On-chain data for the 19th week: The market has reached a staged low, and a change may occur in the short term

Original title: "Where does the market downturn come from? Is the selling pressure too much or too little at present? | WTR 5.13"
Original source: WTR Research Institute

Review of this week

This week from May 6 to May 13, the highest price of Bingtang Orange was around $6550 and the lowest price was close to $60187, with a fluctuation range of about 8%.
Observing the chip distribution chart, there are a large number of chips traded around 60,000, which will have a certain support or pressure.

• Analysis:
1. 59000-63000 is about 1.14 million pieces;
2. 64000-68000 is about 800,000 pieces;
• The probability of not falling below 57000~61000 in the short term is 82%;
• The probability of not rising below 71000～74000 in the short term is 72%.

Important news

Economic news

1. On May 9, the Bank of England announced its interest rate decision, keeping the benchmark interest rate unchanged at 5.25% for the sixth consecutive time. Bank of England: 7 people voted to keep the interest rate unchanged, and 2 people voted to cut interest rates.

2. Bank of England forward guidance: The risk of persistent inflation is weakening. Bank of England Governor Bailey said: CPI is expected to be close to the target level in the next two months, and he is optimistic that things are moving in the right direction.

3. On Friday, the minutes of the ECB's April meeting showed that several members believed that the conditions for a rate cut had been met in April. If wages and inflation data remain at the current relatively mild level, the next step will be a rate cut, most likely on June 6.

4. ECB Executive Committee member Elderson said: If the outlook for consumer prices is confirmed by the latest quarterly forecasts, the ECB is "very likely" to cut interest rates at the June meeting, and he believes that the central bank is likely to take a step.

5. The number of initial jobless claims in the United States for the week ending May 4 was 231,000, the highest since the week ending August 26, 2023. The weakening momentum of the job market has brought the Fed's two rate cuts this year back to the negotiating table. The financial market expects the Fed to start its easing cycle in September.

6. Bank of America cited EPFR data: In the past week, bond funds attracted $17.8 billion in inflows, the largest weekly inflow since July 2021; stocks inflows were $14.8 billion, the largest inflow in 6 weeks; cash inflows were $67.8 billion, cryptocurrencies inflows were $100 million, and gold outflows were $700 million.

Crypto Ecological News

1. According to CCData's report, the cumulative trading volume of spot and derivatives markets fell by 43.8% to $6.58 trillion. The decline was due to unexpected macroeconomic data and negative net flows of US spot BTC ETFs, which caused major crypto assets to give up their gains in March.

2. According to the 13F information of the US Securities and Exchange Commission, US Bancorp and Rothschild purchased about $20 million in spot BTC ETFs in the first quarter.

3. Analyst Rekt Capital said that the altcoin market has been hit hard in the past month, and the market value of altcoins excluding the top ten cryptocurrencies fell by more than 21% to $265 billion last month.

4. BTC fell for the fifth consecutive trading day, the longest losing streak since October last year, and spot ETFs have seen a net outflow of $169 million so far this month, with an overall net inflow of $11.8 billion.

5. British Economic Minister Bim Afolami said the British government may pass stablecoin and pledge legislation in the coming weeks, but will outline more later, saying that these two things are absolute priorities in the coming weeks and months.

Long-term insight: used to observe our long-term situation; bull market/bear market/structural change/neutral state
Mid-term exploration: used to analyze what stage we are in, how long will this stage last, and what situation we will face
Short-term observation: used to analyze short-term market conditions; and the possibility of some directions and certain events occurring under certain conditions

Long-term insight

• Total spot selling pressure on the chain
• Grayscale ETF net position
• Long-term participant position structure
• Long-term participant loss and profit expenditure

(Figure below: Total spot selling pressure on the chain)

The total spot selling pressure on the chain has reached a stage, which means that if the market may not be in a bear market, then it is either in a volatile market or in a slow bull market relative to the future.
They all have a certain reminder effect, that is, they confirm the periodic low point of the market.

(Grayscale ETF net position in the figure below)

Grayscale's ETF position did not sell on the last day of the tradable day, and the selling is now decreasing.
The current ETF selling in the market comes from BlackRock.

