Crypto Market Secondary Fund Metrics Ventures August Market Observation Guide
1/ As I mentioned in the July monthly report, in the absence of a clear turning point in liquidity, macroeconomic changes dominated the sentiment in the market, from interest rate cuts, recession to the contraction of Japanese yen liquidity, which triggered a rapid expansion of volatility.
2/ As of the date of writing this monthly report, the market has formed a relatively strong rebound, but the established fact is that at a relatively high level, risk assets in the global dollar system have generally seen huge trading volumes and volatility, which means that the chips have been gradually changing hands, and the subsequent trends must be observed carefully with the utmost caution.
3/ From the overall trend, mainstream currencies such as Bitcoin have rebounded rapidly after hitting the annual line with large volume. The overall trend is still there, but Ethereum's trend is obviously weaker than others as we expected. It has already fallen below the upward trend. We still need to be cautious in the future, but there is no need to be overly bearish on the exchange rate at this position.
Review and comments on the overall market situation and market trends
After several months of low volatility, the market in early August gave participants an unexpected surprise. Since the beginning of July, when the weekends were no longer significantly reduced, the market volatility has increased significantly. This time, a decline with volume occurred on Saturdays and Sundays. Emotions were vented like mercury. The VIX of the US stock market soared to the same level as in March 2020. The volatility of risky assets was also amplified. BTC formed the largest single-day transaction in this cycle.
The main phenomena we noticed here are:
① As the exchange rate of ETH has once again reached the lower track of the downward channel, a large number of altcoins have returned to their lows this year or even their historical lows. However, due to the market's overly pessimistic sentiment towards altcoins, some altcoins that have been adjusted for more than 3 months have begun to bottom out.
② The market's trading volume has returned again over the weekend, which means that the convergence of volatility may start again. We may continue to witness disorderly fluctuations in the diffusion channel of large-cap tokens represented by BTC. However, under the background of insufficient liquidity, the ups and downs of the market will be smoother and the number of divergences will decrease.
③The market has not had any money-making effect for more than 3 months, and the GAS on the chain has also reached a new low every day. We are at the triple freezing point of sentiment, capital, and hot spots, and it is a good time to warm up.
Overall, we have observed optimistic signals, but the most important thing is still the high transaction volume and high turnover formed by BTC here together with global risk assets. This means that under the premise that liquidity does not change, we must maintain a cautious attitude and make conservative operations when the next weak market situation appears. The optimistic signals mentioned above are more of tactical optimism. Here, we must avoid being damaged by the sharp price fluctuations and our mentality and net worth. It is a better choice to prepare for the next stage of the market.
Altcoin sector
The trend of the altcoin market is highly differentiated and chaotic. Some strong altcoins have recently rebounded and bottomed out, such as saga, sui, tia, sats, etc., but they have not formed a linkage effect among the sectors. Some still broke through the pattern to create a new low trend. Combined with the lack of liquidity in the market, the trading of altcoins is still very difficult. It is recommended to wait and see, and intervene after the trend emerges.
