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Week 45 On-chain data analysis: ETH high-weight selling pressure slows down and the long/short game enters equilibrium

WatchToweR Crypto

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Consistent market selling strength has declined, the market into the transfer and absorb the chip stage.

The original title: "the wind moving night, Ming river, a total of shadow | WTR 11.7"

原文来源：WatchToweR 研究院

This week to review

This week, from Oct. 31 to Nov. 7, the highest was near 21,395 and the lowest was near 20,089, with a swing of about 6.5%.

According to the recent chip distribution map, there are a large number of chips sold around 21000, which will have certain support or pressure.

Analysis:

1. About 2.97 million pieces from 17800 to 20500 pieces;

2. 22000-24000 approximately 650,000 pieces;

• The probability of not breaking 16000~18500 in the short term is 63 %;

• The probability that the price will not exceed 22,000 ~ 24,000 in the short term is 61%.

Important news

In economic news

The United States,

1. The US Federal Reserve raised interest rates for the sixth time this year, by a surprise 75 basis points to 4.0%.

2. Data from the U.S. Department of Labor showed U.S. nonfarm payrolls increased 261,000 in October, well above expectations of 200,000 jobs.

3. The unemployment rate rose to 3.7 percent in October, up from the August level of 3.6 percent and above expectations. Average hourly earnings rose 0.4 percent month-on-month, the highest since August.

4. The amount of dollars deposited by foreign central banks and international monetary institutions in the Fed-related overnight reverse repurchase facility rose to $351 billion by Wednesday, up $48.2 billion from the previous week and the highest on record.

a. The International Monetary Institution sold about 13.1 billion US dollars of US Treasury bonds during the same period, and the liquidity situation of the US financial system is deteriorating rapidly.

b. In the short term, there is a global scramble for dollars.

5. As of Nov. 2, $62.1 billion had poured into cash-like assets. Since the fourth quarter began in early October, $194 billion has flowed into cash, the fastest inflow since the second quarter of 2020.

6. The US 10-year Treasury yield rose 1.15 basis points to 4.1584 per cent. The yield on the two-year note fell 6.59 basis points to 4.65 percent.

7. WTI crude for December delivery closed up 5.03 percent at its highest level since Oct. 7. Brent crude for January delivery closed up 4.12 percent, its highest close since Aug. 30. Both U.S. crude oil and crude oil rose for the third week in a row and for the eighth week in the last 18.

8. Base metals are up for the week, with New York copper futures also surging. Comex copper for December delivery closed up 7.6 percent, the highest since Aug. 26 and the biggest gain since February 2009.

9. In precious metals, New York gold futures rebounded strongly after falling to their lowest level in more than two and a half years. Silver futures in New York also rebounded sharply after two days of losses and three straight weeks of gains on COMEX in December.

• the UK & amp; The European Union

1. The Bank of England said on Thursday that it wanted to bring down inflation without raising interest rates "excessively".

2. Eurostat data this week showed euro zone PPI rose 41.9% year-on-year in September, below market expectations of 42% and 43.3%. Month-on-month growth rate increased by 1.6%, significantly down from the previous value of 5%, both year-on-year and month-on-month growth rate decreased.

3. The preliminary CPI for October harmonized inflation in the euro area continued to climb to 10.7% from 10% in the previous month, extending to a record high and beating expectations of 10.3%, beating market expectations for the sixth consecutive month.

4. European Central Bank (ECB) President Christine Lagarde said that she would take all necessary measures and use all tools (including a balance sheet reduction) to reduce inflation.

• other

1. The latest global food price index released by the UN Food and Agriculture Organization stood at 135.9 points in October, falling for the seventh consecutive month.

2. The FAO Cereal Price Index rose 3.0 per cent month-on-month in October, with wheat prices up 3.2 per cent.

3. The FAO cut its forecast for global cereal production in 2022 to 1.8% lower than a year earlier. The FAO expects world trade in cereals to be 469 million tons in 2022-2023, down 2.2 percent from a year earlier.

