The analyst was referring to the illiquid supply ratio, a metric that falls within the scope of supply shock analysis. Analysis of the supply shock, in turn, can be used to gauge investor intentions and therefore offers price predictive properties.
On-chain analyst Willy Woo has documented the nuances associated with understanding the supply shock. This includes quantifying the various forms of supply shock, e.g. B. the supply shock on the crypto exchange, the supply shock for cash and the supply shock for long-term holders.
However, when modeling the supply shock, Woo prefers the liquid supply shock because it can capture investor intent.
“Glassnode’s Liquid Supply Metric forensically groups wallet addresses into different investors and then classifies their coins as illiquid, liquid, or highly liquid based on the investor’s historical behavior.”
Based on the above data, it is possible to calculate the supply shock by dividing illiquid coins by liquid and highly liquid coins.