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Week 8 On-chain data analysis: The purchasing power of stablecoin continues to lose, and the current accumulation situation tends to the consolidation state

WatchToweR Crypto

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The market began to undertake pressure, there is a certain selling pressure.

原文标题：《高山仰止，景行行止｜WTR 2.13 》

WatchToweR Crypto

Review of the week

This week, from February 7 to February 13, the highest was near $23,450 and the lowest was near $21,405, with a swing of about 9.6%.

Observe the chip distribution chart, there are a lot of chips traded around $21279, there will be some support or pressure.

• Analysis:

1. $22,500 ~ $28,000 about 1.44 million pieces;

2. $18,500 ~ $22,000 about 2.2 million pieces;

• The probability of not breaking $16,500 ~ $20,500 in the short term is 65 percent;

The probability of not exceeding $24,000 ~ $28,000 in the short term is 61 %.

Important information

Economic news

This week, the Bureau of Labor released its latest breakdown weights for the CPI, which included a lower weighting for used cars and a slight increase in the weighting for residential costs. That could weigh on the upcoming core CPI.

a. Used cars, which have been one of the biggest drivers of slowing inflation in recent months, are expected to have narrowed to about 7 basis points in January from about 12 basis points in December.

b. Occupancy costs, mainly landlord equivalent rent, increased from just under 33% to 34.4%. Housing is also one of the biggest drivers of inflation today. It rose 0.8 percent in December.

c. Price increases in the auto and housing markets are expected to slow this year, so the reweighting could help lower core CPI over the full year.

2. The University of Michigan's preliminary reading on consumer sentiment rose to 66.4 in February, its highest level in more than a year.

a. Consumers' preliminary 1-year inflation expectations unexpectedly rose to 4.2%, vs. 4% expected and 3.9% in January;

b. 5-year inflation expectation 2.9% preliminary, 2.9% forecast, 2.9% Jan.

3. Initial U.S. jobless claims came in at 196,000, above expectations of 190,000 and up from 183,000. This week was slightly higher than expected, a relief from last week's ultra-low 3.4 percent unemployment rate.

2. As the rate-hike betting cycle draws to a close, orders for stocks and ETFs from the retail brigade accounted for 23% of total market volume in late January, surpassing even the 22% recorded during the retail rush in the first half of 2021, according to J.P. Morgan.

5. The benchmark 10-year Treasury yield is up about 21 basis points for the week, the most since the week ending Dec. 23.

a. The 2-year Treasury yield is up about 23 basis points for the week;

b. Yields on both 2-year and 10-year Treasury notes rose for three straight weeks after three straight weeks of declines.

6. U.S. crude oil gained 8.62 percent this week, while crude oil gained 8.07 percent.

7. U.S. gasoline and natural gas futures rose together.

8. Gold futures lost little steam this week, losing 0.1 percent and falling for a second straight week after six straight weeks of gains.

9. Russia plans to voluntarily cut oil production by 500,000 b/d in March in response to Western price caps on Russian oil.

Encrypted ecomessaging

1. A total of 11 countries/regions in the world support the legalization of cryptocurrency, namely, the United States, the European Union, Canada, Australia, France, Denmark, Germany, Japan, Switzerland, Spain and the United Kingdom.

2. Tether's latest proof report: It earned $700 million in the fourth quarter of 2022 and reinvested it into its reserves.

a. Of $67 billion in assets at year-end 2022, $39 billion in reserves were managed by Wall Street bond trading giant Cantor Fitzgerald, one of the 25 primary dealers of U.S. Treasury securities allowed to trade directly with the Federal Reserve.

3. A Bank of New York Mellon survey shows that 91 percent of custodian banking customers are interested in investing in blockchain-based tokenized products.

4. BN is in the process of forming an alliance of crypto companies that many have signed up to join, covering the cryptocurrency industry, including individual projects, trading platforms and blockchain analytics companies.

5. According to CB's revenue report for the third quarter of 2022, pledge income was about $62.8 million, accounting for about 11% of net income of $580 million.

6. Ramp has an "Off-ramp" license from the FCA in the United Kingdom, which allows users to exchange cryptocurrencies back into fiat currencies. Currently, users in more than 130 countries on ramp can convert 38 cryptocurrencies into dollars, euros and pounds.

