Week 14 on-chain data analysis: market high weight selling pressure and overall spot selling pressure rise; Unease has reached an inflection point

WatchToweR Crypto

Review of the week

  This week from March 21 to March 27, the highest was near $28,868, the lowest was close to $26,601, the fluctuation range reached about 8.52%.

Observe the chip distribution diagram, there are a lot of chips sold around $27,000, there will be some support or pressure.

• & have spent Analysis:

1.  $23000 ~ $29500 about 1.13 million pieces;

2.  $18500~$22500   About 2.64 million pieces;

• & have spent In the short term can not be broken in $18000~$20000. The probability is 73%;

Important information

Economic news

1.  At the Federal Reserve meeting, interest rates were raised from 4.75% to 5%, 25 basis points, as expected.

2.  The preliminary U.S. services PMI came in at 53.8 in March, up from 50.6 in February and an 11-month high.

3.  Legislation has been introduced in Congress to encourage bitcoin mining in the United States.

4.  Bitcoin miners' earnings rose to $22.6 million a day, the highest since June 2022.

5.  This week, the price of BTC decoupled from the Nasdaq, S&P 500 and Dow, rising to $27,700, the highest since June 2022.

6.  Trading volume in BTC options reached $7.94 billion this week, the highest since October 2021.

7.  A House panel plans to hold its first hearing on the failure of Signature Bank, a Silicon Valley bank, on March 29th.

8.  Silicon Valley Bank (SVB), which filed for Chapter 11 bankruptcy protection in New York, accepted Starc's notice and will delist on March 28.

9.  Deutsche Bank shares fell more than 11 percent in value. An increase in credit-default swaps on Thursday night led to continued concerns about the stability of European banks.

10.  Moody's Investors Service predicts a significant impact on global banks' profits as the adoption of CBDCS continues.

11.  U.S. authorities are considering expanding an emergency lending facility for banks to tide them over.

Encrypted ecomessaging

1.  Microsoft, which is testing a built-in crypto wallet for its Edge browser, dabbled in cryptocurrencies and NFT, at least supporting ETH, DAI, USDC and USDT.

2.  The Arbitrum Foundation airdrops ARB governance tokens to its community members and launches its Tier 3 development tool, Arbitrum Orbit.

3.  Bitcoin NFT protocol Ordinals, the cumulative number of inscription NFT casting exceeded 500,000, reaching 50,265.

4.  Cryptocurrency exchange Coinbase said it was in talks with customers to develop a new offshore platform.

5.  R3, a blockchain company, expects to close a $150 million funding round in the first quarter.

6.  Cryptocurrency company Tether says it has about $1.6 billion in excess reserves to back its USDT stablecoin.

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

• & have spent High weight throw pressure

• & have spent Exchange traffic of large and small market capitalization currencies

• & have spent Spot overall selling pressure ratio

• & have spent The size of the market value of currency strength comparison

(High weight throw pressure below)

High quality selling pressure increases with the market as a whole.

In the past, they have usually caused some turbulence in the pricing of the market.

Of course, this needs to see the overall state of the market and the ability to undertake how.

(Chart below shows exchange flows of currencies with large and small market values)

Market unease is relatively rising, more money into the inflection point; More small-cap growth currencies are likely to flow back to the largest currencies.

Overall funding appeared hesitant and hesitant, uncertainty began to increase.

(Overall spot selling pressure ratio below)

Overall selling pressure continues to rise and is being tested at this key price point in the medium to long term.

This test may take some time to digest, the price increase may reduce the potential growth in the medium to long term, need the overall selling pressure to decline to achieve greater potential.

(The following figure shows the strength comparison of currencies in terms of market value)

In times of uncertainty, the value of the relatively small currencies will fall further against that of the largest.

They typically run out of excess returns relative to the largest currencies when certainty returns to the market.

Similarly, the allocation strategies of medium - and long-term participants also need to be adjusted and matched in the recent period.

Intermediate probe              

• & have spent Volume average

• & have spent Number of non-zero balance addresses

• & have spent MVRV filtering

• & have spent Stablecoin in circulation

• & have spent The cash status of short - term participants to the exchange

Growth rating: The volume can be gradually repaired, the number of users fluctuated growth

Go back to the basics and assess the fundamentals of the overall market.

(Chart below shows volume moving average)

Red line: Volume monthly average

Blue line: Volume annual average

Review basic volume - price relationships and explore medium - and long-term volume changes.