（Figure below: Long-term participants’ holding structure）

Long-term participants begin to increase their holdings. They tend to sell their chips at the peak or high point of the bull market, and tend to collect chips in the bear market.
So these groups play a decisive role in the price and the market.
Currently, 3-5 year participants are the main buyers of the market.

（Figure below: Long-term participants’ losses and profit expenditure）

LTH Realized Price shows the average acquisition price of the cohort.
The LTH pricing range indicates the price levels at which LTH holds a considerable profit (150% and 350%) or a loss (-25%).
When the price is above or below these levels, it usually leads to a large amount of selling by this group.
· When LTH holds a profit of 350%+, it is profitable, and the selling rate is currently high.
· When LTH holds -25%+ losses, it surrenders, and the selling rate is currently very high.

At present, these key points can be used as a reference;
• The cost basis of long-term holders is currently at: $20,510
• The price of a 25% loss for long-term participants is at $15,383
• 150% profit for long-term participants: $30,766.
• 350% profit for long-term participants: around $71,787

If the market goes up in the future, the 350% profit of long-term participants is around 71,800, which needs to be paid attention to, and may be the psychological pressure point of the market.
The holding cost of long-term participants often means one of the bottom prices in a bear market, and it also needs to be paid attention to in the future bear market.

Medium-term exploration

• Spend-output profit rate: 1 day-6 months
• Network sentiment positivity
• Realized real capital within 1 month
• Exchange trend net position

(Figure below Spend-output profit rate: 1 day-6 months)

Green area: 1-6 months short-term supply generated by the positive growth area of the spend-output profit rate
The statistical method of the spend-output profit rate (SOPR) is the ratio of realized value to the value at the time of creation, that is, the selling price/initial price.
When the market is dominated by profit supply, its overall transaction status will be upward.
Through this model, we can observe the rising cycle of the market. When the market enters the green zone, it means that profit supply is dominant. When leaving the profit supply zone, the market may have lost the liquidity of new buying orders and will enter a relatively consolidating position. By then, it may be better to observe the stock market.

（Figure below: Network sentiment positivity）

Network sentiment is in the process of slowing down and declining,
The overall liquidity weakening in the market may be in the consolidation stage.

（Figure below: Realized real capital in 1 month）

Realized real capital means the product of the number of chips and their cost, which is the total amount of funds actually injected in the market.
The value is still in a downward phase in the past month, which may mean that the short-term funds in the market are decreasing.
This will lead to a shortage of funds in the market, which is in the area of stock competition, that is, liquidity contraction, which is only temporarily suspended.

（Figure below: Exchange trend net position）

The exchange is currently gradually reducing inflows, and at the same time, the overall is also entering a state of weak accumulation.
The market may also be in a period of time for space.

Short-term observation

• Derivatives risk factor
• Option intention transaction ratio
• Derivatives trading volume
• Option implied volatility
• Profit and loss transfer volume
• New addresses and active addresses
• Bingtangcheng Exchange net position
• Yitai Exchange net position
• High-weight selling pressure
• Global purchasing power status
• Stablecoin exchange net position
• Off-chain exchange data

Derivatives rating: The risk factor is in the neutral area. Derivatives risk is moderate.

(Figure below: Derivatives risk factor)

BTC continues to fluctuate, and the current risk factor is in the neutral area. Judging from the risk factor alone, the oscillation trend may continue this week.

（Figure below: Option intention transaction ratio）

Option trading volume and put option ratio are both at relatively low levels.

（Figure below: Derivatives trading volume）

Derivatives trading volume returned to low levels.

（Figure below: Option implied volatility）

Implied volatility has dropped slightly.
Sentiment rating: neutral

（Figure below: Profit and loss transfer）

The continued volatility of the market did not cause panic selling, and the market's positive sentiment was also at a low level. The current price has come to the short-term holder cost line of 60K. This week, we will continue to pay attention to the panic of loss.

（Figure below: New addresses and active addresses）

New and active addresses are at a low level.
Spot and selling pressure structure rating: The overall outflow is in an accumulated state, and the selling pressure is low.

（Figure below: Net position of Bingtangcheng Exchange）

The overall outflow is still in an accumulated state.

（E-Tai Exchange Net Position in the Figure Below）

The second cake is currently in an outflow accumulation state.

