Introduction

In the cryptocurrency market, data has always been an important tool for people to make trading decisions. How can we clear the fog of data and discover effective data to optimize trading decisions? This is a topic that the market continues to pay attention to. This time, OKX specially planned the "Insight Data" column, and jointly with mainstream data platforms such as AICoin and Coinglass, starting from common user needs, hoping to dig out a more systematic data methodology for market reference and learning.

The following is the first issue of the content, which was jointly discussed by the OKX Strategy Team and the AICoin Research Institute around the perception of market changes and the construction of the "data" methodology. I hope it will be helpful to you.

OKX Strategy Team: The OKX Strategy Team is composed of a group of experienced professionals who are committed to promoting innovation in the field of global digital asset strategies. The team brings together experts in multiple fields such as market analysis, risk management and financial engineering. With deep professional knowledge and rich business experience, it provides solid support for the strategic development of OKX.

AICoin Research Institute: AICoin Research Institute is based on the AICoin platform and is committed to providing in-depth data interpretation and investor education to Web3 users. AICoin is a Web3 data service provider that focuses on market data analysis, professional K-line, signal strategy tools, asset management monitoring, and news.

To perceive market changes at the first time, which data dimensions must be paid attention to at all times?

AICoin Research Institute:

We believe that the following dimensions can help investors better perceive market changes.

First, price fluctuations and trends. First is the latest price. Real-time price changes can best indicate the current market sentiment. The second is price trends. Price trends are usually measured by technical indicators. Common ones are MA, EMA, MACD, RSI, and various custom indicators developed by technical analysis researchers.

Second, trading volume. Mainly total trading volume and large transactions. Total trading volume can effectively measure market activity. Large transactions mainly look at the trading situation of large investors. For example, the buying and selling of whales may indicate major market fluctuations. In the past, we have also monitored and analyzed several types of important data and opened them to users for analysis and early warning, including major large orders based on CEX market and transaction data, large transaction behavior, chip distribution, etc.

Third, fund flow. Mainly net inflow/outflow of funds: Observing the inflow and outflow of funds can help everyone better judge the supply and demand situation in the market. The recent ETF net inflow data is a good proof. If a large amount of ETF funds flow in, it means that the market is still an incremental market. We have also collected this type of data and shared it with the majority of users for reference. Another is the flow of funds on the trading platform. It is necessary to pay attention to the fund trends of major trading platforms and understand the buying and selling pressure in the market. Generally, the reference is the large deposit and withdrawal data of the trading platform and the balance of the wallet address of the trading platform.

Fourth, Observe market sentiment and social media dynamics. Look at market sentiment indicators, such as the Fear & Greed Index. I would like to recommend OKX's contract data indicators, such as the ratio of long and short positions, the average long and short positions of elites, etc., which are of great reference value for the medium- and short-term market trends. As a leading CEX, OKX's open trading big data is of great reference significance to the market.

Of course, social media and news should also be paid attention to in a timely manner. Social platforms such as Twitter and Reddit and mainstream news media in the circle can help us capture market sentiment and potential hot spots.

Fifth, on-chain transaction data, including the number of transactions, the number of active addresses, etc., can help us understand the activity of on-chain activities. It is recommended to pay attention to the changes in smart money addresses and the changes in project tokens in the focus of community KOLs. For tokens with POW mechanisms such as Bitcoin, changes in hash rate and mining difficulty can reflect miners' confidence and network security. There are two most critical points: the halving cycle, and the impact of the miner shutdown price and the coin price.

Sixth, macroeconomic data and policies, including economic indicators: such as US non-agricultural data, CPI, etc., are helpful for us to understand the general economic trend. In addition, changes in regulatory policies in various countries have a direct impact on the implementation and promotion of the crypto market in the current country, and are also one of the indicators of changes in market growth and decline.

OKX Strategy Team:

It is crucial for users to perceive market changes. We recommend paying attention to at least the following 4 dimensions of data:

First, price trend. Price changes are the most direct signal of market changes. Users need to pay attention to the short-term and long-term trends of prices, and use technical indicators such as moving average (MA), relative strength index (RSI) and moving average convergence divergence (MACD) to assist decision-making.

