How do you view the current market situation?

Crypto李先生 · 2023-08-16T07:45:07.000Z

At present, what can be said about this market every day is almost the same. It is nothing more than saying the same thing from a different perspective. The pricing of BlackRock has been popularized since the end of June. After all, this is the current situation except for the halving cycle. The only narrative. Last night’s tweet also used China’s current real estate situation to explain the trends of BTC and ETH, especially the price of BTC. Although you see news reports every day that the volatility of BTC in the last 90 days is at the lowest level since 2016 (Figure 1) What I hear every day is that poor liquidity has caused the trading volume to be at a historically low level, but the price has not dropped very significantly. The reason why it does not drop is not because there are many bargain hunters, but because of selling. There are fewer and fewer people.

At present, the things that can be said every day in this market are almost the same, which is nothing more than saying the same thing from a different perspective. Since the end of June, we have been popularizing the pricing of BlackRock. After all, this is the only narrative besides the halving cycle. Last night’s tweet also used the current status of China’s real estate to explain the trend of BTC and ETH, especially the price of BTC. Although you can see that there are news reports every day saying that the volatility of BTC in the past 90 days is at the lowest level since 2016 (Figure 1), and what you hear every day is that the poor liquidity has caused the transaction volume to be at a historically low level, but the price has not dropped very significantly. The reason why it has not dropped is not because there are many friends who buy at the bottom, but because fewer and fewer people are selling.
We often use the data of BTC that has not been changed for more than 155 days to measure the trend of long-term holding of BTC. As of today, we can still see that more BTC is moving towards long-term holding. Currently, there are 14.64 million BTC that have not participated in the turnover in the past five months, accounting for 75.23% of the total circulation (Figure 2). The time should be in mid-March, which is around the time when Silicon Valley Bank exploded. At that time, it was not known that BlackRock would apply for an ETF three months later, so investors who started buying and holding at that time and have held until now are more likely to bet on the Federal Reserve entering a period of suspending interest rate hikes, or aiming for a large halving cycle. This part is likely to be dominated by institutions and high-net-worth investors, who do not care about short-term price fluctuations. Even if it briefly fell below $26,000 in June, it did not make them leave the market even if it fell below their cost price.
On the other hand, as the price fluctuates in a narrow range, more Bitcoins are becoming more and more concentrated. Although the short-term turnover rate is decreasing, there are still nearly 2.5 million BTC involved in the short-term (10-day) turnover. The result is that the accumulation of BTC around $29,000 is getting higher and higher every month. Last week, it was estimated that the single price stock of $29,000 may exceed 1.1 million by Tuesday or Wednesday this week. In fact, up to now, this number has risen to 1.136 million (Figure 3), which is something I have never seen in the past two years of looking at the data. There is even a possibility that this part of the accumulation will continue to rise. The higher the accumulation of a single price, the greater the impact on price fluctuations. When the holders are in a good mood, this will become an excellent bottom, but on the contrary, it is easy to turn into collective selling pressure.
Although it seems like nonsense, this is the actual situation. It also shows that the general consensus of investors is that $29,000 is the bottom price. The most obvious example of this is $16,500. At that time, due to the bankruptcy of FTX, many friends saw four-digit prices for BTC, but in fact, the accumulation volume of $16,500 has remained above 1 million for a long time. Even though BTC briefly fell below $16,000, the stock has not decreased significantly. Therefore, even from November 9, 2022 to January 6, 2023, the price of BTC has always remained around $16,000. Although the market is full of FUD and pessimism, it has been supported because of the bottom consensus (some mining machines had been shut down at that time).
Some people may ask, since there is such a strong bottom consensus, will BTC still support the price of $29,000 like $16,500 and will not fall sharply, then why do you say that if the mood is bad, it will become a group selling pressure. There are two details to understand here. First, from the trading volume, we can see that although the price of BTC has reached the current lowest value in November 2023, the trading volume remains in a relatively high range. In addition to representing sufficient funds, it also shows that there was a strong turnover sentiment at the time (Figure 4). However, since the prosecution of the CFTC and SEC in April, the crackdown on market makers has greatly reduced the liquidity in the market, and both funds and sentiment have shown a downward trend. Up to now, the trading volume on weekdays is not even as good as that on weekends at that time.
Another thing to note is that the decline of FTX at that time had a great impact on sentiment. Some BTC mining machines have reached the shutdown price. It can be said that the sentiment is bearish. The purchase at that time can be seen as the beginning of bottom-fishing and gradual position building. Investors have expectations that prices will continue to fall, but now it is just the opposite. In addition to the expectation of BlackRock's application for ETF, the price increase is also the expectation that the Federal Reserve will enter a pause in interest rate hikes. It can be seen that the market is arbitrage behavior under the expectation of upward price increases. In other words, although everyone was bearish last time, there was actually no worse situation. Instead, it was a good time. The Federal Reserve's decision to end the first phase of interest rate hikes was ushered in, and the overall risk market was rising. This time, many investors are looking forward to the passage of BlackRock ETF and even the Federal Reserve's suspension of interest rate hikes.
This is why I say there are two sides. If the sentiment can continue to be stable, then the bottom of $16,500 will be very likely to appear at $29,000, but the prerequisite is that the market can support the approval of the BlackRock ETF, support the Fed's announcement of a pause in interest rate hikes, or other favorable information is announced, so that the sentiment can be maintained and not cause a large amount of selling pressure. On the contrary, if BlackRock is rejected by the SEC in the short term, the Fed resumes interest rate hikes, or there is new negative information, it is very likely to hit investors' sentiment, and they may choose to leave the market. This is just like when the Japanese housing bubble was collapsed. Everyone knows that Tokyo is very expensive, and the price may come back in 20 years (corresponding to the halving cycle of BTC), but how many people dare to bet. This is the case with BTC and ETH now.