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Violent washing in the middle of the bull market, then playing music and dancing.



In April 2021, Bitcoin ended its strong rise for 6 consecutive months and recorded a negative monthly line. At the same time, it has been in the 45,000-60,000-dollar line for 10 consecutive weeks and fluctuated violently, failing to set an effective new high. The panic triggered a short-term sharp adjustment in the market. But we firmly believe that this decline is still just a retracement in the middle of the bull market, and the market is still continuing in the second half of the bull market.

The reason for the sharp drop this time is mainly due to the tight leverage level in the market and the short-term shortage of liquidity. From the TradingView data in the figure below, we can see that the funding rate of Bitcoin contracts has risen sharply in the near future, far exceeding the market The highest level in February-March, the market has once again accumulated significant leveraged positions. At the same time, we are concerned about the synchronous surge in off-exchange leveraged interest rates. The liquidity of the lending market is extremely tight, but the trading volume on the exchange has not increased significantly. The market's leveraged positions and tight liquidity have magnified the vulnerability. It triggered a stampede of killing more and more, causing a short-term sharp adjustment in the market.

Coinbase CEO: The team is working hard to expand capacity to cope with the sudden increase in traffic The bull market is both stimulus and pressure: News on November 18, Brian Armstrong, CEO of cryptocurrency exchange Coinbase today tweeted that the team is working hard to increase capacity, including servers and customers end to deal with the sudden increase in traffic. Running in a bull market is the coexistence of stimulation and pressure. It is reported that the price of Bitcoin rose in the early hours of yesterday, and Coinbase's website and mobile applications were temporarily unable to load. [2020/11/18 21:09:27]

Data source: TradingView

Opinion: Bitcoin dominance falls below 60% or a bull market is ahead: Encryption analyst The Moon tweeted today that Bitcoin’s dominance in currency market capitalization has fallen below 60%, which may be a signal that we will see To a bull market like 2017/2018. what do you think? What altcoins are you buying right now? [2020/8/13]

Data source: CryptoQuant

From a short-term perspective, Bitcoin has already proven its bottom at $46,000. This price is the bull-bear dividing point of Bitcoin MA120. It is an intensive cost area in the past quarter. It has strong support and is difficult to fall break. At the same time, we see that the funding rate of Bitcoin contracts has rapidly turned from a positive extreme value to a negative value, and the market sentiment has turned from extremely optimistic to pessimistic. .

The short-term market shock has greatly dampened investor sentiment, but we believe that the New Year’s Eve bull market is still continuing. This decline is just a retracement in the bull market, and the data analysis on the chain also supports our judgment.

Analysis | TI index soared 12.58%, and BTC’s 60-day volatility was in the peak range of the bull market: According to TokenInsight data, the TI index, which reflects the overall performance of the blockchain industry, reported 606.59 points at 8:00 Beijing time on May 12, an increase of 67.8 points compared with the same period yesterday points, an increase of 12.58%. In addition, among the 28 sub-industries closely watched by TokenInsight, the storage technology or protocol industry has the highest increase within 24 hours, with an increase of 15.4%; the anchor and reserve industry has the highest decrease within 24 hours, with a decrease of 0.15%.

According to monitoring, the number of BTC active-zce addresses has increased by 2.23% compared with the previous day, while the number of transfers has decreased by 1.56%. BCtrend analyst Jeffrey believes that under the market manipulation of policy cooperation, BTC’s 60-day volatility has reached 86%, which is in the peak range of the bull market, and attention should be paid to the risk of large market fluctuations.

According to the quantitative analysis of BitUniverse, BTC is about to fluctuate in a wide range between 6300$-7500$, and it can sell high and buy low to make a profit. [2019/5/12]

From the HODL Waves picture below, we can see that this market decline is a relatively thorough short-term wash. The proportion of the total number of users with a currency holding period of less than one month has dropped significantly, returning to the level of the same period in September 2017. A large number of short-term currency holdings Users left the market at a loss during this decline, which alleviated the tight liquidity situation in the market to a large extent.

Analyst: The bull market of XLM may be coming: According to the analysis of AMBCRYPTO analysts, the trading volume of XLM has been showing an upward trend from the beginning of April to April 22, and the price of the currency has gradually stabilized since the 22nd. With the overall good performance of the digital currency market this week, XLM managed to keep the increase above the average increase of the currency. NewsBTC analysts have said that the potential reversal point for SLM is between $0.27 and $0.30. The price of XLM fell slightly, with an average price of $0.43, a drop of 0.37%. [2018/5/6]

Data source: Glassnode

Observing the profit indicator NUPL on the chain during the same period, we found that the current floating profit ratio of currency holders has also seen a large retracement, which is similar to the retracement in January 2021 and still lower than the retracement in the same period in June 2020. The cleaning effect of short-term floating chips is relatively considerable.

Data source: Glassnode

The fundamentals of the Bitcoin network also support the judgment of the short-term retracement. We observe the MVRV Z-Score. After the recent market decline, the price of Bitcoin has returned to the "network fair value", and the valuation level has returned to a position close to the neutral equilibrium , and there has been no extreme overvaluation trend in the market in the past six months. Based on the above data, we believe that the second half of the bull market is still in the process, and the market outlook is still worth looking forward to.

Experienced investors are often very familiar with the saying that "the bull market falls sharply". The violent shock itself is a typical feature of the market's development into the deep water area. In our March strategy report "Crossing the Trillion Market Value Threshold and Preparing to Embrace the Main Shenglang", we clearly stated that this year's New Year's Eve market has entered the second half based on the cyclical perspective of previous market interpretations. The huge market shocks in the past month have clearly confirmed our According to the judgment, the inflection point of bull market acceleration has arrived, and we will soon usher in "crazy joy".

With the in-depth evolution of market conditions, the proportion of short-term users in the market will further increase, and their frequent entry and exit of the market, cutting meat or chasing prices will further amplify market volatility. According to the market performance in the same period of 2017, we believe that there will still be 2 -Three violent shocks with an amplitude close to this round of adjustments, high-leverage trading users need to carefully assess short-term market risks.

In addition, we are concerned that the exchange rate of EHT/BTC has accelerated the inflection point, the share of Bitcoin has obvious signs of decline, and the market has begun to spread logically in the second half. The overall liquidity level of the market will determine the continuity and space strength of the market. We also It is necessary to continue to pay close attention to the marginal liquidity of the leveraged trading market and new buying forces.

From the perspective of demand and supply, in the latest quarter, the growth of new funds in the market market was relatively flat, and the increase in holdings of industrial capital and Bitcoin fund products was relatively small. The supply of funds and funds are in a tight state, and the overall liquidity is relatively tight, so we believe that the endogenous market still needs to continue to clean up leverage and squeeze out liquidity through continuous huge shocks, so even if we are optimistic about the market outlook in the long term, but in the short term We believe that the market may still be caught in a volatile trend for a period of time, and this kind of turbulence will also be difficult to predict in advance, and it needs to be dealt with patiently. From the perspective of supply, the data on the chain shows that in the past quarter, some long-term currency holders have reduced their holdings, but according to historical data, the proportion of long-term currency holders is not large, and has not reached The historical extreme, and the potential of the continuous influx of short-term users will continue to drive the market up, but we need to closely observe the behavior of long-term currency holders and the peak level of short-term new users in the next 1-2 quarters.

To be sure, the music hasn't stopped yet, let the market continue to play music and dance.


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