Original author: (The failure of the $110,000 impact: is it digestion of the correction or the initial peak? | WTR 12.23)
Source of original text: WTR Research Institute
Review of this week
From December 16 to December 23 this week, the highest for Ice Sugar Orange was around $108,353, and the lowest was close to $92,232, with a fluctuation range of about 15%. Observing the chip distribution chart, there is a large number of chips traded around 95,000, which will provide some support or pressure.
• Analysis: 1. About 1.8 million coins between 60,000-68,000; 2. About 1.85 million coins between 90,000-100,000; • The probability of not breaking below 87,000 to 91,000 in the short term is 80%; • Among them, the probability of not breaking above 100,000 to 105,000 in the short term is 70%.
Important news aspect
Economic news aspect
1. November PCE price index year-on-year 2.4%, lower than the expected 2.50%, higher than the previous value 2.30%;
2. November core PCE price index year-on-year 2.8%, lower than expected 2.90%, unchanged from previous value 2.80%.
3. The November PCE price index month-on-month is 0.1%, and the November core PCE price index month-on-month is 0.1%, both lower than previous and expected values.
4. The initial value of the one-year inflation rate expectation for December is 2.8%, lower than the previous value of 2.90%.
5. Early Thursday morning, the Federal Reserve cut interest rates by 25 basis points but reduced the 2025 interest rate cut expectation from 4 times to 2 times, leading to widespread declines in U.S. stock indices, gold, and the cryptocurrency market.
6. Federal Reserve Chair Powell stated: It is frustrating that the progress in lowering inflation is slower than expected; when considering interest rate cuts, we focus on the progress of inflation;
7. The PCE inflation favored by the Federal Reserve unexpectedly cooled across the board, and this data should help alleviate concerns among Federal Reserve members regarding inflation prospects, as the market continues to bet that the Federal Reserve will pause interest rate cuts in January and increase bets on cuts in March.
8. Citibank stated: Due to the 0.1% month-on-month increase in the core PCE inflation in November, price increases are slowing down, and the final interest rate cut by the Federal Reserve may exceed current expectations; job stagnation and slowing inflation are sufficient reasons for rate cuts in every meeting at least beyond January.
Crypto ecosystem news aspect
1. IMF's Kozak stated when asked about BTC's monetary status in El Salvador: The use of BTC in El Salvador will be voluntary, and the agreement reached between the IMF and El Salvador aims to reduce potential BTC risks based on IMF policy framework.
2. ETH funds sold 4,466 ETH (approximately $12.6 million) in 32 transactions over the past year.
3. On December 20, Salvadoran addresses increased their holdings by 1.07 million dollars of 11 BTC for their BTC reserves.
4. Analyst Adam from Greekslive stated that after the BIC's failure to hit $110,000 this week, it entered a correction, which is a clean-up of aggressive leveraged longs after stabilizing above $100,000. Meanwhile, the adjustment of the altcoins has lasted nearly a month, and based on past bull market experiences, a significant correction in BTC will usher in an altcoin season, but the intensity of BTC's correction is still uncertain.
5. On December 20, CZ posted: 'Waiting for new news headlines, BTC to hit a new high again.' Previously, CZ posted on December 17, 2020: 'Waiting for new news headlines: BTC fell from $101,000 to $85,000, keep this post.'
6. K33 Research report: In 2024, institutional investors collectively increased their holdings by 859,454 BTC, accounting for about 4.3% of the total circulating supply, equivalent to 8 years' issuance volume of BTC.
Long-term insights: used to observe our long-term situation; Bull market/Bear market/structural changes/neutral state mid-term exploration: used to analyze what stage we are currently in, how long this stage will last, and what situations we will face short-term observation: used to analyze short-term market conditions; as well as the possibility of certain events occurring under certain premises
Long-term insights
• Large exchange net positions • U.S. ETF reserve net positions • Aversion sentiment
(See below for large exchange net positions)
From the exchange's perspective, the large net transfers on-chain have begun to decrease and start to flow in, initially putting some pressure on the market, but the pressure is not large.
(See below for U.S. ETF reserve net positions)
The willingness to purchase U.S. crypto ETFs has also begun to decline, and external funding has started to weaken. The market currently looks a bit sluggish.
(See below for aversion sentiment)
In the context of such a sluggish market, two instances of aversion sentiment towards real gold and silver have occurred, resulting in two losses and sell-offs. If the market continues to stagnate in the future, it may generate listless sentiment to digest potential issues, and it may take several more occurrences to reach a general sentiment bottom in the market. The short-term operation rules of the market are closely related to sentiment.
Mid-term exploration
• New address growth status • Net position of total supply of stablecoins • Network sentiment positivity • Liquidity supply • Comprehensive score of USDC purchasing power • Comprehensive score of large whales
(See below for new address growth status)
The growth of new addresses has shown relative stagnation in the past year. The increase in address users may represent the application and popularization of blockchain technology. If the non-zero address increase for BTC is not high, the increase in the past year may come from the influx of funds in the market rather than user growth. This may bring hidden dangers, as BTC will tend to be a means of financial validation of wealth rather than the popularization and application of blockchain technology.
(See below for the net position of stablecoin total supply)
The net position of total supply of stablecoins has shown a slow decline in the past 14 days, which may indicate some signs of slowing capital inflow in the market. The capital influx in the market may be facing certain bottlenecks and may require some time to ease consensus.
(See below for network sentiment positivity)
Network sentiment is continuously declining, and the sentiment in the market may be in a phase of repair and consolidation.
(See below for liquidity supply)
Liquidity supply has shown a significant stagnation in growth recently, which may weaken liquidity in the market.