Encrypted ecological messaging

1. BN is considering acquiring banks to bridge the gap between the traditional finance and cryptocurrency worlds, and is open to minority investments or full acquisitions.

2. BN adds cryptocurrency sale and fiat swap functions to UK and EU issued mastercard.

3. E-tai 2.0 beacon chain, currently 1,475.3943 pieces pledged, 459,059 active verifiers.

4. Ubs will list its first blockchain-based digital bond, with a three-year bond worth about $370 million and a coupon rate of 2.33%. The bond will be the first from a banking institution that will be listed, traded and settled on a digital trading platform.

5. Goldman Sachs has teamed up with index provider MSCI and crypto data company Coin Metrics to develop the first digital asset index for institutional investors.

6. Jiamei Mining Company Hut& Mining, which produced 299 crystal oranges in October, currently holds a total of 8,687 crystal oranges.

7. Meta announced that Instagram is developing an NFT foundry and sales feature that will allow users to create and launch their own NFT and sell it via Instegram, with Arweave to store creators' digital collectibles.

8. Vgod: Compared with Pow's consensus mechanism, PoS consumes 99.95% less power. Strong consensus design and parallel validation bring better stability to Ethereum. The future of Ethereum is about scalability, user experience, security issues, and privacy.

9. The BBC reports that nearly $2 billion has been spent on virtual land in the metaverse over the past 12 months.

10. In the past week, South Korea, the finance Department of Hong Kong, the Central Bank of Thailand, India and other regions actively discussed legislation and taxation.

Long-term insight: to look at our long-term situation; Bull/bear/structural change/neutral

Medium probe: To analyze what stage we are in, how long will we be in this stage, and what situation will we face

Short-term observation: used to analyze short-term market conditions; And the possibility of certain directions and certain events under certain circumstances

Long-term insight

• Long-term trader at least six months

• Short-term traders within six months

• Accumulated heat map at each location

(Chart below shows long-term traders over six months)

Long-term participants accumulated near new highs;

During the sideways volatility of recent months, long-term participants did not slow their hoarding, but rather accelerated it further than before.

The chips in the market are being sucked up and transferred by long-term players.

(Chart below shows short-term traders in six months.)

Short term participants entered the recession, the lowest period on record.

A large number of speculators have left the field, reducing the risk of investment speculation, but also hindered the growth of more power relay.

The explosive growth of the market will be difficult without the help of speculators.

(The figure below shows accumulated heat maps of each location)

The overall market is still growing, different size of the whale has a certain divergence.

But Superwhale's selling is down from two months ago.

Over time, even big whales will have to slow the selling as risk sentiment dissipates.

Medium-term probe

• Non-zero balance address

• Profit shock

• Loss shock

• Analysis of long-term trader costs and consumer behavior

• ETH_CYD

• Incremental purchasing power of the trading platform

Growth rating: In a state of growth

(Non-zero balance address below)

Judging from the state of the wallet address growth, there are some signs of repair on the current chain.

The true repair of wallet addresses is still the key to medium-term growth on the chain, probably after previous adjustments and repairs.

Accumulation and repair may take time, the model is mainly used to look at the overall trend.

At present, it is still in the growth channel and the state is still maintained.

Stress test rating: A stress test of losses and profits has occurred

(Bottom chart: Profit shock)

(Chart below shows loss impact)

Test conditions in which profit shocks have occurred in the intermediate stage;

At the same time, the loss impact of the test situation is relatively frequent, there may still be some unset mood around the floor traders.

Long - term cost and consumption ratings: Long - term traders are the main force of current undertaking

(The following figure shows the analysis of long-term trader cost and consumption behavior)

• Blue line: Long-term traders hold the average cost price

• Orange line: Realized price, the average on-chain cost price

• The blue zone: The long-term trader's cost of selling < the market average price

• The red zone: Average cost of holding for long term traders > average market cost price

Entering the red zone, where the cost of a long-term trader is higher than the market average, may indicate that the market is digesting.