7. Hong Kong's Securities and Futures Commission will allow retail trading of a specific group of cryptocurrencies.

8. Goldman Sachs owns 11 cryptocurrency companies in its portfolio, including CoinMetrics, infrastructure company Blockdaemon and the bank's most recent investment, TRM Labs.

9. Partior, a blockchain payment technology company, completed a $31 million funding round led by Standard Chartered Bank, with the participation of founding shareholders JP Morgan Chase, DBS Bank and Temasek.

10. The New York Department of Financial Services ordered Stablecoin issuer Paxos to stop issuing more BUSD tokens.

11. The founder of Messari, citing the Paxos regulatory crisis, vowed to end SEC Chairman Gary Gensler's political career.

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

Intermediate 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

• Flows of BTC and ETH trading platforms

• Total stablecoins in circulation

This issue focuses on the relationship between BTC and ETH and stablecoin to gain insight into the industry and market.

(The figure below shows the flow of BTC and ETH trading platforms)

From the total proportion of real money flowing to the trading platform to further understand the market dynamics.

When the market is facing a major blow, before or when it is hit, more money will accumulate on the BTC for the main action.

The reservoir effect of BTC is very obvious.

At the same time, it may also represent the influence of psychological factors. When the proportion of ETH transaction capital increases, the market also becomes slow.

It might be possible to combine different strategies;

Such as conditional hedging strategy, wheel strategy and so on.

Also proved from the side, the market for BTC reservoir recognition.

We can pay attention to the subsequent increase in the proportion of this data, which represents the potential risk of the market from the side.

(The figure below shows the total circulation of stablecoins)

The total circulation of stablecoin in the market is slowly declining.

Although there has been no significant sustained loss, there has not been much incremental inflow either.

The market has fallen into a certain predicament, which is mainly concentrated in the internal game of the stock at present.

Focus on the behavior of short-term participants first.

At present, without the influence of derivatives, the space for funds on the floor is relatively limited, and it is difficult to push asset prices to a very high position.

Intermediate exploration

• accumulation coefficient

• Cumulative trend subpanorama

• Online emotional positivity

• Total transfer volume

• Short-term trader profit and loss availability

(The figure below shows the accumulation coefficient)

Red: accumulation coefficient, BTC accumulation in main statistical field;

Blue zone: Short-term traders hold supply.

1. Looking down on the current state from the perspective of medium and long term, the short-term funds in the market have been active for more than one year and are still wavering in the stock state, and have not yet emerged from the state of big market;

2. At the same time, the stock of funds on the floor is moving towards the theme of "accumulation". Continuing to maintain this state may make the "amount of coins available for sale" on the floor decrease continuously.

3. Back to the present, there is still a lack of short-term funds to spark emotions. No matter the macro sentiment, M2 contraction or whatever the reason, from the current structure, a more prudent strategy may be to reduce the frequency of short selling in the case of non-hedging.

4. Short-term funds are also the core driving force for an explosive rise in the market. In the absence of short-term funds, a relatively anxious game may occur in a limited space due to the overall "stock game" state.

5. If the mood of funds is "after hair" lit, may be in the field of relatively low selling pressure layout, will be a good entry point on the left.

(Sub-panorama of accumulation trend below)

The model calculates the accumulation status of each address group in the field and gives a score of 0-1.

1. The accumulation trend of the whole/most of the addresses close to the "red" state (that is, the overall score is close to), will enter a relatively dangerous state, the price may not support due to the lack of accumulation consensus.

2. At the same time, "> 10k" and "> 1-10K" address has a higher weight, if they are not in the "accumulation" state, may make the price of the field lack of strong support belt.

3. In the current state, there may be a certain degree of anxiety in the field. The accumulation of addresses of "> 10k" and "100-1K" has weakened, showing a score of 0.2-0.3, and the current consolidation time may be passed when their state is relatively relaxed.

(The picture below shows online emotional positivity)

From the relatively higher accuracy of the network emotion enthusiasm to diagnose the market, the current market may temporarily fall into a stagnant state.

May be in a state of consolidation, relatively depleting the patience and time of currency holders inside.

(Chart below shows total and average transfers)

From the overall transfer situation on the chain, there is a slight change in the field, but the whole has not triggered the warning.

Perhaps the current close to consolidation, switching hands state, and the present state is relatively calm.

(Chart below shows the supply of short-term traders' profit and loss.)

