namely, on-chain data.
With the right tools you can survey what everyone is doing and trade accordingly.
For our hedge fund, we survey what Bitcoin holders are doing and use an AI algo to identify early trends.
But retail traders can use a slower, high-confidence signal manually.
Best part? You only need to check it once a day. For this strategy, we used aggregate stablecoin data.
2 Aggregate Stablecoin Data
Crypto grows with liquidity.
But what matters more than the water in the reservoir... ...is whether it’s flowing into your field. That’s where stablecoins enter.
When their total supply starts rising, it’s one of the clearest signs that real capital is entering the market.
How do you measure flows into the crypto market? One way is to total up the value of all stablecoins in the crypto space.
If that aggregate data suggests an increasing supply, you have evidence of positive capital flows (and the reverse holds).
3 Measuring Aggregate Stablecoin Data
You could try something sophisticated, but you’d need to worry about overfitting the data. I
nstead, we just used a 50-day moving average and a basic crossover signal:
If stablecoin value (red) is above the moving average (green) → bullish.
If it drops below → bearish.
4 Transition Periods
You’ll see various transition periods in the chart below.
Today, we’re in a transition phase.
The stablecoin line just crossed above its trend for a day—and now they’re neck and neck.
It’s a warning light turning green, but not quite a confirmed signal.
A few more days of data will tell the story.
5 Concluding Thoughts
This indicator won’t catch every pump—but it might save you from every 80% BTC crash.
That’s its power. You don’t need speed when you’ve got certainty. R
ight now, capital is flowing back into crypto. If the trend holds for just a few more days, the signal turns green.
Trade safe.
NFA. DYOR.
Happy Trading!
-Sebastian Purcell, PhD
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Disclaimers and Disclosures
This post is provided for educational and entertainment purposes only and should not be relied upon for business, investment, taxation, or legal advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by 1.2 Capital Management. (An offering to invest in a 1.2 Capital Management fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation--all of which should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by 1.2 Capital Management, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
The views expressed here are those of the individual author and are not the views of 1.2 Capital Management, 1.2 Labs, or their affiliates. Certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, 1.2 Labs and affiliates have not independently verified such information and make no representations about the enduring accuracy of the information or its appropriateness for a given situation.
Finally, as the author of this report, you should recognize that I do actively invest. Many of my trades are quick and I do write about many investment items, whether stocks, digital assets, collectibles, and the like which I do not own. For the purposes of disclosing any conflicts of interest, assume that if it is covered, I own the investment item. Or if my coverage is negative that I am short the investment item.
