KNC has been on a bender in the past 48 hours, gaining +46.6% and breaching the $1.75 resistance for the first time since May 2018.

The reason for the rally is no mystery: the Kyber team recently announced the launch date for their much-anticipated Katalyst upgrade along with KyberDAO, a community platform to facilitate decentralized governance of the protocol:

KNC price, last 3 months (Source: Sanbase)

“This will usher in an exciting new era for Kyber Network”, reads the announcement, “with a host of major technical improvements aimed at enhancing decentralized liquidity for decentralized finance (DeFi)!”

Among other notable updates, KNC holders will now be able to stake their coins to vote and earn rewards (in ETH) for their efforts. Holders will be able to stake KNC starting in Epoch 0 (July 7th), and vote on the first KyberDAO proposal in Epoch 1.

The Katalyst upgrade is due in four days, however the price of KNC is already going ballistic. Is this another case of ‘buy the rumour, sell the news’ (like we saw happen with Quant recently) or can KNC actually sustain this rally ahead of the network upgrade?

According to KNC’s on-chain and social data, the former seems more likely. Kyber’s native token has been flashing an increasing number of bearish indicators, pointing to an incoming consolidation or short-term correction.

At the moment, there’s still a few reasons for optimism to be found in KNC’s data (mainly its whale behavior), although those are feeling increasingly sparse. Let’s explore.

  • KNC has hit ‘peak hype’

According to data from over 1000 channels, the amount of KNC-related mentions on crypto social media mushroomed in the past 2 days and is currently at its highest level since the local top recorded on March 19th, 2019.

Extreme social volumes can often coincide with local tops and short-term price corrections for the coin, as it has already done a number of times in KNC’s recent past:

Amount of KNC-related mentions on crypto social media, last 6 months (Source: Sanbase)

The elevated social volume has also placed KNC at the top of our list of ‘emerging trends’ on crypto social media. This list is re-calculated each hour and aims to discover the words and topics gaining the most steam within the crypto community. At the time of writing, KNC is the king:

KNC tops our list of Emerging Trends (Source: Sanbase)

This is another highly concerning indicator for KNC’s short-term price action. We have recently published a study in which we’ve analyzed the performance of 200 coins two weeks before and after they appeared at the top of our Emerging Trends list, indicating that the crowd is paying increased attention to these assets – most often because of an ongoing pump.

The results were startling:

“Within the next 12 days after a coin claims a top 3 position on our list of Emerging Trends, its price drops by an average of 8.2 percent.”

The average price two weeks before and two weeks after a coin reaches the top of our ’emerging trends’ (200 instances)

Based on our study, once the increased crowd attention subsides (which usually happens in a matter of hours/days), a short-term price correction – or consolidation – is oten a likely outcome.

  • Signs of on-chain distribution

Moving to the coin’s on-chain data, we’ve also observed an ongoing decline in KNC’s mean dollar invested age (MDIA), which tracks the sudden movement of previously dormant coins. The rising MDIA slope signals a network-wide accumulation trend, while drop-offs point to increased distribution of QNT tokens between network addresses.

As you can see below, major downturns in KNC’s MDIA often coincide with local price tops, as the trend pivots from network-wide accumulation to rapid increase in token activity in response to the rally:

KNC, mean dollar invested age, last 6 months (Source: Sanbase)

Further to this point, the amount of active KNC coins in the past 180 days is once again on the incline – another indicator whose growth tends to mirror KNC’s price action:

Amount of active KNC coins in the past 180 days, last 6 months (Source: Sanbase)
  • Rising sell pressure

As expected, KNC’s exchange-related activity has shot up in the past 48 hours, with the amount of deposit transactions (transactions involving KNC deposit addresses) spiking to a 4-month high 821:

Amount of KNC-related deposit transactions, last 6 months (Source: Sanbase)

The amount of transactions involving deposit KNC addresses tend to increase dramatically around local price tops, if the rising sell pressure proves too difficult for the KNC bulls to absorb.

  • Short-term MVRV ratio back in the ‘danger zone’

Yet another concerning indicator is KNC’s 30-day MVRV ratio, which measures the average profit or loss of addresses that acquired KNC in the past month ( aka ‘new money’).

The 30-day MVRV ratio is now hovering at 1.44, indicating that short-term KNC holders are currently – on average – up 44% on their initial investment. As a rule of thumb, the higher the MVRV ratio becomes, the more likely it is that short-term holders will start to offload some of their bags and take profit.

Below are some of the previous ‘peaks’ of KNC’s 30-day MVRV ratio. In general, levels above 1.25 (25% profit for short-term holders) tend to not last very long, as new money quickly becomes content with closing their positions at these margins:

KNC’s 30-day MVRV ratio, last year (Source: Sanbase)

KNC’s 30-day MVRV ratio shot up from 0.98 four days ago to 1.44 today, and is now the same it’s been at KNC’s December 6th top.

Safe to say, the number of bearish indicators for kNC is ramping up fast. That said, it’s worth pointing to several metrics where we’re still waiting on ‘the other shoe to drop’ before calling it a top:

  • KNC whales accumulating…for now

Although there’s been a rising number of exchange-related KNC transactions, larger holders – on average – seem to be content sitting on their bags for now. For example, the combined balance of all addresses holding between 10,000 and 100,000 KNC has actually grown by 500,000 KNC in the past 5 days.

Why does this matter? Most of KNC’s recent tops coincided with major drops in the balance of these addresses, as you can see below.

In other words, keep an eye on this holder cohort – should we see a notable drop-off in days to come (especially if it coincides with the amount of KNC moving to exchanges), the correction could be around the corner:

Combined balance of addresses holding between 10k and 100k KNC, YTD (Source: Sandata)

Along the same lines, the number of addresses holding more than 10,000 KNC experienced similar drops around virtually each of KNC’s local tops, year to date.

For the time being, however, this number also continues to grow; in the past 72 hours, 33 new addresses joined the 10k+ KNC club:

Number of addresses holding more than 10k KNC, YTD (Source: Sandata)
  • KNC network activity remains strong

Finally, the amount of addresses interacting with (sending or receiving KNC) daily is still very high, peaking at 3233 in the past 24 hours:

KNC, daily active addresses, last year (Source: Sanbase)

While the rising token activity can be a positive sign, the timing suggests that the spike in KNC’s daily addresses is mostly price-related.

We’ve seen this same pattern occur several times in the past: KNC’s daily addresses explode into a pump, with most spikes being very short-lived. We call this phenomenon Price-DAA divergence: once the coin’s network activity starts to retrace back to its pre-pump levels, it leaves the price without strong fundamental support for a sustained rally. As a result, the price often fails to chart a higher high into a declining on-chain activity, as you can see above.

For the time being, however, KNC’s on-chain activity remains unconventionally high. Keep an eye on it in the next few days – should we see a divergence between KNC’s price (pushing up) and its on-chain activity (declining), a top may be near.