Green line area: > 97.5% of short-term traders are in the profitable state;

Red line area: > 97.5% of short-term traders are in the red.

Yellow line: short - term trader position

1. When the market presents a green area, the probability of "profit selling" in the short-term group may be increased because short-term traders are in a "profit" state;

2. At the same time, short-term traders may be able to absorb this "profit selling" as their holdings increase.

3. It is relatively easy to observe the position status of short-term traders, who may be the last driving force in the market, if you want to construct a concise escape top model.

Short-term observation

• Derivatives risk factor

• Option intent to volume ratio

• Derivatives volume

• Implied volatility of options

• Transfer of earnings and losses

• Add addresses and active addresses

• Crystal orange trading platform net position

• Net position of aunt trading platform

• High weight dump pressure

• State of global purchasing power

• Net position on stablecoin trading platform

• Off-chain trading platform data

Derivative rating: The risk of derivatives is in the neutral and safe area

(The figure below shows derivative risk coefficient)

When the overall trading volume of derivatives is low, the sliding range of the risk coefficient of derivatives is small, and it continues to stay in the neutral and safe area.

(Option intent to volume ratio below)

The proportion of call and put options decreased slightly, and the transaction intention ratio returned to a more balanced state.

Options volume is low at the moment, but it has continued to rise in recent weeks.

(Chart below derivatives volume)

Trading volume is at a low level, the participation enthusiasm of traders is not high, and the market as a whole is in a wait-and-see mood.

(Chart below shows options implied volatility)

Implied volatility continues the downward trend of last week, with participants taking correspondingly less bets.

Emotional state rating: Overall neutral

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

Losses stampede this week has risen somewhat but then also started to fall, earnings selling pressure continues to fall.

From the perspective of profit and loss transfer. In recent weeks, earnings selling pressure has been falling as prices have continued to climb, suggesting that the current market is not looking to take profits early.

(New address and active address below)

The number of new and active addresses decreased last week, followed by a large increase this week, in which the number of new addresses is greater than the number of active addresses.

Spot and selling pressure structure rating: a small amount of inflow accumulation, a certain selling pressure.

(Chart below shows net position of BTC trading platform)

At present, the trading platform presents inflow, which is not very large. However, in the current market environment with wait-and-see sentiment, it will test the overall capacity of the following market.

(Chart below shows net position of ETH trading platform)

ETH saw a large outflow this week, but also a high weight selling pressure warning.

(High weight throw pressure below)

The ETH has a high weight dump pressure. Procedure

The high weight selling pressure of ETH has a significant impact on the overall market, and the response is more sensitive. From this point of view, caution should be exercised in the face of subsequent market behaviors.

Purchasing power rating: Global purchasing power is weakened, stablecoin is in a state of loss.

(Chart below shows the state of global purchasing power)

Global purchasing power as a whole is falling and falling sharply, with the small Asian purchasing power almost disappearing.

(Chart below shows USDC trading platform net position)

USDC continued outflow, purchasing power slightly insufficient.

If last week's purchasing power deficit continues, and there is no further derivative impact, the market upside will be relatively limited.

(Chart below shows USDT trading platform net position)

USDT continues the outgoing state. While the overall impact of USDT on the market is relatively small, the continued outflow status also indicates a relative lack of current purchasing power.

Down chain transaction data rating :21200 -- 21400 willing to buy

(Figure below shows data from Coinbase chain)

There is selling appetite at 23,000 and buying appetite at 21,200.

(Figure below shows data under Binance chain)

Buying interest at 21430.

(The figure below shows data under Bitfinex chain)

21720 slightly willing to sell;

21570, 21530, 21440, 21400 price has the intention to buy.

Summary of the week:

Summary of message surface:

1. Ahead of next week's CPI, the Fed has changed the sub-weighting, creating a lot of speculation in the market.

2. Used car prices have risen month-on-month in each of the past two months. Parts of the US benefited from a strong Labour market in January, with median rents trending higher and last week's surprise drop in the unemployment rate.

A. The market is worried that the Fed will keep tightening policy, pushing back expectations of a halt to rate hikes until after May. Tuesday's CPI is in focus.

3. Powell said in his speech that 2023 will be a year of sharply lower inflation. There will be several core CPI and PCE releases between now and the next rate hike announcement, and both the Fed and the market will be watching closely for changes in the data.

a. Financial conditions will gradually ease this year, regardless of when the rate hike stops.