(See below for the comprehensive score of USDC purchasing power)
The purchasing power score of USDC remains high, indicating that U.S. market users still have a high willingness to participate in the market.
(See below for comprehensive score model of large whales)
The scoring situation of large whales has shown some changes recently, hovering between 'Very High' and 'High'. There may also be some divergence among large whale users.
Short-term observation
• Derivative risk coefficient • Options intent transaction ratio • Derivative transaction volume • Implied volatility of options • Profit and loss transfer amount • New addresses and active addresses • Net position of Ice Sugar Orange exchange • Net position of E exchange • High-weight selling pressure • Global purchasing power status • Net position of stablecoin exchanges • Off-chain exchange data
Derivative rating: Risk coefficient is in a neutral zone, derivative risk is moderate.
(See below for derivative risk coefficient)
After more than a month, the risk coefficient has risen from the red zone to the neutral zone, indicating that the market frenzy's main uptrend has come to a pause.
(See below for options intent transaction ratio)
The put option ratio is in a medium-high position, and the trading volume is at a medium level.
(See below for derivative transaction volume)
Derivative trading volume has fallen back to a low level again; for a market in a short-term bull phase, each return to a low level indicates that the market is brewing the next volatility.
(See below for implied volatility of options)
Implied volatility of options has not changed much.
Sentiment state rating: neutral
(See below for profit and loss transfer amount)
In the previous two weeks, the judgment of market sentiment was neutral, and this week remains neutral. As mentioned in the previous two weekly reports, the market's positive sentiment blue line resembles waves, each slightly lower than the last, diverging from price.
The current market has completed an initial correction; this week, key observation is whether there will be a recurrence of panic chip sell-off, and the current panic sentiment orange line is still at a low level.
(See below for new addresses and active addresses)
New and active addresses are at a high level.
Spot and selling pressure structure rating: BTC is in a state of large outflow accumulation, while ETH is in a small outflow accumulation overall.
(See below for the net position of the Ice Sugar Orange exchange)
BTC exchange net position continues to accumulate in a large outflow state.
(See below for the net position of the E exchange)
ETH overall shows a small outflow.
(See below for high-weight selling pressure)
Current high-weight selling pressure has eased.
Purchasing power rating: Global purchasing power is in a state of loss, and stablecoin purchasing power is unchanged from last week.
(See below for global purchasing power status)
Global purchasing power is in a state of loss.
(See below for USDT exchange net position)
Stablecoin purchasing power is unchanged from last week
Off-chain trading data rating: There is a willingness to purchase at 90,000; there is a willingness to sell at 100,000.
(See below for Coinbase off-chain data)
There is purchasing willingness around the price level of 85,000 to 90,000;
(See below for Binance off-chain data)
There is purchasing willingness around the price level of 85,000 to 95,000; there is a willingness to sell around the price level of 100,000.
(See below for Bitfinex off-chain data)
There is purchasing willingness around the price level of 85,000 to 90,000
Summary of this week
Summary of news aspects:
1. From the current perspective of market news and the Federal Reserve's attitude, the probability of an interest rate cut in January is relatively low, but the probability of interest rate cuts beyond January is not small, as the PCE inflation favored by the Federal Reserve has shown a relative improvement.
2. The Federal Reserve's interest rate cut rhythm is roughly characterized as decisive in the early stage, hesitant in the mid-stage, and may accelerate in the later stage, ultimately likely returning to a long-term interest rate of around 3.25%.
3. The coming year is still expected to be relatively loose, with abundant capital inflows and not much likelihood of a bear market.
On-chain long-term insights:
1. Large exchange net positions indicate that the current purchasing willingness has decreased and there is extremely subtle selling pressure; 2. U.S. ETF inflows have also begun to decline, and U.S. capital support has decreased simultaneously; 3. In this correction and consolidation process, two extremely extreme aversion sentiments have occurred.
• Market tuning: The market may need some time to digest pressure and adjust, requiring a trigger of more aversion sentiment to reach a sentiment bottom.
On-chain mid-term exploration:
1. The increase in new addresses has lacked growth in the past year, showing relative stagnation; 2. The growth rate of new funds has slowed down; 3. Network sentiment is in a stage of consolidation and repair; 4. Liquidity has weakened; 5. USDC users still have a certain willingness to participate in the market; 6. Large whales have shown some divergence recently.
• Market tuning: Divergences have occurred recently in the market, but currently, there are no worse situations; it may also be adjusting.
On-chain short-term observation:
1. The risk coefficient is in a neutral zone, the risk is moderate. 2. The growth of new active addresses is relatively high, with high market activity. 3. Market sentiment status rating: neutral. 4. The overall net position of exchanges shows that BTC is in a large outflow state, while ETH is in a small outflow overall. 5. Global purchasing power is in a state of loss, and stablecoin purchasing power is unchanged from last week. 6. Off-chain trading data shows a willingness to purchase at 90,000; there is a willingness to sell at 100,000. 7. The probability of not breaking below 87,000 to 91,000 in the short term is 80%; among them, the probability of not breaking above 100,000 to 105,000 in the short term is 70%.
• Market tuning: In the context of two consecutive weeks of declining market positivity, the market finally welcomed a correction. Market sentiment remains neutral this week, with expectations that this week's price performance mainly relies on whether panic sell-offs occur; if not, there will be more fluctuations around the current price, while if panic sell-offs occur, prices may reach the short-term holder cost line around 85K.
Risk reminder: The above is all market discussion and exploration, and does not have directional opinions for investment; please treat it with caution and prevent market black swan risks.
This article is from a submission and does not represent the views of BlockBeats.
