On the macro news front, there is a temporary pause in rate hikes for September, with the dot plot unchanged for 2023. There is a possibility of a small market movement during the rate hike gap in October, but the outlook thereafter remains pessimistic. Specifically, the interest rate for 2024 has increased from 4.6% to 5.1%, indicating a delayed timeline for future rate cuts, with expectations of a high-rate period lasting for 6 months or even longer. At this stage, aside from inflation and rate hike concerns, the US government faces an imminent issue due to funding problems, and it is once again at risk of a government shutdown as early as October 1st. The main reason behind this is internal disagreements within the Republican Party in the House of Representatives, which is essentially a game of US votes and positions. The US economy is currently in a state of uncertainty, with inflation and high interest rates on one side and the potential for a soft landing (economic slowdown) or a hard landing (economic recession) on the other. Many institutions and major investors are liquidating and reallocating to safe-haven assets. Historical experience tells us that this is a very dangerous point, and even the debt default rate is approaching the levels seen in 2008. The mainstream investment banks are essentially betting on a turning point after the deployment of AI innovations and the resolution of the US elections, followed by a loose monetary policy to stabilize the economy. Short-term AI regulation is also underway, with the US elections expected to be settled around the second quarter of 2024, and expectations for the rate-cutting cycle extending into the third quarter of 2024. The current trend of the US stock market is like climbing a cliff, it may continue to rise, but one wrong move could lead to a steep drop, and safety is the primary direction in the traditional venture capital market at this stage. Now, let’s take a look at the dynamics of on-chain data and changes in investor sentiment.
First, let’s take a look at the dynamics of long-term holders. The last time we mentioned long-term holders, there were signs of a short-term dip in chip accumulation. When Bitcoin dropped below $25,000, it successfully scared away some long-term holders who sold at a loss. Now, looking at the recent SOPR trend over the past week, we can see that there is once again a significant anomaly. Before the Fed’s interest rate decision on the 19th, there was a significant profit-selling anomaly among long-term holders (SOPR above 1 indicates profit selling among long-term holders, while SOPR below 1 indicates loss selling among long-term holders). During the mid-term to short-term period when the cost of long-term chips (155 days to within 720 days) was below $26,500 (from June 2022 to March 2023), it is highly likely that institutions or large players were hedging (there were two instances of a slow rise and sharp fall in the market in 2019-2020). Long-term chip behavior has temporarily returned to stability, and if hedging funds flow back into the market later on, there may be another short-term accumulation cycle.
Next, let’s look at the Taker buy-sell ratio. The Taker trend is very straightforward, with recent small rebounds occurring when prices are on the rise. However, during periods of consolidation and decline, the Taker value has consistently been below 1 (Taker value above 1 indicates a dominant bullish sentiment, while Taker value below 1 indicates a dominant bearish sentiment). This also serves as a clear demonstration of market buyer and seller strength. As long as the price reaches a certain point, there will be significant selling, especially when combined with the abnormal long-term chip data, there is a suspicion of manipulation, pumping, and profit-taking. Recently, Bitcoin prices have seen a slight rebound, maintaining above $26,000, but the Taker value remains significantly below 1, indicating a need to be cautious of the risk of a downturn.
Macroeconomic trends and short-term dynamics of on-chain data have been analyzed. Since August, the market has not been optimistic for the subsequent market. The macroeconomy is so, and even more so for cryptocurrencies. In September, compared to August, spot trading volumes have once again shrunk, and it is likely that major exchanges and market makers have been hit hard. If there are issues in the macroeconomy, the first to be affected are banks and financial institutions, and if there are issues in the cryptocurrency market, the first to be affected are exchanges and market makers. Of course, medium and long-term trends can only be speculated based on existing data and historical trends, and the subsequent economic developments will be influenced by inflation data, government policies, major events like the US elections, and the potential cryptocurrency market crisis may not necessarily lead to a full-blown crisis. The strategy of huddling together and weathering the winter seems viable, but regardless of the current situation and historical trends, the cryptocurrency market is indeed in a low period, and the current trend feedback indicates that there is a clear flight to safety in the cryptocurrency market. Although there has been a large withdrawal of funds recently, trading activity is not active, and it may simply be a matter of moving funds to wallets for safekeeping. Without a large influx of external funds, most of the behavior falls under internal adjustments, with limited impact. In October, there may be a small market movement during the macro gap period, and the cryptocurrency market’s spot ETF may once again be in play. If you participate, be sure to set stop-loss orders. (The above views are for reference only and do not constitute any investment advice.)
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