With the development of science and technology and the process of globalization, virtual world is becoming more and more important.

In the new era of the generation, the basic physical supply of satisfaction, gradually transformed into high-end emotional needs and spiritual needs of the desire.

In terms of data representation, virtual worlds are also gathering the time and energy of more and more young people around the world.

In the future, with the rise of the geometric level of the technology industry, it will gradually affect the real world;

Virtual IP class such as "Disney", "Marvel", "Three-body problem" and so on in the virtual world influence up to more than ten years or even decades.

The spiritual symbol of sustainable development symbolizes the increasing spiritual demand, and more importantly, the endless stream of industries and opportunities that can generate potential cash flow.

From this point of view, century-old family businesses of physical rules are rare, while the existence of the virtual world industry will have more continuity.

Similarly, the explosion of cryptocurrencies based in virtual worlds shows extremely impressive growth:

In 14 years, the world went from zero to the highest $3 trillion, equivalent to one of the world's top eight GDP of the UK.

On the other hand;

The physical limits of the creation or existence of the physical world are great:

For example, the amount of chip production is very limited in a year, and it is also a reality that the total amount of physics spent to shoot movies or create special effects of model tests will cause production constraints.

If the overall creation scale of the economy is limited and there are physical limitations, it will not be able to fully absorb the leverage caused by finance and the huge bubbles generated by society, including the current phenomenon of a large amount of money in globalization.

An industry that can digest leverage and bubbles and break things up for the whole needs to be more productive and even less limited.

The Internet, for example, is free from more physical constraints, so creative ideas can be created very cheaply.

This is especially true in virtual worlds, where the creation of models or effects can be exponentially increased.

There may be a need for a platform to build movies, games, and engineering models, and the cost of trial and error is small enough, even getting smaller.

The bubble itself is not a bubble when the productivity created is sufficient to digest it.

Tesla also uses digital twin or virtual simulation to train AI models and multi-state decisions when making autopilot. Similarly, the popular Chat-GPT inherits a lot of data processing.

Third, young people are crazy about the virtual world.

The young will grow older over time and produce the next generation, which will be re-educated in their virtual age concepts and labels.

This will have a huge incremental basis for the future, and it will be a rolling wave from generation to generation.

Willingly or unwillingly, this trend is deepening and accelerating, regardless of anyone's will.

Long-term insight on the chain:

1. When the market is facing a major blow, before or when it is hit, more funds will accumulate in BTC for the main action;

2. It can be noted that the subsequent increase in the proportion of this data represents potential market risks from the side;

3. From the perspective of the circulation of stablecoin, the market has fallen into a certain predicament, which is mainly focused on the intra-office game of the stock;

4. It may be harder to push market valuations to extreme heights in the long run.

• Market tone setting:

There's not a lot of increment, so the cap ceiling is limited.

Mid-chain probe:

1. Cash holders are still increasing their holdings, waiting for repair, but currently lack short-term funds to ignite the disk;

2. The current accumulation is inclined to the consolidation state;

3. The trading sentiment on the chain is currently slowing down and may enter a state of adjustment;

4. The state of on-chain transfer is relatively calm, and no excessive coins are moved;

5. Short-term traders have seen profit selling conditions, may need to absorb some short-term traders profit selling pressure.

• Market tone setting:

Slow down and consolidate

At present, the lack of short-term funds to ignite the plate, but the field is in a state of accumulation repair, may need to test the patience of the current coin holder and holding time.

Strategy suggestion: in the medium and long term perspective, reduce the frequency of short selling in the case of non-hedging; Spot Angle can choose to arrange the left position.

Short-term observations on the chain:

1. The risk of derivatives is relatively reduced, and the trading volume is also low;

2. The market mood is neutral, and the overall mood of traders is wait-and-see;

3. Trading platform data shows that a small amount of potential selling pressure has accumulated;

4. The global purchasing power is weakened, and the purchasing power of stablecoin is continuously lost.

5. The off-chain transaction data shows that 21200-21400 has purchase intention;

6. The probability of not breaking $16500 ~ $20500 in the short term is 65 percent;

7. The probability that the price will not exceed $24,000 ~ $28,000 in the short term is 61%.

• Market tone setting:

The market began to undertake pressure, there is a certain selling pressure.

Strategy suggestion: reduce position appropriately or hedge market risk

Risk warning:

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