Filtering the Signal From the Noise: Finding the Next Trading Narrative | Christopher Newhouse

filtering the signal from the noise finding the next trading narrative uh my name is Christopher new house I'm a defi Analyst at Cumberland Labs Cumberland Labs uh web 3 incubator and Venture studio uh so if you're a Founder with ideas and need resources whether that is capital developer resources uh legal help anything of that nature feel free to reach out to me and we'll get started I was actually here as a speaker last year um Moroso focused on a beginner panel how to onboard on web 3 so was teaching people about wallets metamask things like that this is probably a little bit more of an intermediate panel we're going to be covering a bunch of the just data sources that I use to form investment thesis um so right now the market is you know we're bull market bitcoin's above 60k ethereum is really performing um it's a very institutionally LED narrative right now um but as we kind of start to see more of that shift towards ethereum maybe the EF in May uh we might start to see a lot more trickle down into some of the layer ones and a variety of the altcoins and defi ecosystems um so I hope that this presentation gives you the opportunity to see some of the different defi native kind of data that I'm looking at before I form an investment thesis and buy it in my own PA as a bit of a background so I graduated Georgia Tech in 2022 I've been fully Crypton native uh so sorry if the slides are pretty rudimentary I had no Consulting no Investment Banking none of that experience I've fully been Crypton native I started at Genesis went to GSR um now I'm currently here at Cumberland Labs uh I was previously also a research partner at derit um so I was writing like options Focus Market commentary if you guys follow me at all on Twitter crypto defi guy I write a lot of Market Focus commentary for institutions and uh retail Traders as well um sorry let me uh mute telegram forgot about that very Crypton native of course and got to close the Discord as well all right awesome so getting back into it so I entered crypto in 2017 uh First Trade was Ripple during the Ico bubble uh made a decent bit of profit there kind of took a break from crypto until 2020 defi summer came got super involved in Heath super involved in the ecosystem realized I wanted to stay in crypto for the foreseeable future had a role at Genesis and that was kind of my foray into the institutional side of digital assets uh we're going to be looking at kind of like a data driven approach to finding trades and forming a fundamental thesis um and then hopefully like the presentation is probably going to be pretty quick um and then hopefully if people have questions from the audience I'd love to answer them so I've been in the space for six years now and three on the institutional side so why am I presenting we we're kind of entering this this new cycle here new participants it's a very it's a very institutionally driven Market I'd say uh we all see the stuff on the inflows you know coming up on Bloomberg and everyone's talking about ETF inflows it's very much so Bitcoin dominated uh I think a lot of that's going to trickle into eth I think one of the it's not really a narrative but it seems like uh something that's kind of just going to happen is people are starting to position themselves for eth ETF maybe coming in May um so that's definitely something to look at but what I just described is very institutionally focused um there's still a lot of specific narratives going on in the background that might have massive upside and being able to leverage data effectively is how I've kind of had the opportunity to catch some of these waves back in 2020 2021 um and then recently in 2023 as well with salana um so like I said potentially eth ETF in May we're going to maybe see that trickle down into altcoins um there's new interest in growing volumes in defi we're seeing a lot of different uh xes across a variety of ecosystems really start to pick up tvl really start to pick up volume and you're starting to see like decentralized exchanges really get volume and get interest again uh we're going to approach it from kind of like a three waves so we're going to talk about like how I think of uh the Bitcoin and eath narrative that's primarily going to be like derivatives data options focused data very institutionally focused just to see where the flows are where people are trading and what they're speculating on um we're going to approach it from the altcoin side as well so it's a lot of of the altcoin data I use whether that is onchain whether that is like defi llama TBL tracking things like that and then also def5 specific as well so we'll talk about some of like the data sources I use from an API standpoint um to monitor liquidity pools and things of that nature so those are the three verticals we're kind of tackling this at data driven approach of course is obviously going to be a you know you could just get long on any type of meme coins or any type of coins without doing any research but obviously using a data driven approach is probably going to do a little bit better um so I'd like to talk about the important data feeds that I look at so for Bitcoin and eth I'm primarily focused on the derivatives markets so that's funding rates on the perpetuals that's open interest that's shorts getting closed options markets as well so that's going to be options open interest across a variety of strikes it's going to be dealer gamma positioning that is going to be how the institutions are focusing on the options Market uh we'll talk a little bit about defi so TBL and ecosystem activity those are probably two of the biggest metrics you can track on def llama it's a screenshot of defy llama um and then I'll cover like some interesting just a couple interesting chats uh from Telegram and some research sites