Grin Price Analysis – Bearish trend metrics

Grin (GRIN) is a default privacy coin which employs MimbleWimble to obscure transaction data. The MimbleWimble (MW) whitepaper was first released in August 2016, on a Bitcoin IRC channel, by Tom Elvis Jedusor, an anonymous developer. In October 2016, Andrew Poelstra, a developer at Blockstream, released improvements to the original whitepaper.

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A few days later, the first partial implementation written in Rust was released by another anonymous developer, Ignotus Peverell. That implementation was named Grin. A testnet was launched in November 2017, with a mainnet launch in January 2019. There was no ICO, no pre-mine, and no Founder’s Reward.

Similar to CoinJoin, MW hides transaction amounts by batching inputs per block, but does not inherently provide anonymity. GRIN also uses the Dandelion relay, which attempts to anonymize the IP address or client where the transaction originated.

Source: GrinExplorer

A quick comparison between coins with privacy capabilities shows Monero (XMR) leading by market cap. total daily fees, and GitHub Commits. Both XMR and GRIN obscure the blockchain transaction values and addresses used. On-chain metrics for another MW implementation, BEAM, could not be obtained. Litecoin (LTC) also has plans to add MW functionality via extension blocks.

GRIN uses a progressive Proof-of-Work consensus algorithm dubbed the “cuckoo cycle”. The algorithm was created in 2015 by the Dutch computer scientist John Tromp. To help deter ASIC use, the network uses the ASIC friendly Cuckatoo31+ and GPU friendly Cuckaroo29, switching between the two every 24 hours. Obelisk Miner canceled ASIC development for three GRIN algorithms in February 2019 due to a lack of interest. Innosilicon, which had also been developing three ASICs for GRIN, announced a pre-order cancellation in January 2020.

Since the networks launch, network difficulty (line, chart below) has continued to decline. Inflation (fill, chart below) is currently 61% per annum, and has fallen rapidly over the past year after starting with an aggressive distribution schedule. Issuance will drop to 10% after 10 years, 5% after 20 years, and 4% in 25 years, with no finite supply.

Source: CoinMetrics

Transactions per day (line, chart below) have essentially held near a steady 2,500 until March when transactions began to decline significantly. The spikes in transactions, about once a month, maybe related to mining pool payouts. Average transaction fees (fill, chart below) have continued to decline over the past year and currently sit at US$0.0036. This average fee is also lower than all other chains with privacy-enabling features.

Source: CoinMetrics

Turning to developer activity, the GRIN repo has had over 300 commits by 100 developers over the past year. GRIN development is funded through donations, which currently total over US$1 million.

Most coins use the developer community of Github where files are saved in folders called "repositories," or "repos," and changes to these files are recorded with "commits," which save a record of what changes were made, when, and by who. Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher developer activity and interest.

In total four hard forks are scheduled in the first two years, at regular six-month intervals, to introduce new features. GRIN’s first hard fork, to v2.0.0 occurred in July 2019, with a second, to v3.0.0 in January 2020 and v3.1.0 in February. The most recent hard fork patched a vulnerability, CVE-2020-6638, which could have led to a malicious chain split. GRIN v4.0.0 was released in July 2020 with continued work on v4.x and v5.0 over the past few weeks.

Source: Github – mimblewimble/grin

Technical Analysis

GRIN has a market cap of under US$20 million with GRIN/BTC having a little more than one year of price history. As prices push all-time lows, roadmaps for future market movements can be found on high timeframes using Exponential Moving Averages, Volume Profile of the Visible Range, oscillators, divergences, and the Ichimoku Cloud. Further background information on the technical analysis discussed below can be found here.

On the daily chart for the GRIN/USD pair, the spot price has mainly held below the 50-day Exponential Moving Average (EMA) since inception. A Golden Cross of the 50-day and 200-day EMA has never occurred. The 200-day EMA, currently at US$0.64, should act as a mean reversion target should bullish momentum materialize.

Most of the historical volume has occurred between the US$0.40 and US$0.55 zone based on the Volume Profile of the Visible Range (VPVR, horizontal bars chart below). A re-consolidation in this high volume zone will likely be necessary before any further local highs beyond US$0.63. Currently, there are no active bullish divergences on volume or RSI to suggest waning bearish momentum.

Turning to the Ichimoku Cloud, four metrics are used to indicate if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, and the Lagging Span. The best entry always occurs when most of the signals flip from bearish to bullish, or vice versa.

Cloud metrics on the daily time frame for GRIN/BTC, with doubled settings (20/60/120/30) for more accurate signals, are bearish; the spot price is below the Cloud, the Cloud is bearish, the TK cross is bearish, and the Lagging Span is below the Cloud and inside of the spot price. A traditional long entry signal will not occur until the spot price is above the Cloud, which typically occurs in concurrence with a chart pattern.

Conclusion

GRIN entered the market alongside other default and non-default privacy chains, such as XMR, BEAM, DASH, ZEC, DCR, and PIVX. Now over one year old, inflation remains higher than most, if not all cryptocurrencies, in an effort to distribute the coin as widely as possible. Development is decentralized and well-funded through several donations totaling over US$1 million.

GRIN has limited exchange listings, which may hamper speculation in the near term. Any additional exchange listings should be extremely bullish for the pair, albeit unlikely due to the default privacy capabilities of the coin.

Both the GRIN/USD and GRIN/BTC pair show bearish trend metrics with prices below both the 200-day EMA and daily Cloud. GRIN/USD sits near all-time lows on the underside of a high volume node. The GRIN/BTC pair is unlikely to regain bullish momentum until a breach above the 10,000 – 11,000 sat zone. Value traders may begin catching knives, hoping for a quick capitulation spike downward, followed by a mean reversion to 10,000 sats or higher.