Week 42 on-chain data: Crypto market recovers strongly, but more external capital inflows are needed

Original title: "Long-term participants sell, short-term speculators buy? ETF funds pour in. | WTR 10.21"

Original source: WTR Research Institute

Review of this week

This week from October 14 to October 21, the highest price of Bingtang Orange was around $69,000, the lowest was close to $X, and the fluctuation range reached about 10.47%.

Observing the chip distribution chart, there are a large number of chips traded around 62,000, which will have a certain support or pressure.

• Analysis:
1. 59000-63000 is about 2.02 million pieces;
2. 64000-68000 is about 1.18 million pieces;
• The probability of not falling below 53000~57000 in the short term is 70%;
• The probability of not rising above 71000～74000 in the short term is 60%.

Important news

Economic news

1. The European Central Bank cut interest rates as expected on Thursday. ECB members expect inflation to reach 2% in the first or second quarter of next year. They believe that the possibility of a rate cut in December is very high, and there is no discussion of the option of a 50 basis point rate cut.

2. The recent series of solid economic data in the United States has strengthened the expectation that the Federal Reserve will only cut interest rates by 25 basis points in November.

3. Goldman Sachs expects the Federal Reserve to cut interest rates by 25 basis points from November 2024 to June 2025, and the final interest rate range will reach 3.25%-3.5%.

4. The median historical return of the S&P 500 between October 15 and December 31 was 5.17%, and the median return in the election year was even slightly above 7%, which means the year-end level could reach 6,270 points.

5. Deutsche Bank said the ECB's decision to cut interest rates on Thursday was significant and could represent a shift to accelerated easing by the ECB.

6. Traders expect the bank to cut rates again in December, and there will be about 122 basis points of rate cuts by June next year, which means a 25 basis point cut at each meeting before then.

7. US statistics show that the number of initial jobless claims for the week was 241,000, lower than the expected value of 260,000, and the previous value was revised from 258,000 to 260,000. The US retail sales monthly rate in September was 0.4%, higher than the expected value of 0.3% and higher than the previous value of 0.1%.

8. Retail sales growth in September was slightly higher than expected, supporting the view that the economy maintained strong growth in the third quarter. Signs of economic recovery may not prevent the Fed from cutting interest rates again next month, but will strengthen expectations of a 25 basis point cut.

9. Goldman Sachs said it expects the Federal Reserve to cut interest rates by 25 basis points between November 2024 and June 2025, with the final interest rate range reaching 3.25%-3.5%

Crypto Ecosystem News

1. Morgan Stanley holds $272.1 million worth of BTC spot ETFs, according to documents from the U.S. Securities and Exchange Commission (SEC).

2. As of Thursday, the cumulative net inflow of 12 ETFs exceeded $1.85 billion, and the net inflow of Belaid this week exceeded $1.07 billion, which may set the largest single-week inflow since mid-March.

3. The US election is the next key catalyst for BTC and cryptocurrencies, but the market is still uncertain about the trend after the election.

4. Vitalik said at the 2024 Shanghai Blockchain International Week that the main problem of ETH now is the lack of a unified ecosystem. The current ETH is like 34 different chains, and the future should be like a unified ecosystem. Solutions include chain-specific addresses, etc.

5. The Aspen Digital report shows that 76% of Asian private wealth is already involved in digital assets, and another 18% plans to invest in the future. The report surveyed 80 family offices and high-net-worth individuals in Asia. Most respondents manage assets between US$10 million and US$500 million;

6. Compared with only 58% of respondents in 2022 who were involved in digital assets, there has been a significant increase. Digital assets account for less than 5% of 70% of investment portfolios. With the approval of spot BTCETFs in the United States and Hong Kong, 53% of respondents have gained cryptocurrency exposure through funds or ETFs.

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

Long-term insights

• Long-term holder chip structure
• Long-term and short-term costs and stocks
• Crypto ETF funding status

（Figure below: Long-term holders’ chip structure）

The data in the figure shows that long-term participants are reducing their chips; more data shows that short-term participants are increasing their chips. The chips in this stage are being initially controlled by short-term chips.

（Figure below: Long-term and short-term costs and stocks）

The area around 70,000 US dollars is an important stage in the market, and it is also the stage where the profit ceiling of long-term participants is certain. It is related to the top of this stage of stock (capital in the market). More external funds may be needed to intervene in order for the market to make a breakthrough.

（Figure below: Crypto ETF funding status）

The US crypto ETF funding shows that the foreign exchange funds are still relatively active in the near future.

The purchase reserve has warmed up, and there is no pressure from Grayscale now. If there is continuous purchase in the future, it will have a very good positive effect on the promotion of the market, which will help the market break through or approach new highs.

Mid-term exploration

• Changes in net positions of long-term and short-term holders
• Liquidity supply
• Positive network sentiment
• Whale comprehensive score model
• USDC purchasing power comprehensive score

(The following figure shows changes in net positions of long-term and short-term holders)

Explore the changes in net positions of long-term and short-term holders, and analyze the two macro trend forces in the market from a time dimension.

When the market is rising or improving, usually one of the long-term and short-term holders chooses to hold or buy. From the perspective of market weight, since long-term participants hold more coins, the maximum can reach more than 13.6 million, while the maximum coin amount of short-term participants is only more than 3.2 million. Therefore, the weight of long-term participants' coin holding/buying behavior will be higher.

The market is currently in a rhythm where short-term participants are slowly increasing their positions and long-term participants are slightly selling their chips. The current instability of the market may be that long-term participants pass their chips to short-term participants. If short-term participants cannot take over the chips, the market may stagnate.

