Visualizing the Recent Crypto Selloff

Written by jasonyip184 | Published 2021/12/08
Tech Story Tags: crypto | cryptocurrency | cryptocurrency-trading | cryptocurrency-investment | crypto-trading | altcoin | altcoins | data-science

TLDRCoins dropped even more during the selloff if they were already further off from highs, suggesting a downward momentum weighing on the euphoria in crypto markets.via the TL;DR App

An Altcoin Perspective

Feels amazing to be back after a 1-year hiatus! I recently started my full-time job and have not been so active in data science but I would like to start going at it again. It’s virtually impossible to ignore what’s going on in crypto markets right now and it’s super exciting to explore what we can do here with all the data and opportunities. It’s been a while so I’m starting with something light this round.

December 4th Crypto Selloff

Crypto markets were hit with a wave of de-risking recently on several possible factors:
  • Fed speeding up the tapering process as inflation no longer seen as ‘transitory’
  • Omicron fears and U.S job growth slowing
  • Billionaires like Musk and Bezos selling their stocks
  • Evergrande warning it could run out of money
  • Exchange Reserves for BTC rose sharply before the crash (money from wallets to exchanges with possible intention to sell away)
  • Estimate Leverage Ratio for BTC hitting ATHs
  • Exchange Whale Ratio for BTC hitting 3Y Highs
  • Liquidating crypto to lock in profits ahead of holiday season
  • Crypto Feed & Greed Index at Extreme Fear
  • Low liquidity conditions (weekend night, crypto people partying in Art Basel Miami)
  • Prior to this, the crypto market was on a bull run with all the hype about Metaverses, NFTs, Web3, DAOs and DeFi 2.0; and I wanted to see how the top coins performed after coming off the euphoria into what many would call a bear market or a crash.

A Quick Data Collection Process

I scraped price data, token images and basic data from CoinMarketCap for free using python’s requests and beautifulsoup instead of using CMC’s API. I started scraping them when BTC prices were $47,543, which was shortly after the bottoms when things stabilized for a bit. Was busy checking my positions when it all happened… haha.

Visualizing the data

I used plotly which looked great and was easy to use. I also used PIL to store the coin image objects for the plots and sized them up based on their market cap rank. I plotted the daily 24h % price change against the T-24h Price from 30D High expressed as a percentage, as I wanted to see how far we were from recent tops before this selloff. I also excluded most stable coins to see the other coins better.

Analyzing the data

There are several observations that we can make with a little bit of extra digging:
  • Large L1 coins dropped even more if they were already further off from recent highs —Ethereum, Polygon & Solana near the yellow line region vs Tron & Bitcoin near the orange region vs XRP, Algorand & Litecoin near the red region vs VeChain & Kadena near the black region. Avax was a surprise outperformer.
  • Above applies for Gaming coins too — Axie & Sandbox near the orange region vs Decentraland & Enjin near the red region vs Wax near the black region. Theta was a surprise underperformer.
  • DeFi tokens dropped the most in the 30% from the recent highs cat, they also happen to be mentioned a lot more in social media recently— Uniswap, Chainlink, Dai, Fantom & Loopring near the red region vs Avax, Tezos & Maker near the orange region and PancakeSwap & Wrapped BTC near black region.
  • Above 3 findings could support the argument that downward momentum is heavy for categories that were recently very popular. We know the Metaverse narrative has been hot for gaming crypto, and the surge in ETH gas fees has led to a wave of support in other L1s.
  • CEXs fell the least relative to other coins despite where they were — Kucoin, Huobi, FTX & Voyager down about 10–15% (I realized CRO is missing from the scraping..*)
  • Most coins have come off around 30% from recent highs. Most coins have dropped at least 10%, except for $CEL which is a L&B platform with mcap of $1b, and $NEAR which is an L1 with mcap of $7b. $REV is also in the list but it has fallen so much from 3M and ATHs.
  • Smaller caps see wider volatility in the price fall — Coins like NuCypher, Velas, Nano & DigitalBits have limited drops to 15% while others like dydx, SKALE & Storj saw drops beyond 25%.
  • Coins that have come off at least 40% from recent highs (black line) are mostly small and under 1b mcap with the exception of Kadena.
Well, I’m sure you can derive more from this and it is definitely just a starting point for further analysis. 

Conclusion

It seems like there is a very general downward pressure that suggests that the further coins have come off the last rally, the further they have continued to drop in the recent selloff. I am curious to find out what else you see here and what your next steps would be. Please reach out to me on linkedin!

Written by jasonyip184 | Cryptonaire wannabe by night, thousandnaire trader at J.P. by day
Published by HackerNoon on 2021/12/08