On-chain data for the 29th week: This month’s interest rate meeting may lay the foundation for a rate cut in September. In the short term, we need to

Original title: "July interest rate meeting is imminent, market purchasing power begins to rise | WTR 7.22"
Original source: WTR Research Institute

Review of this week

This week from July 15 to July 22, the highest price of Bingtang Orange was around $68474, the lowest price was close to $60632, and the fluctuation range reached about 12.9%.
Observing the chip distribution map, there are a large number of chips traded around 65000, which will have a certain support or pressure.

• Analysis:
1. 59000-63000 is about 1.33 million pieces;
2. 64000-68000 is about 1.17 million pieces;
• The probability of not falling below 57000~61000 in the short term is 82%;
• The probability of not rising above 71000～74000 in the short term is 67%.

Important news

Economic news

1. The European Central Bank’s interest rate decision maintained the three major interest rates at 4.25%, 3.75% and 4.5% respectively.

2. Among them, the main refinancing rate is 4.25%, the expected rate is 4.25%, and the previous value is 4.25%.

3. ECB President Lagarde said: There will be more information in the coming weeks and months. It will be a busy summer. What to do in September is completely open. There is no preset interest rate path. The door to (rate cuts) in September is open.

4. UBS, HSBC, Deutsche Bank, Bank of America, etc. believe that the ECB will cut interest rates in September.

5. Economist Stefan Gerlach said that since the Federal Reserve may cut interest rates in September, the ECB will do the same. It is expected that the ECB will cut interest rates again in December or January next year.

6. Bank of America said: It is expected that the ECB will cut interest rates by 75 basis points in 2024, once in September and December, and five times in 2025.

7. The Federal Reserve has entered a silent period before the July 30 interest rate meeting. It is expected that the new monetary policy statement at the July meeting may change the description of the economy and prospects, laying the foundation for a rate cut in September.

8. On Wednesday, Fed Governor Waller said that interest rates will be cut in the "near future." Before the upcoming July policy meeting, Fed members believe that inflation may continue to slow, and if inflation slows, a rate cut will be appropriate.

9. Investors are focusing on the Federal Reserve's September interest rate meeting, when the central bank is expected to begin cutting interest rates. Fed head Powell said this would mark a "significant" shift in monetary policy, from a tightening cycle to fight inflation to an easing phase.

10. Ahead of the upcoming July policy meeting, Fed members believe that inflation may continue to slow, and if inflation slows, a rate cut would be appropriate.

Crypto Ecological News

1. The results of the Reddit survey poll showed that about 260 MtGox creditors (56% of the 467 survey participants) plan to continue holding BTC after receiving compensation, and 88 creditors (about 20% of all survey members) said they would sell all the BTC paid. This survey may reflect the overall sentiment of MtGox creditors.

2. The media said that the first batch of spot ETH ETFs may be launched next Tuesday (July 23).

3. As issuers have successively submitted S-1/A and other documents of spot ETH ETFs to the US Securities and Exchange Commission, the fees of 9 spot ETH ETFs have been announced. The fee of BlackRock spot ETH ETF is 0.25% (0.12% for the first $2.5 billion or the first 12 months).

4. Bitwise CIO Matt Hougan said that the price of ETH is expected to fluctuate in the first few weeks after the launch of ETH ETF, because funds may flow out of the trust after the $11 billion Grayscale ETH Trust is converted into a spot ETF. He believes that the price of ETH will exceed $5,000 by the end of the year and set a record high.

5. Citi reported that the net inflow of ETH spot ETF in the first 6 months ranged from 4.7 billion to 5.4 billion US dollars.

Long-term insights: used to observe our long-term situation; bull market/bear market/structural change/neutral state
Medium-term exploration: used to analyze what stage we are in, how long will it last in this stage, 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 under certain premises

Long-term insights

• Net positions of US crypto ETF wallets
• Large net positions of exchanges
• Profit levels of long-term and short-term participants

(Figure below: Net positions of US crypto ETF wallets)

From the perspective of the total number of ETF wallets, it is still a positive premium, and people are still buying ETFs over the counter.

（Figure below: Large net positions on exchanges）

Large net positions on exchanges began to flow out, which is a relatively good concept, indicating that large participants began to buy continuously.

The purchasing power of the market gradually recovered.

（Figure below: Profit levels of long-term and short-term participants）

The 250% profit of long-term participants indicates that the market's periodic pressure may be between 695,00 and 70,000. Pay attention to market risks near this price.
The market generally hovers and slumps near the periodic price, and accumulates enough energy to continue to break through.

Medium-term exploration

• Price level structure analysis model
• Liquidity supply
• Incremental model
• Network sentiment positivity

(Figure below: Price level structure analysis model)

Regarding the thinking on the upper and lower limits of the market, under the condition that the market is determined by liquidity, the general market law works.
The upper and lower limits of the market are calculated through short-term costs, that is, around 91,000, and around 49,000 are the upper and lower limits of the market.
At this time, the market will be in the liquidity channel, which is strongly related to the supply and demand relationship.
Similarly, when the market is in an incremental market, the upper limit value may be broken.
If the market is in leverage liquidation, a bad cycle or a crisis such as a black swan appears in the market, the lower limit value may be broken.
When the market breaks the lower limit, 3-5 year holders will be in a relatively cost-effective position to increase their holdings.
When the upper limit is broken, you may need to consider selling some.