(Figure below: Liquidity supply)

Liquidity is slowly increasing. It is possible that the liquidity in the market has not yet reached a bottleneck, and the trading environment in the market is still relatively good.

（Figure below: Network sentiment positivity）

Network sentiment is constantly rising, and it may not have reached the bottleneck yet, and the sentiment in the market has not dropped.

（Figure below: Whale comprehensive score model）

The scores of the whale group have been very high, and they may not have a large group selling action for the time being.

（Figure below: USDC purchasing power comprehensive score）

USDC users' willingness to participate has declined, and they are currently in a state of weak purchasing power. It is possible that US market institutions have high concerns about the current market situation, or they are not currently buying too much.

Short-term observation

• Derivative risk coefficient
• Option intention transaction ratio
• Derivative trading volume
• Option implied volatility
• Profit and loss transfer volume
• New addresses and active addresses
• Net position of Bingtangcheng Exchange
• Net position of Yitai Exchange
• High-weight selling pressure
• Global purchasing power status
• Net position of stablecoin exchange
• Off-chain exchange data
• Off-chain exchange data

Derivative rating: The risk coefficient has entered the red area, and the risk has increased.

（Derivatives Risk Factor in the Figure Below）

The derivatives risk factor indicates that it has reached the red area. Combined with the observation that there is still a large amount of chips turnover and accumulation around the current price of 68K this week, it is expected that the probability of a large-scale correction at the current price is low.

（Option Intention Transaction Ratio in the Figure Below）

The option transaction volume increased slightly, and the put option ratio increased slightly.

（Derivatives Trading Volume in the Figure Below）

The derivatives trading volume returned to the bottom area.

(The figure below shows the implied volatility of options)

The implied volatility has not changed much.
Sentiment rating: neutral

（Figure below: Profit and loss transfer）

Last week, the small-scale short squeeze in the market also caused the positive sentiment of the market to surge. The current positive sentiment has slightly fallen back. The market may continue to short squeeze after a slight consolidation at the current price.

（Figure below: New addresses and active addresses）

New and active addresses are at a medium-high level.
Spot and selling pressure structure rating: BTC continues to flow out, and ETH continues to flow in.

（Figure below: Net position of Bingtangcheng Exchange）

BTC continues to flow out.

（E-Exchange Net Position in the Figure Below）

ETH continues to flow in.

（High Weight Selling Pressure in the Figure Below）

No high weight selling pressure at present.

Purchasing Power Rating: Global Purchasing Power Loss, Stablecoin Purchasing Power Loss.

（Global Purchasing Power Status in the Figure Below）

There is a small loss of global purchasing power.

（USDC exchange net position in the figure below）

USDC exchange net position loss.

Off-chain transaction data rating: willing to buy at 62,000; willing to sell at 70,000.

（Coinbase off-chain data in the figure below）

Willing to buy at prices around 58,000 and 60,000;
Willing to sell at prices around 70,000 and 72,000.

(Binance off-chain data in the figure below)

There is a willingness to buy at prices around 58000, 60000;
There is a willingness to sell at prices around 70000, 72000.

（Bitfinex off-chain data in the figure below）

There is a willingness to buy at prices around 58000, 62000;
There is a willingness to sell at prices around 70000, 72000.

Summary of this week

Summary of news:

1. Since October 11, the net inflow of US spot BTC ETF has exceeded US$1.6 billion.
2. The crypto market has gradually recovered its strength.
3. Global central banks have generally entered the era of interest rate cuts, and risky assets have entered the bull market. The possibility of a further deep drop in crypto is gradually decreasing.
4. Monetary policy is getting looser and looser, and the water is accumulating more and more. The bottom is too thick, and time is exchanged for space. Cryptocurrency and risky assets will always break through the highs.
5. From experience, the crypto market will experience a stage where BTC breaks through first, and the remaining currencies wait and make up for the rise.

Long-term insights on the chain:

1. Long-term participants are dumping their chips in relatively small quantities; the overall speed is not large, and short-term participants are starting to buy actively;

2. The area around 70,000 is currently quite important. It is a staged top and requires additional strength to break through;

3. The level of ETF funds inflow in the United States is currently good. If it can continue to flow in actively, it may increase the market and the probability of breaking through new highs or approaching new highs.

• Market Tone:
It is still in the accumulation stage and needs more funds to intervene. We need to pay attention to the flow of funds in US crypto ETFs.

On-chain mid-term exploration:

1. Currently, long-term participants are selling their chips to short-term participants;
2. There is still good liquidity in the market;
3. The sentiment of participants in the market has not declined;
4. The whales still have a high willingness to buy/hold, and there is no selling action;
5. USDC users are less enthusiastic about participating, and even have a slightly wait-and-see attitude.

• Market tone:
Anxiety
The market is in a state of chip exchange, which may have a certain instability, but buyers still have spare power.

On-chain short-term observation:

1. The risk factor enters the red area, and the risk increases.
2. The number of newly added active addresses is relatively high.
3. Market sentiment rating: neutral.
4. The overall net position of the exchange shows that BTC continues to flow out and ETH continues to flow in.
5. Global purchasing power is lost, and stablecoin purchasing power is lost.
6. Off-chain transaction data shows that there is a willingness to buy at 62,000; there is a willingness to sell at 70,000.
7. The probability of not falling below 53,000-57,000 in the short term is 70%; the probability of not rising below 71,000-74,000 in the short term is 60%.

• Market Tone:
The short-term market positive sentiment has slightly declined, and purchasing power is also at a low level. It may fluctuate around the current price or retrace slightly. In addition, observing the chip chart, it is found that chips are also rapidly accumulating near the current price. It is recommended to pay attention to the medium and long-term trend.

Risk Tips:
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 comes from a contribution and does not represent the views of BlockBeats.