If you’ve been fixated on the ongoing DeFi madness, you might’ve missed the absolute barrels of hype surrounding the Quant project and its native QNT token in the past few days:
The QNT chatter started picking up on June 24th, after the Quant team announced that they’ve successfully tested blockchain interoperability with SIA, a European hi-tech company leader in the fields of payment services and infrastructures, and a subsidiary of CDP Equity:
“The breakthrough was achieved by integrating Quant Network’s Overledger technology (the world’s only DLT operating system that allows interoperability) into the SIAchain private blockchain infrastructure leveraging on 580 European network nodes within SIAnet (the fiber optic network with high-speed and low-latency stretching over 208,000 kilometres).”
According to the announcement, the successful test should help facilitate cross-platform applications including payments, notarization and KYC services. The news of the test quickly spread online, contributing to a major spike in QNT mentions on crypto social media:
Although the partnership with SIA was originally announced back on June 5th, a look at Quant’s development activity over the past year reveals a curious spike in the weeks ahead of the reveal. Preparation for the upcoming SIA test, perhaps?
Either way, the price of QNT quickly surged on the back of a successful test, gaining +32.9% over the next 10 hours. It finally wavered after breaching $8.50 for the first time since August 2019, and has been on a consolidation binge until just a few days ago:
On June 28th, the price of QNT leapt once again, this time gaining +15% in less than 24 hours and retesting the massive $10 resistance level before retracing. So why the second rally?
The latest QNT pump was prompted by the fact that we’re now at the edge of Q2, which is when the Quant Network promised the launch of their much-anticipated Overledger network:
For the sake of brevity, you can read all about the Overledger network and its many touted benefits here. Regardless, it’s safe to say that the crowd was expecting a hefty ‘mainnet’ pump, heavily propping up QNT in the days ahead of the release.
Instead, the exact opposite happened. Overledger launched yesterday to much community praise, yet the price of QNT has been on a steady downtrend since, losing more than 10% since the Overledger release.
Another case of ‘buy the rumour, sell the news?’
In fact, QNT’s price action in the past 24 hours is hardly surprising. Based on the coin’s recent network and social media activity, the potential for a short-term correction seemed fairly significant.
Here’s a few reasons why:
- Rising sell pressure
The amount of QNT moving from private addresses to exchanges surged around the correction yesterday, with over 55,000 QNT (~$485,000) entering known exchange wallets. As you can see, similar spikes in QNT’s supply on exchanges can also be observed on June 24th (as QNT pumped following the successful test news) as well as on June 26h, as the coin attempted another push above $8.6.
Each time, the spike in exchange inflow coincided with a local top for QNT, as the rising sell pressure proved difficult for QNT bulls to absorb.
- Elevated token activity
In line with the above, the amount of unique QNT tokens moving on the blockchain in the past 180 days shot up on two main occasions: June 24th (test news) and once again yesterday, ahead of the correction:
The increased token activity can also be seen on QNT’s mean dollar invested age (MDIA for short) chart, which tracks the sudden movement of previously dormant coins. The rising MDIA slope signals a network-wide accumulation trend, while drop-offs indicate the increased distribution of QNT tokens between network addresses. Once again, two curious dips stand out:
- Whales offloading
Since the news broke of a successful interoperability test, the largest 100 QNT addresses (not belonging to exchanges) offloaded more than 150,000 QNT, indicating the intent of several QNT whales to cash in on the hype:
Short-term selloffs by some QNT whales are also visible on the list of biggest QNT transactions in the past 2 days, available on Sandata. As you can see below, a number of largest QNT transfers ahead of the Overledger release proved to be exchange-bound:
- Extremely bullish crowd sentiment
According to our sentiment algorithm, QNT-related chatter on crypto social media was overwhelmingly bullish ahead of the Overledger release, which tends to be bad news for the coin’s price action:
These spikes in bullish sentiment often indicate ‘peak hype’ moments, when the crowd becomes irrationally confident in the coin’s short-term price action (check out some of the tweets above), and the whales start to dump on the FOMO crowd. In fact, you’ll notice that most of QNT’s tops in the past 18 months coincided with an overwhelmingly bullish crowd mood.
- Dangerous MVRV levels
Finally, the last bearish indicator to mention is QNT’s 60-day MVRV ratio, which measures the average profit or loss of addresses that acquired QNT in the past 2 months (‘new money’).
The MVRV ratio peaked at 1.58 before the latest QNT correction, indicating that this group of holders was, on average, +58% on their initial investment. As a rule of thumb, the higher the MVRV ratio the more likely it becomes that holders will start to offload some of their bags and take profit.
This is especially true for short-term holders, whose MVRV ratio, as you can see above, tends to peak somewhere between 1.50 and 1.58 around most of QNT’s recent tops. In recent history, it appears that new QNT money is content with selling their bags whenever we hit the 50%+ ‘danger zone’, which proved correct once again ahead yesterday evening.
These are some of the reasons I wasn’t too surprised to see the price of QNT tumble soon after the Overledger release. The coin was priming for short-term correction, and the market obliged.
The question now is – can QNT bounce back once again and finally break above $10? One positive sign is that QNT’s network activity remains optimistically high, with its daily active addresses currently hovering around a year-high 395:
This should provide plenty of fundamental support for the coin to rally further, but keep an eye on this metric in days to come. If QNT’s daily addresses start to diverge from its price action, (i.e. begin to decline into another attempt above $10), it could make it difficult for the coin to manage a sustainable rally, like it did several dimes in the coin’s past:
Outside of QNT’s daily addresses, I’d keep an eye on QNT’s crowd sentiment, exchange-bound inflow and its short-term MVRV ratio. All three of these indicators have begun normalizing in the past 24 hours after some fairly extreme spikes, tho they’re not out of the ‘danger zone’ yet. Look for these to retrace back to their pre-pump levels in order to provide enough leeway for another QNT breakout.
This report was produced using Santiment’s growing suite of market and network analytics tools – Sanbase and Sandata – which help users analyze the crypto market and find data-driven investment opportunities.
Santiment provides clean and reliable on-chain, social media and development information on over 1000 crypto assets, and develops unique metrics, signals, strategies and reports on top of our custom datasets.
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