Specifically:

· Moving Average (MA): includes Simple Moving Average (SMA) and Exponential Moving Average (EMA), which can be used to smooth price fluctuations and identify trend direction;

· Relative Strength Index (RSI): measures the speed and change of price changes and identifies overbought or oversold conditions. Usually, an RSI value above 70 indicates overbought, and below 30 indicates oversold;

· Moving Average Convergence Divergence (MACD): The difference between the short-term and long-term moving averages can be used to determine the change in price trends

Second, market volatility Volatility is an important indicator of market changes. It can help determine the stability of the market and potential investment risks. Volatility can usually be measured by standard deviation or VIX index, or by the fear and greed index that combines multiple indicators (including volatility), which can also more comprehensively assess market sentiment and potential volatility.

Third, fund flow and transaction distribution Comprehensive analysis of fund flow and transaction distribution can quickly understand the overall fund movement and cost distribution of the market, and then more accurately determine market sentiment, price fluctuations and key support and pressure levels.

Among them, fund flow is an important indicator for determining market sentiment and trends. By monitoring the inflow and outflow of funds, investors can understand the overall fund movement in the market and thus understand the market trend. Inflows are orders executed at the ask price or higher, and outflows are orders executed at the bid price or lower. Net inflows equal inflows minus outflows. The size of a single inflow is sorted by the transaction amount, which can be divided into extra-large orders, large orders, medium orders, and small orders for easy viewing.

The transaction distribution shows the number of transactions of the target at different prices, reflecting the trading distribution of investors. By analyzing the transaction distribution data, you can understand the profit or loss of investors. By comparing the current price, you can distinguish between profitable areas and loss areas. Key data include profit ratio, average cost, pressure level, support level, 90% and 70% transaction ranges, and transaction range overlap. A high overlap indicates that the transaction position of funds is concentrated and the price fluctuation is small. Following these data can more accurately judge market trends and price changes.

Fourth, fundamental data For the cryptocurrency market, fundamental data includes the project's technical progress, tokenomics, partnerships, regulatory dynamics, etc.

How many types of indicators can help users better grasp the changes in macro trends?

AICoin Research Institute:

Based on the overall changes in the past market, we believe that the following macro indicators are suitable for crypto traders to track in depth:

First, total market value The total market value of cryptocurrencies can reflect the size and health of the entire cryptocurrency market. The growth of total market value usually indicates the overall development of the market and the increase in participants.

Second, BTC Dominance represents the proportion of Bitcoin's market value to the total cryptocurrency market value. A high Bitcoin market value share usually indicates a lower risk appetite in the market, with investors preferring more stable assets, while a lower share may indicate that funds are flowing into altcoins. In addition, we also counted Ethereum's market value share, which is also a similar indicator worth paying attention to.

Third, On-chain activity data mainly refers to the number of active addresses, the number of transactions, and the amount. In addition, for Bitcoin, the Bitcoin hash rate reflects the computing power and security of the Bitcoin network, and the miner's balance of payments reflects whether the miners are in a profitable state. This indicator is very important for understanding the health of the mining industry.

Fourth, Fund liquidity and trading volume includes the trading volume of cryptocurrency trading platforms in different periods of time, and the inflow and outflow of funds from trading platforms. Tracking the flow of cryptocurrencies in and out of trading platforms, a large amount of funds flowing into trading platforms may indicate an increase in selling pressure, and vice versa.

Fifth, stablecoin liquidity, mainly refers to the total market value and circulation of stablecoins, such as the market value and circulation of stablecoins such as USDT and USDC. The inflow and outflow of stablecoins can show the buying and selling pressure of the market.

Sixth, market sentiment index, mainly looks at the Crypto Fear & Greed Index and OKX's trading big data indicators.

Seventh, decentralized finance (DeFi) data, the total locked value in the DeFi protocol can reflect the scale and growth trend of the DeFi market to a certain extent.

Eighth, derivatives market data, the key is the open interest: the open interest in the futures and options markets can reflect the expectations and risk exposure of market participants. There is also funding rate, such as the funding rate in the futures market, which can indicate the power comparison between the long and short sides. Rates and spreads are important tool indicators for guiding large funds to conduct arbitrage, and large funds balance the spread of the market through arbitrage while also providing liquidity to the market.

