On-chain data for the 27th week: Expectations for two rate cuts this year have increased, but the market is still facing selling pressure

Original title: "When will the whales' selling stop? When can we enter the recovery? | WTR 7.08"

Original source: WTR Research Institute

Review of this week

From July 1 to July 8 this week, the highest price of Bingtang Orange was around $63,861 and the lowest price was close to $53,485, with a fluctuation range of about 16.25%.
Observing the chip distribution chart, there are a large number of chips traded around 55,000, which will have a certain support or pressure.

• Analysis:
1. 59000-63000 is about 1.24 million pieces;
2. 64000-68000 is about 1.11 million pieces;
• The probability of not falling below 51000～53000 in the short term is 53%;
• The probability of not rising below 61000～64000 in the short term is 70%.

Important news

Economic news

1. The Congressional Budget Office reported two weeks ago that the US budget deficit is expected to increase by 27% to $1.9 trillion next year.

2. The minutes of the Federal Reserve meeting showed that several participants said that if inflation continues to be at a high level or rises further, interest rates may need to be raised; the vast majority of members believe that economic growth is gradually cooling down, and the Federal Reserve is waiting for more information to gain confidence in cutting interest rates.

3. ActivTrades analysts said that the rise in gold prices and the fall in the US dollar were mainly due to the fact that Fed head Powell admitted that inflation was finally moving in the right direction. At the same time, today's data showed that labor demand has cooled down. Powell's remarks raised traders' expectations that the Federal Reserve will cut interest rates soon after the end of summer.

4. On Friday, the United States announced the unemployment rate in June, the previous value was 4%, and the expected value was 4%; the non-farm employment in June was 272,000, and the expected value was 190,000.

5. The US unemployment rate in June was 4.1%, the highest since November 2021, and non-farm employment fell sharply.

Crypto Ecosystem News

1. On July 4, EmberCN data showed that an address marked as "German Government" transferred 1,300 BTC to centralized platforms.

2. Steve Kurz, head of Galaxy Digital Asset Management, said that the U.S. Securities and Exchange Commission may approve the spot ETH ETF by the end of July and is optimistic about more cryptocurrency ETFs.

3. QCP Capital said that concerns about a large number of BTC sales after the MtGox compensation may exacerbate bearish sentiment. MtGox will begin to compensate customer assets in July, which may bring selling pressure to both markets. It is expected that the price will rise to $150,000 after the MtGox compensation is completed.

4. Matrixport said that as the total market value fell from $2.7 trillion to $2.3 trillion, the daily trading volume of cryptocurrencies also fell from $180 billion to $50 billion. There is a saying in traditional finance: "Don't short a depressed market."

◦ Because a little momentum can push up prices, this may also apply to the crypto market, because during the summer downturn, the market may see a wave of rebounds in view of multiple possible stimulus factors (such as the Fed's interest rate cuts, the US election, etc.).

5. The correlation between BTC and the S&P 500 index has dropped to 0.05, indicating market differentiation. In the past five years, the two have been highly positively correlated. In early 2024, both rose significantly. Since 2019, BTC and the S&P 500 index have been negatively correlated four times, each time indicating a local low in BTC prices.

6. Richard Galvin, co-founder of hedge fund Digital Asset Capital Management, said: If weak economic data in the United States stimulates people to bet on the Federal Reserve to ease monetary policy, the sentiment in the cryptocurrency market may shift and boost market sentiment.

7. On July 5, MtGox continued to send BTC to creditor addresses. Lawyer Nobuaki Kobayashi said: MtGox has begun to repay some creditors in BTC and BCH through some designated cryptocurrency platforms. Data shows that MtGox sent 1200, 1544, 2702, 1545, and 47228 BTC to the new address. Many creditors said that they have received BTC/BCH repaid by MtGox.

8. Justin Sun said that he is willing to negotiate with the German government to purchase all BTC in an over-the-counter manner to minimize the impact on the market. On July 4, Sun Yuchen's address sent 30 million USDT to Bitfnex. From July 2 to date, Sun Yuchen's three addresses have sent a total of 80 million USDT to the exchange.