1.  From the perspective of basic trading volume changes, the trading growth in the exchange is more obvious during 2014-2018, which is also the beginning of blockchain entering the public eye. It is possible that under this environment, the exchange has ushered in substantial user growth and the trading volume is also growing constantly, which indicates the high heat in the exchange.

2.  If you look closely at the annual average of trading volume, the floor has been declining over the past 2020-2023 period, but it has gone through a bull-bear cycle, which may correspond to monetary policy changes in the economic cycle.

3.  On the whole, the market may not only face the issue of trading volume is stock or increment, but whether crypto can undertake the growth of science and technology of macro significance, or whether encryption can be defined as innovation.

4.  At the same time, trading volume is significantly better at the monthly EMA, which may be a change caused by demand still outstripping supply in a tightening environment.

5.  From the current situation, in the process of gradual repair of trading volume, it is possible that the growth of volume and energy needs to go through a lot of differences and games.

Review the non-zero balance address in combination with the transaction volume.

(Non-zero balance address below)

Although from the point of view of the quantity of energy, there is no substantial internal growth from the release of water, but the number of users in the shock up.

Probably from the point of view of expansion and application, the long-term construction needs more users to come in.

It also provides a new perspective for the participants in the arena. The key to the long-term fundamentals may be to return to the arena users' exploration of new things.

The uncertainty inherent in something new can cause turmoil on the floor.

Market status rating: May be moving from depressed to neutral, but Stablecoin is slow to repair

(MVRV filtering below)

• & have spent Yellow line: MVRV Ratio - assessing the ratio of the current market value of the BTC to the sum of the total cost basis of all coins in circulation

• & have spent Red line: Sum of cumulative mean and standard deviation of MVRV (detect market overheating)

• & have spent Blue line: Cumulative average of MVRVS

• & have spent Green line: Difference between cumulative mean and standard deviation of MVRV (check for market downturns)

From the condition of the three filters,

Perhaps a market price near the blue line indicates a neutral market;

When the market is at the upper end of the red line, it may be that the market is overheated and the bubble is larger when the market value is higher than the realized capital.

When the market is below the green line, it can be a sign that the market is too confusing and undervalued.

(Figure below shows stablecoin circulation)

It is possible that the growth rate of the number of stablecoin in the field will determine the speed of the field repair.

If one were to detect medium-term risk, there might be a degree of doubt about liquidity provision.

This data needs to be observed in the future.

(The following chart shows the situation of short-term participants' money filling to the exchange)

It is possible that the market is currently experiencing a wave withdrawal of short-term participants and needs to guard against potential risks.

Short-term observation

• & have spent Derivative risk factor

• & have spent Option intent to volume ratio

• & have spent Derivatives trading volume

• & have spent Option implied volatility

• & have spent Transfer of profit and loss

• & have spent New address and active address

• & have spent Crystal orange exchange net position

• & have spent Aunt trading net position

• & have spent High weight throw pressure

• & have spent State of global purchasing power

• & have spent Stablecoin exchange net position

• & have spent Down chain transaction data

Derivative rating: in the neutral zone, moderate risk.

(The figure below shows derivative risk coefficient)

BTC prices have been less volatile over the last week, but the risk factor has moved from the danger zone to the top of the chart and is now in the neutral zone.

If the volume of subsequent derivatives continues to rise and the risk factor continues to swing upward, long liquidation pressure will increase.

(Option intent to volume ratio below)

Option volume has picked up, with the short/long ratio dipping briefly last week and remaining at elevated levels.

(Chart below derivatives volume)

Derivatives volumes have continued to decline within the current price range.

As noted in last week's weekly report, the continued low level of derivatives trading indicates that the overall appetite for derivatives trading is low and that the derivatically-led market is coming to an end.

(Chart below shows options implied volatility)

The decline in implied volatility reflects the lower activity and willingness of option traders in the current market to place bets.

Emotional state rating: Neutral to cautious

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

With a slight correction in prices, earnings transfers have fallen sharply and loss transfers, which remain relatively low, have also risen slightly.

If loss transfers continue to rise, the panic will spread.

So far, the overall mood of the market remains neutral to cautious. There is no clear direction to buy or sell, waiting for more signals or events to guide the market.

(New address and active address below)

The overall number of new and active addresses is high, indicating that the current market activity level is good.

Spot and selling pressure structure rating: no net inflow accumulation, the market selling pressure is small.