Ninth, U.S. economic data and indicators, CPI and non-agricultural data: The value of these two indicators lies in guiding the Fed's interest rate hike policy and predicting the direction of the total capital inflow and outflow in the market.

OKX Strategy Team:

We believe that users can refer to the following five key indicators:

First, the overall cryptocurrency market value, the overall cryptocurrency market value is an important indicator to measure the market size and development trend. Changes in market value can reflect the overall health of the market and investor confidence. When the overall market value continues to grow, it usually indicates that the market is in an upward trend, and vice versa.

Second, the overall market trading volume, the overall market trading volume reflects the activity of the market. High trading volume usually means high market sentiment, which may be accompanied by large price fluctuations. Users can judge the strength of market trends and identify the peaks and troughs of the market by analyzing changes in trading volume.

Third, the market value share of BTC/ETH, the market value share of BTC and ETH is an important indicator to understand the market structure. When the market capitalization share of BTC or ETH rises, it may indicate that market funds are more concentrated on these two major cryptocurrencies, which is often seen as a signal of market risk aversion. Conversely, a decline in market capitalization share may indicate that investors are exploring more alts coin opportunities.

Fourth, ETF inflows and outflows The inflows and outflows of funds in cryptocurrency ETFs can reflect the market attitude of institutional investors. A large amount of funds flowing into ETFs usually indicates that institutional investors are optimistic about the market outlook, while fund outflows may indicate that institutions have weakened confidence in the market. Analyzing the fund movements of ETFs can help users judge the medium- and long-term trends of the market.

Fifth, Economic calendar The economic calendar includes key economic events and data releases, such as GDP data, inflation rates, interest rate resolutions, etc. These macroeconomic factors have an important impact on the cryptocurrency market. For example, rising interest rates may lead to outflows of funds from high-risk assets, while increased economic uncertainty may prompt investors to seek cryptocurrencies as safe-haven assets. Paying attention to the economic calendar helps users predict changes in macro trends.

Timing is the key to success. What data can help capture the best opportunity?

AICoin Research Institute:

This issue can be divided into several stages:

First, position building stage: It is recommended to refer to the following indicators:

· EMA indicator: The crossover of short-term (such as 12-day moving average) and medium-term (such as 26-day moving average) moving averages can indicate buying opportunities, such as "golden cross" (short-term moving average crosses long-term moving average)

· RSI indicator: When RSI is below 30, it is usually considered to be an oversold zone, which may be a good opportunity to buy

· BOLL indicator: When the price touches the lower track of the Bollinger Band and is accompanied by signs of recovery, it can be used as a buy signal

· There are many types of technical indicators and they have very rich uses. A single indicator is a deep subject. As an investor, you can choose the indicator that suits you

· In addition, in terms of data indicators, we need to understand: trading volume, number of active addresses and new addresses, number of on-chain transactions, and trends of major large orders.

Secondly, in the stop profit and stop loss stage, you can refer to the following indicators:

· Fibonacci retracement: Fibonacci retracement levels, such as 38.2%, 50%, 61.8%, etc., can be used to set take profit and stop loss points.

· EMA: When the price falls below a key moving average, such as the 120-day or 250-day moving average, it can be used as a stop loss signal.

· RSI: When the RSI is above 70, it is usually considered an overbought zone and a signal to consider taking profit.

In addition, if you make stop-profit and stop-loss decisions based on data indicators, you should also understand the trading volume and large transfer trends, as well as the decline in network activity: the number of transactions and active addresses on the chain has dropped significantly, which may indicate a decrease in market interest and is a signal to consider stop-loss. Of course, relevant regulatory policies or unfavorable news are of great reference significance to our investment. Finally, we have another suggestion, which is to do a good job of risk control: set clear stop-profit and stop-loss points, build positions in batches to smooth the purchase price, and reduce the risk of a single position; and review and adjust regularly, and think and gain.

OKX Strategy Team:

We believe that position propensity, basis, and technical indicators have strong reference value.

Specifically, position propensity (Long Short Ratio) reflects the long-short ratio of market participants. A high long ratio usually indicates that the market sentiment is optimistic and investors tend to buy; a high short ratio indicates that the market sentiment is pessimistic and investors tend to sell. By analyzing the position tendency, users can judge the main trend and sentiment of the current market and choose the appropriate time to open a position.