as well so first I'd like to uh start off and pretty much the way the slides are these are all the data sources that I use personally um so I'm a big fan of Amber data Litas and Greeks live for the options data um it's pretty high fidelity uh and the cool thing about Amber data leitos and Greeks live is they all have some of their own proprietary charts that they make that are different from others um so that's kind of how I like to look at the option space I primarily use these three um whenever you're looking at the option space you're really trying to focus on institutional positioning so how are the institutions positioned um it's really nice to understand volatility Dynamics so before I enter into a lot of positions I like to see hey is implied volatility in the options Market cheap is it rich um I like to take a look at term structure so that's how I trade a lot of events um and then also just in general like I was discussing with implied volatility or options cheap or expensive um other data I like to use these sources for to take a look at are primarily around like the xre and the open interest usually see on coindesk it's like okay we've got this xre happening at the end of the month 2.9 billion dollars of Bitcoin options are expiring where do you think that's going to impact the market down the line is it going to impact the market usually I like to leverage both the derivatives data plus the Perpetual Futures funding data um and that's kind of how I think about the positions y so it's it's primarily going to be a directional directional Focus but like I said these are all options data providers that give a lot of insight into the volatility surface of Bitcoin and eth perpetuals so these are coinalyze and coin glass um coin Li is actually like my favorite I'm I'm not paid to Shi them or anything but you can literally put a lot of the Perpetual datas on a trading view looking chart um so one of the biggest things I use coinalyze for is a variety of things you can take a look at funding rate you can take a look at predicted funding rate you can take a look at open interest so one of the things I like to use in terms of like a Confluence of data here is whether or not not you know shorts or Longs are being liquidated so if the price is heading up and we see a massive move higher and a lot of open interest just just decreased uh I feel like shorts got closed there and they got blown out and pushed the price higher um so using these kind of data sources on the perpetuals markets uh first it helps me understand leverage it helps me understand Market positioning um and then it helps me understand like is this a derivative lead rally right now or is there a lot of spot organic demand and given the ETF um it is really important to say see like hey is this a Perpetual rally uh based off the back of derivatives markets or is it a spot driven and as we've all seen from like this massive recent run up from 53k to 64k and then you saw the 64k down to 61 within 5 minutes bunch of people got liquidated um that's the kind of thing that I like to use coinalyze to look at coin glass I use that just to track liquidations um it's got very nice charts uh all these are free actually as well um and then yeah the way that I like to leverage this data is to think about liquidation Cascades delta neutral funding trades and then how are the SS performing versus the majors so if you use coinalyze it actually has like the funding rates for any listed per um on the altcoins markets but recently Bitcoin and eth have been dominant so I've been focused on bitcoin and eth now we'll kind of look at some of the Defi and onchain data um so everyone's probably heard of defi llama if you're trading on defi it's like a very very easy way to track TBL of ecosystems see what's hot see what's not and then also track specific verticals Within These ecosystems so using defi llama one of the biggest trades I had this year was on salana and it was really interesting to see a lot of the defi activity start to flow from ethereum over to salana and then start to also see like how the individual protocols were accumulating volume after a lot of the different salana airdrops um so I feel like you know Q4 Q3 of 2023 one of the bigger trades with salana and one of the things I was doing was just constantly being on defi llama looking at the TBL and the defi ecosystems looking at how much volume is going through their dexes looking at how many developers are starting to build on salana or continuing to build um and I get a lot of that from defi llama so a lot of the stuff I was talking about here what ecosystems are thriving what's growing uh what protocols so on defi llama you can get like protocol specific um and that's what protocols might have user growth and volume um a lot of the stuff in defi is competing with each other so being able to look and see who's actually winning whenever there's five dexes is very important especially for like token air drops in the future or just investing in those verticals um I also use a lot of onchain data from glass node and dune analytics so that's like specifically onchain and kind of just looking at active wallet addresses um seeing like how much of a coin someone holds um if are there you know a thousand users with one coin each or is it one user with a thousand coins um so that's something I like to take note of because the activity can be very different across a variety of those different users um another thing I like to use as well is expand it's API access so I use this for a lot of defi liquidity pool pool forensics um and that's just very interesting to me from a historical analysis standpoint to say like hey this might be a dead narrative I'm looking at you know liquidity pools a year or two ago and uh you know they're kind of flat kind of trending downwards and now they're starting to get active again whales are starting