（Figure below: Liquidity supply）

The liquidity supply has increased slightly, and it has increased again on the previous basis.
The continuous injection of liquidity may raise the upper limit of the market and make the upward movement smooth.

（Figure below: Incremental model）

The current problem in the market may be that the overall trend of short-term participants is unclear,
but the increase in the supply of stablecoins is also providing a good upward foundation for the market.

（Figure below: Network sentiment positivity）

This model is used for trend tracking and can perform in advance during market fluctuations or adjustments.
As time goes by, there is still a good trend, and the trend may not subside in the short term.

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 red zone. Derivatives risk increases.

(Figure below: Derivatives risk factor)

The risk factor fell back to the red zone from the neutral zone last week, and the expected probability of short squeeze was low. Judging from the risk factor alone this week, there is still room for short squeeze.

（The figure below shows the option intention transaction ratio）

The option trading volume has dropped significantly, and the put option ratio is at a low level.

（The figure below shows the derivative trading volume）

The derivative trading volume is at a low level.

（The figure below shows the option implied volatility）

The implied volatility has increased significantly.
Sentiment status rating: neutral

（The figure below shows the profit and loss transfer volume）

Last week, as the market squeezed, positive sentiment (blue line) also increased, and panic sentiment (orange line) continued to decline. At present, considering the risk factor, the blue line needs to continue to increase in order to break through the existing price resistance range.

（Newly added addresses and active addresses in the figure below）

Newly added and active addresses are at a low level.
Spot and selling pressure structure rating: BTC has a large amount of inflow accumulation, and ETH has accumulated outflow.

（The figure below is the net position of Bingtangcheng Exchange）

The net position of BTC exchange has a large amount of inflow accumulation, and only a small amount of inflow chips have been digested. These potential selling pressures need to be paid attention to this week.

（The figure below is the net position of E-Tai Exchange）

ETH exchange net position is in an outflow accumulation state.

（Figure below: High-weight selling pressure）

There is no high-weight selling pressure at present.
Purchasing power rating: Global purchasing power has recovered slightly, and stablecoin purchasing power has increased significantly.

（Figure below: Global purchasing power status）

After several weeks of loss of purchasing power, the purchasing power of the Americas, which has the highest weight this week, has turned positive, while the purchasing power of Asia and Europe is still in a state of loss.

（Figure below: USDC exchange net position）

USDC has a large inflow this week.

Off-chain transaction data rating: Willing to buy at 64,000; willing to sell at 70,000.

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

Willing to buy at prices around 60,000~64,000;
Willing to sell at prices around 70,000.

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

Willing to buy at prices around 60,000~64,000;
Willing to sell at prices around 70,000.

（Bitfinex off-chain data in the figure below）

There is a willingness to sell at a price around 70,000.

Summary of this week:

Summary of news:

1. Currently, it is still facing the headwind of MtGox compensation, and compensation is expected to be made at the end of July and early August. According to the survey, about 20% of people are willing to sell all BTC immediately.

2. After the negative news landed, the US and European central banks began to prepare for monetary easing/interest rate cuts. The continuous inflow of BTC spot ETFs from the traditional market is a good boost to BTC.

3. Pay attention to the inflation data from July to August, which determines the probability of interest rate cuts in September.

Long-term insights on the chain:

1. The market's ETFs are still positive in terms of net positions, and US crypto participants are still willing to buy;
2. Large positions on exchanges are gradually turning to outflows, and the willingness to buy is beginning to increase;
3. According to the 250% profit position of long-term participants, the market may generate some pressure between 69,500 and 70,000.

• Market tone:
Emotions eased, and willingness to buy increased.

On-chain mid-term exploration:

1. The fundamental upper and lower limits of the market are 49000-91000;
2. There is a small increase in liquidity;
3. The supply of stablecoins has increased, and the movement of short-term participants is unclear;
4. It is still in a trend state.

• Market tone:
Easy
The movement of short-term participants is unclear, the supply of stablecoins has increased, and the recent trend performance may have a certain amplitude.

On-chain short-term observation:

1. The risk factor is in the red zone, and the risk is increasing.
2. The number of newly added active addresses is relatively low.
3. Market sentiment status rating: neutral.
4. The overall net position of the exchange shows that BTC has a large amount of inflow accumulation and ETH has accumulated outflow.
5. Global purchasing power has rebounded slightly, and the purchasing power of stablecoins has increased significantly.
6. Off-chain transaction data shows that there is a willingness to buy at 64,000; there is a willingness to sell at 70,000.
7. The probability of not falling below 57,000~61,000 in the short term is 82%; among them, the probability of not rising below 71,000~74,000 in the short term is 67%.

• Market tone:
Market purchasing power and positive sentiment have rebounded, and there is still room for short squeeze, but we also need to pay attention to potential selling pressure. In addition, there are still news impacts such as ETF and BTC conferences this week. In the short term, the market is expected to pay attention to a small correction after the short squeeze this week.

Risk warning:
The above are all market discussions and explorations, and do not have directional opinions on investment; please be cautious and prevent market black swan risks.

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

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