The cost of a long-term trader is higher than the average market price because the market may fluctuate due to the "repair phase".

When the market enters the blue zone, that is, the cost price of the long-term trader < the average market holding price >

Maybe the market will get into a state where the long-term trader gains,

Long-term traders historically have the habit of selling chips to short-term traders and speculators, and the overall operation is stable.

At present, it is in the red zone, that is, the cost of long-term traders is higher than the average market price, which is the main force of current market undertaking.

It's possible that this pattern will continue, and historically, this is also a time when long-term traders are collecting cheap chips.

Sell pressure rating: ETH long-term high weight sell pressure slow contraction

(ETH_CYD below)

The long-term high weight selling pressure of ETH showed signs of gradual decline and slowdown after ETH2.0.

It is possible that high weight selling pressure is no longer one of the obstacles that will reduce the market upside;

Incremental purchasing power rating: Slightly weaker, but still purchasing power

(The figure below shows the incremental purchasing power of the trading platform)

From the point of view of the current trading platform incremental purchasing power, it has been slightly weakened at present, but it still has purchasing power.

Short-term observation

• Derivatives risk factor

• Options intent-to-volume ratio

• Derivatives trading volume

• Option implied volatility

• Transfer of earnings and losses

• Add addresses and active addresses

• Crystal Orange trading platform net position

• Net position of aunt trading platform

• High weight sell pressure

• The state of global purchasing power

• Net position on stablecoin trading platform

• Off-chain trading platform data

Derivative rating: initial bet volatility, but long - short game into the balance point

(The figure below shows the risk coefficient of derivatives)

The risk of derivatives returned to the neutral zone; In the previous report last week, we entered the relatively dangerous zone, experienced a week of digestion, and relatively recovered.

Only the current state, the derivatives long - short game into a clever balance point, may be more difficult.

(Options intent-to-volume ratio below)

Option trading volume has a small happiness increase, but the market's rise and fall ratio has not changed much;

So it follows that:

1. A large number of option participants double-sold to short volatility;

2. A large number of options participants are double-buying, long volatility.

(Chart below derivatives volume)

At the same time, the trading volume of futures participants also showed a preliminary increase, and the overall derivatives participants showed preliminary betting intention.

(Chart below shows options implied volatility)

Implied volatility has shown signs of rising slightly in the near term.

This further indicates that the previous bets were more tilted towards the long volatility side.

Coupled with the recent Fed speeches, more mature participants may see some potential for volatility in the near term.

But they haven't been very clear about the direction, just long volatility, perhaps because the market has become more tangled and complex, causing participants to become more cautious.

Emotional state rating: somewhat weakened, moderate flat

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

Market stampede sentiment is still good, the market profit selling pressure is further finished.

The mood is slowly fading.

(New address and active address below)

New addresses and active addresses have a preliminary decline in the short term.

The market is slowly moving into a flat state, perhaps also a bit of a wait-and-see situation.

Spot and sell pressure structure rating: the accumulation trend weakened, there are wait-and-see signs

(Below chart shows net position of ice orange trading platform)

The outflow degree is not obvious, and the accumulation effect appears initially, but the bias is weak.

For nearly 10 days, participants have been in a slightly wait-and-see attitude.

At present, the tendency of intention is not obvious.

(Chart below shows net position of E-Pacific trading platform)

The outflow accumulation is gradually decreasing.

It is necessary to pay attention to the future state of this currency market. When the accumulation trend weakens, if the market still rises firmly, it may represent the initial appearance of the state of reduced supply selling pressure in the market.

This will be the dominant state of affairs for the long term.

(High weight drop pressure below)

High weight selling pressure initially decreased.

With profits spat out from previous highs, the market has also perfected another small stress test.

