Hello everyone! I am Trader J!
In the world of cryptocurrency, market fluctuations are as exciting as a roller coaster. Faced with a dazzling array of indicators, how can a novice quickly get started?
Below are three simple and easy-to-use indexes to help you quickly understand the potential information of the market.
(1) Macroeconomic indicator CPI affects investor sentiment:
The impact of CPI on BTC price fluctuations is mainly reflected in the following aspects: when CPI data is lower than market expectations, it is usually regarded as a positive signal, and the probability of BTC price increase is as high as 78.57%; while CPI exceeding expectations is regarded as a negative signal, and the probability of BTC price decline reaches 69.57%.
Taking the recently released CPI data on November 13, 2024, at 21:30 as an example, the actual value closely matched the expected value, and this favorable news led to a 0.3% increase in BTC within just five minutes. Such macroeconomic indicators not only affect traditional currency markets but also directly influence the decision-making processes of cryptocurrency traders.
(2) Bitcoin Reverse (BTC Exchange Reserve Volume)
[Basic Introduction]: Bitcoin Reverse (BTC Exchange Inventory) refers to the total BTC held by major centralized exchanges (CEX), encompassing user custody assets and the platform's own assets. The following chart aggregates BTC inventory data from various exchanges (which can be viewed on cryptoquant/glassnode platforms):
[Market Signal of Inventory Fluctuations] During bear markets or periods of market panic (FUD), changes in the BTC inventory of exchanges become a barometer of market confidence. Taking the FTX crisis as an example, users rushed to withdraw coins to personal wallets, leading to a sharp decline in the exchange's BTC inventory.
In a bull market, an increase in exchange BTC inventory may indicate rising potential selling pressure; while a decrease in inventory may suggest that investors (including both individuals and institutions) are actively buying. For example, after the approval of the Bitcoin spot ETF on January 11, the exchange's BTC inventory showed a downward trend, primarily due to continued absorption by large institutions (such as BlackRock, Fidelity, etc.). However, there is no simple linear relationship between BTC exchange inventory and price, as a decrease in inventory does not directly equate to a rise in price.
BTC exchange inventory generally reflects the tendency of investors to trade through CEX. Most BTC trading occurs on CEX due to its superior liquidity and trading depth compared to on-chain trading. Therefore, when the exchange's BTC inventory declines, it is necessary to analyze the reasons: if it is due to panic sentiment towards the exchange, this may be a negative signal; but if it is due to institutional and individual investors increasing their holdings, then it could be a positive market signal.
(3) Contract Market Position Indicators
In the contract market, position indicators are important analytical tools, commonly including the following three types:
* OKX's Long and Short Position Ratio
* Binance (BN) long-short position ratio
* Bitfinex BTC Long and Short Positions (BTCUSD)
Below, we will take Bitfinex's BTC long positions as an example to explore how to gain market insights through contract market position indicators.
Function entry: AICoin platform - Homepage - New Tab - Index Section - Search 'Bitfinex'
[Data Comparison]
Bitfinex has attracted attention due to its large whale clientele, with its long positions primarily based on spot leverage trading, maintaining around 68,000 BTC over the past two months. In contrast, industry leader Binance has a total long and short position of 82,985.2 BTC in BTCUSDT contracts. However, Bitfinex's long positions have reached about 67,580 BTC, which is unusually high.
[Long Position Trends and Market Forecasts]
From a long-term perspective, Bitfinex's longs tend to reduce positions when BTC value rises and increase positions when value declines. However, viewing Bitfinex's long behavior as a barometer of whale movement, the timing of their adjustments does not fully synchronize with BTC price peaks and troughs. Observing the long positions on a weekly basis shows a particularly evident downward trend.
Focusing on recent dynamics, as soon as the news of the spot BTC ETF in October 2023 broke, Bitfinex's BTC long position continued to climb, reflecting the optimistic expectations and proactive actions of whales. However, when BTC attempted to break through the $70,000 mark in March, the whales began to withdraw. Looking back at 2021 to 2022, this trend was even more pronounced.
[Disclaimer] The market has risks, and investment requires caution. Please carefully consider personal risk tolerance before use; this article does not constitute any investment advice.