The basis is the difference between the futures contract price and the spot price. The basis can be positive (the futures price is higher than the spot price) or negative (the futures price is lower than the spot price). The basis reflects the expectations of market participants about future price changes. If the basis is positive, it usually means that the market expects future prices to rise (contango); if the basis is negative, it usually means that the market expects future prices to fall (backwardation). The basis can be used to monitor market sentiment and develop arbitrage strategies. For example, a rapid increase in the basis may indicate that the market sentiment is bullish, while a rapid decrease in the basis may indicate that the market sentiment is bearish.

Technical indicators - Overbought/Oversold, through technical indicators such as the Relative Strength Index (RSI) and the Stochastic Oscillator, users can determine whether the market is overbought or oversold. When the RSI is above 70, the market may be overbought and prices may pull back; when the RSI is below 30, the market may be oversold and prices may rebound. These technical indicators help users choose the right time to open a position when the market is extremely emotional.

Finally, there are profit/risk tools, which help users visualize and manage the potential profit and risk of each transaction. Users can set take-profit and stop-loss points, calculate the risk-return ratio of each transaction, and formulate a reasonable exit strategy.

For large funds, what data should be considered to build a scientific and robust trading strategy?

AICoin Research Institute:

This question mainly depends on the funding goals and the ability to withstand risk drawdowns. Here I will briefly analyze some arbitrage indicators suitable for large funds: · Pay attention to the spot and futures spread opportunities in the market · Pay attention to the price spread and timeliness opportunities of the same subject across exchanges in the market · Pay attention to the arbitrage opportunities of contract funding rates in the market · Pay attention to the arbitrage opportunities on the chain and off-chain · Pay attention to the market depth and position data of the corresponding subject in the market to determine whether it can accommodate large funds for arbitrage · Pay attention to the stability of the trading platform. For example, super-large platforms like OKX can better accommodate the arbitrage operations of large funds

Currently, AICoin provides arbitrageurs with analysis and early warning of the above multiple data dimensions, hoping to provide effective reference for the trader group.

OKX Strategy Team:

According to our observation, the asset allocation of large capital users is more diversified. For this group of people, the commonly used tools include fixed investment strategy, combination arbitrage and large order splitting. Fixed investment strategy reduces the overall holding cost through periodic purchases, combination arbitrage reduces transaction risks through hedging arbitrage, and large order splitting reduces market impact and transaction costs by splitting large orders into small orders. These strategies, combined with their respective characteristics, can help large capital users to diversify their allocations more efficiently and achieve stable investment goals.

The fixed investment strategy (multi-currency combination, regular purchase) is a strategy to reduce the overall holding cost through periodic purchases. Continue to buy in batches at low prices during the price decline, and sell at a profit when the price rebounds, repeating over and over again, and continuously circulating arbitrage.

Combination arbitrage is a strategy to help users hedge and arbitrage and reduce transaction risks. This strategy can choose to trade different or the same currency/market at the same time, and automatically and timely help you take profits by taking advantage of market fluctuations and the price difference between various trading products. The combined arbitrage strategy can effectively help you reduce the potential risk of losses in dealing with future market uncertainties.

Big order splitting is also a convenient trading strategy for large traders. This strategy can help users split large orders into small orders and place orders in batches. Through the intelligent setting of the strategy, the order can minimize the impact of the large order itself on the market, and at the same time maintain a high average transaction price level, thereby greatly reducing the transaction costs of large traders.

Conclusion

The above is the first issue of the "Insight Data" column launched by OKX, focusing on the core issues encountered in trading, such as the perception of market changes and how to establish scientific trading strategies. It hopes to provide a systematic data methodology for traders to better grasp the pulse of the market and make wise trading decisions. In future series of articles, we will continue to explore more practical data usage/analysis methods to provide reference for traders with different investment preferences to learn investment.

Risk Warning and Disclaimer

This article is for reference only. This article only represents the author's views and does not represent the position of OKX. This article is not intended to provide (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell or hold digital assets; (iii) financial, accounting, legal or tax advice. Holding digital assets (including stablecoins and NFTs) involves high risks and may fluctuate significantly. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals for your specific situation. Please be responsible for understanding and complying with local applicable laws and regulations.

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

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