Purchasing power rating: European and American purchasing power gradually relays, stable currency micro loss

(The chart below shows global purchasing power)

Purchasing power in the United States and Europe has gradually recovered over time, and so far has returned to positive levels.

Although the momentum is not strong, but there is a slow relay Asian buying trend.

(Chart below shows USDC trading platform net position)

Stablecoin has been lost in recent days, and more profit makers may gradually spit out chips and replace them with stablecoin trading platforms.

(Chart below shows USDT trading platform net position)

Consistent with the figure above, there is still a slight outflow trend.

Off-chain trading data rating :Coinbase has buy interest at 19,000

(Figure below shows data from Coinbase chain)

The order of $19,000 has been placed, but the trend of the order arrival has weakened compared with the previous week.

(The figure below shows data under Binance chain)

Binance has an order for $20,000, which is different from the picture above and has just been strengthened in the last two days.

(The figure below shows data under Bitfinex chain)

The Bitfinex trading platform showed buying interest between 20200 and 20500, but it was much weaker than the previous readings.

Summary of the week:

Summary of the message:

1. Fed reports and Powell comments suggest a slower but longer pace of rate hikes in December.

a. The market expects the terminal rate to be 5.2%, which will slow down to 50 basis points in December and reach 5.25% in three 25bp rounds early next year, extending the time of one rate hike.

2. The market is still divided on future Fed rate hike expectations, with more information to come next week with CPI inflation data and November non-farm report.

3. Watch for market impact from the midterm elections next Tuesday.

From the perspective of market expectation participants, the first 25 basis point rate hike will be of extraordinary significance.

When the first 75 basis points were raised, panic stamped out a lot of huge and irrational space.

Then the first quarter-point and the last quarter-point will have different expectations.

Will be a relatively certain opportunity for some cautious players.

At the same time, when markets start to tighten less and start to loosen again, expectations will dominate even more aggressively than expected asset repair.

In the future, Web3 will be the fulcrum of the trend of scientific and technological innovation, fulfilling the role of credit and the cohesion of global cooperation.

And these characteristics will be increasingly important in the future.

Long-term insights on the chain:

1. Market chips are slowly absorbed and transferred by long-term participants;

2. The accumulation of long-term participants is near a record high;

3. A large number of speculators have left the field, reducing the risk of investment speculation, but also hindered the explosive growth of more power relay;

4. With the passage of time, a significant whale due to the dissipation of risk sentiment, will also sell within two months of a substantial decline.

• Market tone:

From the action point of view, the strength of the unanimous market selling has declined.

The market has entered the stage of transferring and absorbing chips.

On-chain intermediate probe:

1. There is still a certain state of growth on the chain;

2. A shock test of profit and loss has occurred;

3. Long-term traders are the main support in the current phase;

4. The long-term high weight selling pressure of ETH slowly declines.

5. There is still incremental purchasing power, but it is slightly weakened;

• Market tone:slow

BTC has experienced a profit and loss shock test and the current ETH high weight selling pressure has slowed down.

Purchasing power has weakened slightly.

On-chain short-term observations:

1. In the risk-neutral area of derivatives, the long-short game enters the equilibrium and the trend strategy is relatively difficult;

2. Futures bullish sentiment is still relatively existing;

3. The overall spot selling pressure is lower than a few days ago, spot participants enter the wait-and-see;

4. The purchasing power of Europe and the United States began to relay, and there was a slight loss of stablecoin;

5. About 20000 -- 19000 have a little bit of purchase intention;

6. The probability of not breaking 16000~18500 in the short term is 63 %;

7. The probability that the price will not exceed 22,000 ~ 24,000 in the short term is 61 percent.

• Market tone:

Physical participants moved to the sidelines and derivatives participants made preliminary bets on short-term volatility.

Strategy suggestion: In the short term, it is suitable to break through the strategy of fast play, and the trend strategy is more difficult.

Risk Warning:

The above are market discussion and exploration, and do not have directional opinions on investment; Please treat with caution and prevent the market black swan risk.