Long-term insight: used to observe our long-term situation; bull market/bear market/structural change/neutral state
Medium-term exploration: used to analyze what stage we are currently in, how long this stage will last, and what situation we will face
Short-term observation: used to analyze short-term market conditions; and the possibility of some directions and certain events occurring under certain conditions

Long-term insights

• Position structure of participants of different ages
• New and destroyed chips on the chain
• Illiquid whale positions
• Total spot selling pressure

（Figure below: Position structure of participants of different ages）

From here, the overall market, the selling of long-term participants has not accelerated, and the participants with one to two years have begun to continue to increase their holdings.
The continuous increase of long-term participants is the key to the stability of the market, and even the key to the continuous upward price.

（Figure below: New and destroyed chips on the chain）

From here, the new chips on the entire chain have not increased, but the destroyed chips have increased. The market is currently sluggish, and there has been no significant increase in real gold and silver chips.

（Figure below: Illiquid whale positions）

Illiquid whales show a little selling, which may be slightly related to the recent compensation event and the German government's selling. If there is no subsequent accelerated selling, it is not a big problem, and you need to pay attention to this data.

（Figure below: Total spot selling pressure）

Relative to the short-term right side safety considerations, it may be necessary to wait until the total spot chip selling pressure drops to the green range.
The haze in the market has not been removed, and it takes time to digest it continuously.

Mid-term exploration

• Analysis of short-term holder behavior
• Accumulation trend points
• Liquidity supply
• BTC exchange trend net position
• BTC profit supply cycle

(Figure below: Analysis of short-term holder cost structure)

The red and blue lines are: the lower and upper limits of the cost of short-term participants
Yellow line: the average cost of short-term participants
The following inferences can be drawn around the distribution of short-term participant costs:

(1) The cost of short-term participants may be related to the changes in bull and bear markets. For example, in the market from the second half of 2022 to the beginning of 2023, the short-term cost was below the market price for a long time, which may be a signal of surrender.

(2) When the market price is below the lower limit of the short-term cost, it may indicate a low point adjustment area or an area where short-term participants formally surrender;

(3) The upper limit of the market can be calculated by the cost of short-term participants. The market price may be 35%-50% higher than the cost of short-term participants, which will be the relative limit of market profit. Of course, all conditions for calculating the upper and lower limits of the market are subject to the stock conditions. If the market is in an incremental state, factors such as market value growth and liquidity increase, many theoretical calculations about the upper limit may fail.

(Accumulation trend score in the figure below)

In the current accumulation trend, the whale addresses of 1k-10k and <10k show signs of slowing down accumulation, and the large addresses of 100-1k have accumulated and increased their holdings, and the current score has reached about 0.6.

It is possible that the main body of current market accumulation is large households, and the accumulation of the market may still be in the process of repair, so that the state of the entire market is not particularly stable.

（Figure below: Liquidity supply）

From the perspective of liquidity supply, the recent rate of liquidity reduction is slowing down.
If the situation continues to improve, the market will have a certain recovery performance, which still needs to be observed.

（Figure below: BTC exchange trend net position）

There is still a large amount of BTC accumulation in the exchange, forming a large potential selling pressure, and the differences in the market are still continuing.

（Figure below: BTC profit supply cycle）

After a large correction, the current profit status of the market has dropped below 80%.
It is possible that under the condition of reduced profit impact, the profit selling pressure of the market that continues to slide downward will be relatively slowed down.

Short-term observation

• Derivatives risk factor
• Option intention transaction ratio
• Derivatives trading volume
• Option implied volatility
• Profit and loss transfer volume
• New addresses and active addresses
• Bingtangcheng Exchange net position
• Yitai Exchange net position
• High-weight selling pressure
• Global purchasing power status
• Stablecoin exchange net position
• Off-chain exchange data

Derivatives rating: The risk factor is in the green area. Derivatives have low risk.

(Figure below: Derivatives risk factor)

ETH risk factor is still in the green area. Although there are conditions for short squeeze, the probability is low. The current market is still expected to be a continuous shock.

（Figure below: Option intention transaction ratio）

Option trading volume has increased significantly, and the proportion of put options is in the middle.

（Figure below: Derivative trading volume）

Derivative trading volume is at a low level.

（Figure below: Option implied volatility）

Implied volatility has increased significantly.
Sentiment rating: neutral

（Figure below: Profit and loss transfer）

At present, the most panic period in the market has passed, and the panic sentiment (orange line) has turned this week. At the same time, the positive sentiment in the market (blue line) has also continued to decline. It is expected that the market will show more continuous fluctuations.

