The macroeconomic situation is like a double-edged sword, which continues to stimulate FOMO sentiment in the crypto market. The market value of stablecoins has increased for the first time this year. Where does this capital come from? Will growth continue in the future? Can Bitcoin break through this year’s all-time highs? The market is in a state of anxious waiting.
As of the time of writing, the price of Bitcoin is around $30,500. At 6 a.m., the market set off a wave of sentiment-driven gains, breaking through $30,990 at noon, but then fell back and entered a period of volatility, and trading volume began to decrease.
From a technical perspective, we are faced with a limited data supply. The 1-hour Bollinger Bands show relatively large exposure, and although the price has pulled back, it is clear that selling has not increased as trading volume has decreased. The 4-hour Bollinger Band returned to below the 4-hour Bollinger Band due to price correction. If market sentiment factors are excluded, it means that a round of correction may be ushered in. However, although the market is shrinking, there is no obvious selling pressure. The daily Bollinger Bands have broad exposure. Overall, technical indicators, especially Bollinger Bands, have lost a certain reference value.
In-depth analysis of transaction depth shows that as the price of Bitcoin continues to rise, the transaction depth above is gradually increasing. The current depth near $32,000 is about $50 million, and the depth near $28,500 has also increased to about $40 million. The increase in transaction depth on Monday clearly shows that market activity is gradually increasing. Positions above $30,000 seem quite firm, and the market's long and short battles are becoming more intense. Despite the entry of short-term funds, for long-term holders, wait-and-see sentiment is still prevalent. The selling pressure above mainly comes from short-term holders.
At present, the entire crypto market is facing an awkward and contradictory situation. From the perspective of macroeconomic data, whether it is the high interest rate policy of the United States, the expected rate hike at the end of the year, or the possible rate cut next year, it has constituted a potential negative for the entire investment market, including the crypto market. Although the market has gradually accepted this situation, the core problem is that traders do not have much available funds under high interest rates. Coupled with the tension in the Middle East, although it has eased slightly due to Israel's cessation of ground offensives, the US dollar index is still weakening, but it is still sucking blood in the US bond market. In this case, the market outlook is not optimistic from a macroeconomic perspective. In particular, the situation in the Middle East has not been resolved, and there is a potential risk of oil and economic crises. In this mood, people should have been more cautious, and funds would have chosen at least relatively stable US dollar index and US bonds for risk aversion.
However, the fact is that the Asian market has been filled with FOMO sentiment since last week, and market participants have obviously continued to pour in. Since last week, the circulating supply of USDT, the crypto market’s main stablecoin, has increased by $1 billion, the first increase this year. This shows that financial liquidity is increasing, but the scale and sustainability of this increase are questionable. At the moment, the market seems to be waiting for some outcome tonight. However, while waiting, the market continued to fluctuate and rise, selling pressure significantly reduced, and market sentiment increased. Macroeconomics and markets showed divergence. Although many optimists see this as a sign of a bull market
Why do you say that? Because the current market sentiment is waiting for a result, that is, the U.S. court authorization that was postponed last week to Monday this week. The explanation is simple. Grayscale won the case against the SEC, but the SEC chose not to appeal. This court session will ask Grayscale whether it is willing to continue to appeal, but it is basically unlikely to appeal again. The key question is that since the SEC chooses not to appeal, its attitude towards Grayscale ETFs will become clear, whether to directly approve or conduct review.
In the long run, this is good news for Grayscale's ETFs. What is certain at present is that according to Mr. Ni’s analysis, if Grayscale ETF’s 19B-4 document chooses the review process, it will take up to 240 days for the review period. So the Grayscale ETF is either 0 or 240, which is a long process. Of course, this will also bring a wave of positive sentiment towards the eventual approval of the Grayscale ETF, but direct approval is unlikely in the short term. Will markets remain highly enthusiastic following this surge in sentiment, and will more money be pouring in?
Let's analyze the source of funds. According to the situation from last week to Monday, the funds were initially brought in by the market's FOMO sentiment. This part of the funds may be impulsive investors who enter the market in pursuit of short-term profits. Through data observation, the recent Bitcoin trading volume is mainly from the FDUSD/BTC trading pair, and the liquidity of FDUSD is mainly concentrated in southbound funds, that is, funds from Hong Kong or parts of Southeast Asia. The recent increase in trading volume mainly occurred during the opening hours of the stock market, while trading volume decreased during the stock market closing period. In contrast, the performance of A-shares and Hong Kong stocks is relatively poor, so some funds may be transferred from the stock market to Bitcoin. This is also one of the reasons for the recent rise in Bitcoin prices.
Finally, due to the tense situation in the Middle East, there has been a rise in risk aversion before. Although the encryption market is a highly volatile venture capital market with limited risk aversion, Bitcoin is a special case and has attracted some risk aversion funds. In addition, due to the previous real estate crisis and the long-term high interest rate policy of the United States, the performance of softmei coins in the offshore market was relatively poor. Therefore, some funds chose to withdraw to Hong Kong. This part of the funds is likely to flow into other assets that are relatively more risk-resistant. , and among the many choices of Hong Kong investment banks, Bitcoin is one of them, although Bitcoin’s proportion is not the highest. These sentiments are likely to drive capital inflows into crypto markets, thus underpinning the recent gains.
Whether it is short-term FOMO participants, stock market funds, or safe-haven funds, most funds are unlikely to generate significant selling pressure when faced with the possibility that ETFs may need to go through normal procedures. Although some funds have been bottom-fishing during this period, the price of Bitcoin has risen from $27,000 to the current $30,500, and some people have made profits, they may choose to exit after market sentiment subsides.
Microtrading currently holds about $4.6 billion worth of Bitcoin, with a floating profit of about $150 million. Although the company has no precedent for selling, their purchase method is usually to chase the rise, and the current cost is about $29,000. If the ETF is likely to be postponed until next year, will they choose to reduce their holdings? Meitu is transforming its AI business and holds about $100 million in Bitcoin. Will it take the opportunity to sell? These are all potential risks. In this uncertain situation, we should face risks cautiously instead of blindly chasing the rise.
In terms of contracts, the current technical aspects have almost lost their reference value. This is not to say that it is completely lost, but that the current reference value of technical indicators, especially Bollinger Bands, has been greatly reduced. While Bitcoin’s trading depth has increased, it has increased to such an extent that volatility in the $30,000-$31,000 range is still likely to be significant. In this case, if you choose to open a position, you should either set a stop loss or be prepared to be hit by sudden fluctuations. Don't have any illusions about not setting a stop loss. It is particularly important to note that tonight is working time in the United States, and important news may be released at any time, especially regarding the SEC's attitude towards Grayscale, which may cause violent fluctuations in the market. Therefore, you need to be extra cautious when trading contracts, especially when the news may be volatile.
On the spot side, as the price of Bitcoin rises, major public chain tokens such as Ethereum and blockchain infrastructure tokens have increased to varying degrees. However, don't blindly chase the rise, choose carefully. The current rally is largely driven by Bitcoin, and if Bitcoin sentiment subsides, coins with larger gains in the short term could be affected. At present, the spot market is suitable for short-term trading. If you plan to hold it for a long time, be prepared to be trapped.
The market is in a state full of risks, technical indicators have lost part of their reference value, and the divergence between macroeconomic factors and market sentiment is worrying. Handle risks carefully, especially in contract trading, and have a clear trading strategy when choosing spot positions. Continue to monitor the market and remain vigilant.
Investment is risky, so be cautious when entering the industry
PS: The macro idea comes from Uncle Cat