（High-weight selling pressure in the Figure Below）

There is no high-weight selling pressure at present.
Purchasing power rating: Global purchasing power is lost in large quantities, and stablecoin purchasing power is basically the same.

（Global purchasing power status in the Figure Below）

Currently, global purchasing power is in a state of large-scale loss.

（USDT exchange net position in the Figure Below）

USDT net position is generally flat.

Off-chain transaction data rating: Willing to buy at 60,000; willing to sell at 65,000.

(The figure below is the Coinbase off-chain data)

Willing to buy at prices around 56,000, 58,000, and 60,000;
Willing to sell at prices around 65,000 and 70,000.

(The figure below is the Binance off-chain data)

Willing to buy at prices around 59,000 and 60,000;
Willing to sell at prices around 65,000.

（Bitfinex off-chain data in the figure below）

There is a willingness to buy at a price around 60,000;
There is a willingness to sell at a price around 65,000.

Summary of this week

Summary of news:

Overall analysis of the relationship between policy expectations and market changes.
At the beginning of 2023, the Federal Reserve showed a tendency to cut interest rates, and cryptocurrencies subsequently ushered in a big rise;
At the beginning of 2024, the market expected the Federal Reserve to cut interest rates 6 times throughout the year, and cryptocurrencies subsequently broke new highs.
In April, 6 interest rate cuts were reduced to 1 or 2 times, and the market fell.

At present, the crypto market relies on the mainstream market, and the corresponding monetary policy will give rise to the same direction of the market.
At present, after experiencing the initial excitement of the interest rate cut discussion, the bull market is waiting for the confirmation of the interest rate cut time to enter the era of monetary easing (Citi, Goldman Sachs, JPMorgan Chase, and Morgan Stanley believe that the Fed will cut interest rates on July 31).
Historically, cryptocurrencies are generally relatively flat in the summer.

In a high-interest environment, the current size of US money market funds has reached new highs many times, rising to 6.03 trillion US dollars.

Once the interest rate cut occurs, the interest rate will drop from 5.5% to 2.5%. Money market funds will look for new investable targets, such as risky assets, gold, and crypto assets, which will once again give birth to a better market.

In the short term, pay attention to CPI on Wednesday.

Long-term insights on the chain:

1. The total spot selling pressure shows that the market has reached a staged low;
2. Grayscale ETF But no selling occurred in the last trading day;
3. Participants who hold coins for 3-5 years are the main buyers and eaters in the current market;
4. Then the 35% profit of long-term participants is around 71,800, which needs to be paid attention to, which may be the psychological pressure point of the market.

• Market tone:
The selling pressure decreases, and the market begins to accumulate slowly.

Medium-term exploration on the chain:

1. The market is in a state of supply consolidation;
2. The liquidity in the market gradually decreases and weakens;
3. Lack of capital injection from participants within 1 month;
4. Weak accumulation state, entering a period of time for space.

• Market tone:
Oscillating bottoming
The market is in a state of slight accumulation with weak liquidity, and a change in the inventory is needed.

On-chain short-term observation:

1. The risk factor is in the neutral area, and the risk is moderate.
2. The number of newly added active addresses is in a low range, and the market activity is low.
3. Market sentiment status rating: neutral.
4. The net position of the exchange as a whole shows an outflow accumulation state, and the selling pressure is low.
5. A large number of global purchases have been lost, and stablecoin purchases are largely flat.
6. Off-chain transaction data shows that there is a willingness to buy at 60,000; there is a willingness to sell at 65,000.
7. The probability of not falling below 57,000~61,000 in the short term is 82%; among them, the probability of not rising above 71,000~74,000 in the short term is 72%.

• Market tone:
The overall market sentiment is currently neutral. Although the selling pressure is at a low level, the market activity and purchasing power are relatively insufficient. The current market is once again oscillating to test the price range near the cost line of short-term holders. The short-term market may be brewing a change, so be aware of the risks.

Risk warning: The above are all market discussions and explorations, and have no directional meaning for investment; please be cautious and prevent market black swan risks.

This article comes from a contribution and does not represent the views of BlockBeats.

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群： https://t.me/theblockbeats

Telegram 交流群： https://t.me/BlockBeats_App

Twitter 官方账号： https://twitter.com/BlockBeatsAsia