（Newly added addresses and active addresses in the figure below）

Newly added and active addresses are at low levels.

Spot and selling pressure structure rating: BTC has medium inflow accumulation, ETH outflow accumulation.

（Bingtangcheng Exchange Net Position in the figure below）

BTC Exchange Net Position has medium inflow accumulation.

（E-Tai Exchange Net Position in the figure below）

ETH Exchange Net Position has continuous outflow.

（Figure below: High-weight selling pressure）

There is no high-weight selling pressure at present.

Purchasing power rating: Global purchasing power is in an outflow state as a whole, and stablecoin purchasing power has rebounded significantly.

（Figure below: Global purchasing power status）

Currently, the purchasing power in the Americas is the same as last week and is still in a state of loss. The market is more inclined to fluctuate during this period.

（Figure below: USDT exchange net position）

USDT exchange net position has a medium outflow.
Off-chain transaction data rating: There is a willingness to buy at 53,000; there is a willingness to sell at 70,000.

（The figure below is the Coinbase off-chain data）

There is a willingness to buy at a price of 50,000~53,000;
There is a willingness to sell at a price of 70,000.

（The figure below is the Binance off-chain data）

There is a willingness to buy at a price of 50,000~53,000;
There is a willingness to sell at a price of 70,000.

（The figure below is the Bitfinex off-chain data）

There is a willingness to buy at a price of 50,000~53,000;
There is a willingness to sell at a price of 70,000.

Summary of this week:

Summary of news:

1. The interest rate swap market has once again fully priced in two interest rate cuts by the Federal Reserve before the end of the year.

2. From employment to economic data, the overall economic situation has proved that the economy is cooling down. The remaining is to pay further attention to the CPI data in the next one to two months, which is the key to determining whether there will be one or two interest rate cuts this year. If the data is relatively positive, that is, CPI falls again, the market may have expectations of two interest rate cuts.

3. Whether from the macro situation or from the evolution of the cycle, the current price is a relatively suitable and low position, if the time is extended.

4. The current market sentiment is relatively panic, partly due to the problem of compensation and partly due to the problem of government selling. The panic in the form needs to wait for the market to squeeze. When the emotional squeeze is completed, it will slowly return to a normal level, and then a second price repair will be carried out with future expectations and cyclical evolution.

Long-term insights on the chain:

1. Long-term participants have started to increase their holdings again, mainly those who have been holding for 1-2 years;
2. No real money and silver chips are being created, which means that the real new forces are not yet fully in place;
3. The whales are selling relatively slowly;
4. From the perspective of safe buying on the right side, it may take a little time.

• Market tone:
The haze of the market has not been completely removed, and it takes time and more funds to slowly digest it.

Medium-term exploration on the chain:

1. The current market is below the short-term cost price and is in the adjustment area;
2. The main body of market accumulation is large households, and the accumulation state may still need to be repaired;
3. The speed of reducing liquidity supply is slowing down;
4. There is still a lot of potential selling pressure in the market;
5. BTC's profitability has declined, and the profit impact in the market may slow down.

• Market tone:
Adjustment, test
The market still needs to restore the accumulation state, and at the same time, it is necessary to gradually digest the impact of potential selling pressure, which will bring tests to the market.

On-chain short-term observation:

1. The risk factor is in the green area, and the risk is relatively low.
2. The number of newly added active addresses is relatively low, and the market activity is low.
3. Market sentiment rating: neutral.
4. The overall net position of the exchange shows that BTC has a medium inflow accumulation and ETH has an outflow accumulation state.
5. The global purchasing power is in an outflow state as a whole, and the purchasing power of stablecoins has rebounded in large quantities.
6. Off-chain transaction data shows that there is a willingness to buy at 58,000; there is a willingness to sell at 70,000.
7. There is a willingness to sell at 70,000. The probability of not falling below 51000~53000 in the short term is 53%; the probability of not rising below 61000~64000 in the short term is 70%.

• Market tone:
After a round of decline, the current market sentiment has turned from panic to neutral. Since the market purchasing power and positive sentiment have not recovered, the market is expected to remain volatile this week, and the probability of sustained and sharp decline is low.

Risk warning:
The above are all market discussions and explorations, and do not have directional opinions on investment; please be cautious and prevent market black swan risks.

This article comes from a contribution and does not represent the views of BlockBeats.

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