The last two times I mentioned the importance of liquidity and technical analysis in judging bullishness, but no indicator is absolutely correct. We need to combine various indicators to make a comprehensive judgment.
When judging the trend, I usually use liquidity as the first priority to judge the trend, then refer to technical analysis, and finally use other indicators to assist the judgment. The other indicators here mainly include cycle, macro level, on-chain gas fees, and stablecoin market value. Can change the relationship between supply and demand.
First of all, let’s talk about the cycle. Any market is a market dominated by capital. It takes time for capital to build a position, ship goods, and build a position. Therefore, ups and downs are the eternal laws of the financial market. There is a certain interval between the rise and fall, and there will also be cycles with similar general patterns.
The second is the macro level. For the macro level, we can only assist judgment. We cannot use a single indicator at the macro level as a sign of building a position. Usually the macro level responds to the market slower than liquidity and technical analysis. Many people are too superstitious about macro indicators. And ignore the technical indicators and liquidity, and then liquidate the position with huge losses. In fact, in essence, the macro level will affect liquidity and technical indicators. For example, if interest rates are raised, once interest rates are raised, large funds will be more willing to risk-free arbitrage, their willingness to deposit will increase, and the ten-year yield of U.S. debt will increase. , the U.S. dollar index rises, which will in turn affect the liquidity and technical aspects of the market; essentially, internal factors such as interest rate hikes are the cause, while liquidity and technical indicators are the effect. Because the causes are complex, it is sometimes difficult to judge, so we It is more direct and practical to see the results directly.
The third is the gas fee on the chain. The gas fee on the chain can actually be equated to the confidence of funds in the market in the current market environment. Confidence is a double-edged sword. From the establishment of confidence at the beginning of the bull market to the eternal bull market at the end of the bull market, the degree of confidence is also The process of gradually reaching the top from a low point, so at the end of the Ox, confidence reaches its peak and emotions reach its peak.
The fourth is the benefit that can change the relationship between supply and demand. To put it simply, it is the benefit that allows leeks to continuously enter the market. For example, spot ETFs can lower the threshold for retail investors and increase the exposure of the big pie.