to get active in these ecosystems providing liquidity these pools again maybe there's something going on behind the scenes um so a lot of this stuff about crypto and about data is just really like I said on the PowerPoint is filtering signal from noise there's a lot of data and it just really focuses on what is important and that's what I'm hoping to highlight here with this presentation um so yeah this is my Defi and onchain data that I look at def llama is a massive one and then here's some telegrams um so I don't have the links to these and these are just the images um but crypto fundraising maybe you could type that into Telegram and it'll pop up there's like 25,000 people there um but basically that's you know easy access to a lot of the early stage deals going on in crypto they post them pretty quickly they've already happened um but but it's good to see who's investing in a lot of these different narratives um you know different VCS have different focuses in terms of verticals it's really interesting to see like hey you know I'm on crypto fundraising the past 10 deals over the past two months have been web 3 and gaming maybe that's a hot narrative um and then Paradigm Edge uh so that's a specifically focused institutional options chat um and what that has it's got like 1,600 users in there if if you can find it maybe you need the link and I I don't have it um but if you see on Paradigm Edge like it shows like top flows for Institution it shows what is going on the options markets it shows you the biggest prints of the day so if the market is rallying massively and someone came in and yesterday yesterday they bought you know a massive amount of calls they're probably in profit and that's something to stay cognizant about because eventually they're going to have to exit that position and exit uh exit that position um and then Infinity hedge this is just one that like I've been using recently and it's very similar to tier 10K on Twitter um they come out super quick quick with crypto native news um so yeah these are three of the telegrams that are like pinned to the top of my telegram um I'm sure everyone in here has telegram it's uh you know crypto conference um and then you know there's also the news and media company specific channels so you know companies have their own specific channels for Market commentary um you know coindesk uh what coin coindesk blockworks a variety of different uh research and media companies also have their own kind of research telegram chats and yeah cool so so I've got seven minutes which is a decent bit of time um if anyone has any questions about how I use any of this data um how I have used any of this data how I've traded um I think you know you can raise your hand and someone will walk around with a microphone if anyone has questions and then if not feel free to to reach me on the side but I'd be happy to talk about any of this and then also Cumberland Labs being an early stage incubator if anyone's a Founder here um looking for resources and haven't raised yet we'd be happy to talk to you as well about incubation and if nobody oh yep hey Chris uh just curious how you prioritize which data sets to pick and um where you spend your time on any of them uh sorry sorry what was the last part data sets to pick and and like how you prioritize spending time on which ones got it yeah so for me I also just have like a uh personal vested research interest um so I have like a a predetermined set of narratives I'm looking at and then I usually just pick data to analyze those specific narratives so if I have a view that hey maybe deers are hot right now maybe liquidity is coming there maybe there's a lot of volume I already have like these predetermined layer ones that I'm just personally interested in and I kind of look at defi llama and some of the data and historical analysis there um to just analyze the growth or whatever vertical I'm looking at at if the if the uh hypothesis is hey dexes are getting more volume Dex are getting more users maybe I look at some of the onchain data for the addresses of active users on that protocol maybe I like to see you know okay like I was talking about in terms of a thousand addresses with one salana versus one address with a thousand Salon it's a very different narrative um but in terms of choosing the data I already have kind of like uh predetermined layer ones that I'm I'm interested in um and then it's more so about looking at specific ecosystem verticals I came in a bit late but uh if we want to follow you specifically do you post any particular place consistently yes so I'm on Twitter it's @ crypto defi guy very basic crypto name um and I usually post like options commentary I post I've posted stuff on ETF uh on the ETFs I've been on the by lines for Bloomberg coindesk Yahoo finance for Market color and Market commentary um so anytime there's a big move I usually post something on Twitter about why I think that happened and usually that leverages charts from some of these data sources that way you can actually see and I also explain why that happened so whenever I was talking about coinalyze for liquidations and open interest I usually highlight and point that out just for new people who are kind of coming in and seeing a new data source um and then also shout out so I've actually never used these other two data sources but this is why it's good to connect with other research analysts and just talk about you know different data and have a presentation like this to see all the different data sources um Vell data is another good one that I've been seeing pop up um and then Artemis is another one that was recommended to me by a research analyst um so I've never used those but I wrote them down because you can never get enough data in crypto and if no one else has any questions you can talk to me on the side well awesome thanks guys really appreciate it for