(Below chart: Net position of Crystal orange Exchange)

At the current price, the crystal orange exchange net position is in a small outflow accumulation state, indicating that the spot market selling pressure is smaller.

(Chart below shows net position of E Pacific Exchange)

E Pacific current exchange net position in a net outflow state.

(High weight throw pressure below)

Currently there is no high weight throw pressure.

Purchasing power rating: The global purchasing power is strong, and the purchasing power of stablecoin is lost.

(Chart below shows the state of global purchasing power)

Europe currently has the strongest purchasing power, followed by Asia.

As of this writing purchasing power in America has declined to almost disappear.

(Chart below USDC Exchange Net position)

There was a huge outflow of USDC, and the USDC has not yet fully recovered its anchoring to the dollar.

(Chart below USDT Exchange net position)

The outflow of USDT has not stopped, but it continues to be issued on the chain, the market share increases, and the purchasing power weight of stablecoin represented by it increases.

Down chain transaction data rating: 22,000, 22300 price with purchase intention; Sell appetite at 30,000.

(Figure below shows data from Coinbase chain)

20000, 20100, 24850, 25000, 26000, price is willing to buy;

29000, 30000 level there is a willingness to sell.

(Figure below shows data under Binance chain)

222000, 22300 price have purchase intention;

Sell appetite at 30,000.

(The figure below shows data under Bitfinex chain)

20500 price is willing to buy;

Summary of the week:

Summary of message surface:

1.  The current rate is 5.0%, with 10 points remaining. Both the Fed statement and the interest rate dot plot show that the rate-raising cycle is nearing its end.

2.  America's service sector is gradually recovering. That could boost the U.S. economy, but it could also lead to higher inflation.

3.  Digital currencies are transforming the global financial system. This may lead to some challenges for the traditional banking industry, but it may also promote the development of fintech.

According to a recent Microsoft Research paper, GPT-4 is an early version of strong artificial intelligence.

What kind of industrial disruption this will entail is unclear.

But being within the range of intelligence enhancement would greatly expand the range of human intelligence. There are three aspects: enhanced intelligence, enhanced productivity, and enhanced stitching of imagination with the real world.

The appearance of GPT-4 will make machine language transfer to natural language programming, painting and other fields, and the comprehensive transformation of various tools will further reduce the separation of logical information exchange between machine and reality.

AR products, led by Apple, are coming soon, when new ways of interaction are presented in front of us.

Web3 is a key to virtual reality, often representing the new financial liberalism, new contract; Form a new cooperative contract paradigm.

It will be interesting to see how new modes of production, interaction and contract will reshape the world of the future.

Long-term insight on the chain:

1.  The high weight selling pressure of the market and the overall spot selling pressure, rising with the market;

2.  In the medium and long term, the uneasiness of the market, the sentiment began to ferment slowly in this price, entering the inflection point;

3.  When the market uncertainty is high, the market value performance of the small market value currencies will be weaker than that of the large market value currencies.

• & have spent Market setting:

Medium - and long-term nodes are facing tests, potential growth space is compressed, and anxiety has entered an inflection point.

Mid-chain probe:

1.  There has been a slight increase in transactions, now slowing down;

2.  The number of users in the field shows a shock growth;

3.  MVRV is in the stage of slow repair;

4.  Stablecoin circulation repair is slow;

5.  The market is experiencing a wave exodus of short-term players;

• & have spent Market setting:

Slow growth

The number of users in the arena is increasing, which lays the foundation for the popularity of project participation. However, the repair of purchasing power is slow, and the increase of users may be greater than the increase of funds in the arena.

Short-term observations on the chain:

1.  The risk coefficient of derivatives is in the neutral area, and the risk of derivatives is moderate;

2.  Low derivatives volumes; Derivatives traders stay on the sidelines;

3.  The overall market sentiment is neutral and cautious;

4.  Exchange data show chip outflow accumulation, selling pressure is small;

5.  Global purchasing power is strong, stable currency purchasing power loss;

6.  Off-chain transaction data show that there are purchase intentions at the price of 22,000 and 22300; Sell appetite at 30,000.

7.  In the short term not broken in the $18000 - $20000 probability is 73 %

• & have spent Market setting:

Investor sentiment is neutral and cautious, and the market as a whole is on the edge of stability, but it is still necessary to further wait and observe the impact of possible emergencies on the market.

Strategy suggestion: It is better to adopt the defensive strategy.

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.

This report is provided by the "WTR" Institute:

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