Delphi Digital, a (tiny) NYC-based cryptoasset research firm, have compiled an extensive – and exhaustive – analysis of bitcoin’s fundamentals and market position, bringing to the table some novel ways of measuring the current state and direction of the market.

The research firm predicted a bottom to bitcoin’s falling price action in Q1 of 2019, or H1 at the latest, reaching this conclusion based on an analysis of transaction activity derived from two separate methods.


One of these methods is to compare bitcoin market market cycles with cycles of (in)activity of unspent transaction outputs (UTXOs). The universally-available data, an upshot of Bitcoin’s (for now, at least) pseudo-anonymous character, bears a simple but powerful logic.

Delphi measured the percentage of the UTXO pool that had been inactive for at least a year, and compared it with market movement. A higher general age implies fewer transfers of bitcoin and lower activity (more holding); whereas a lower general age implies more bitcoin transfer and more activity (less holding). The research also used higher-age metrics, but the one-year is most compelling.

They found that periods of decreasing activity (an aging UTXO pool) correspond with periods of falling prices, market bottoms, and accumulation. Likewise, moments of rising activity (a “young-ing” UTXO pool) presage price rises and market tops. (The green line on the chart below represents higher or lower percentage of holders.)


Periods of sharply rising prices have coincided with peak UTXO age, whereas UTXO age troughs occur after price peaks have been found.

The Bitcoin network UTXO pool is currently aging. It is from this basis that Delphi issue their Q1 bottom price prediction.


Network Value/Transaction Signal

Another interesting metric employed by Delphi is the so-called Network Value/Transaction Signal (NVTS), which tries to glean a more objectively measurable “value” – that is, aside from what the market thinks is the correct value! – of the Bitcoin network in lieu of traditional measurements such as earnings reports or creditworthiness ratings.

Building off of the Network Value/Transaction Ratio (NVT) indicator, which compares price with on-chain transaction volume, the NVTS was an effort of Dmitry Kalichkin of Cryptolab Capital to refine the NVT with the use of a transaction volume moving-average indicator.


The result is a leading indicator that generally accords with the UTXO analysis. Nadirs in transaction volume, using the average, presage price bottoms and vice versa – although this method clearly treats of a much more local timeframe. The NVTS method clearly indicates such a local bottom arriving soon.

Delphi note that estimating transaction volume will always be just that – an estimation rather than an exact science, because of the general tendency for on-chain volume to be “overstated,” and because of any present or future sidechain diminution of Bitcoin network transaction load.

More Fundamentals

In addition to the strictly statistical analysis focused on price, Delphi conducted an extensive long-term value analysis utilizing several metrics, as well as an assessment of bitcoin as a medium of exchange.

In Delphi’s opinion, if certain obstacles – volatility, more reliable custody, and regulatory hurdles – were overcome and the Bitcoin network continued to function as reliably as it has, Delphi concludes that “over the long run we foresee bitcoin serving as a staple allocation in traditional investment portfolios, central bank reserves, and as a suitable alternative for a portion of assets held in offshore accounts.”

Delphi also consider the well-worn use cases of bitcoin as a cheap remittance vehicle, and as a safe haven for people suffering from hyperinflation local currencies, realistic possibilities as catalysts to wider adoption.