Market analysis report (weekly brief version)

– 09 – 2021

Weekly summary :

1. The  reserve balance of TC and E TH exchanges continues to decline, and the trend of currency withdrawal continues. The increasing demand for buying is the main driving force for the upward trend of currency prices.

2. The  fund rate in the futures market is still negative, and the Korean kimchi premium index continues to fall, indicating that the speculative enthusiasm of retail investors has not yet heated up. The superimposed coinbase exchange premium rate rebounded back to a positive number and hit a three-month high, indicating that the main driving force for this wave of rise is the promotion of the spot and U.S. market. This is a healthy trend driven by real spot demand.

3,  hold out the amount of 1 000 – 10000 Mei B TC total holding money balances addresses since May .19 years, bought a total of 2 Wanmei B TC , and 3- range to form a dense million dollars change hands . If there is no large negative, 3- million dollars will be the bottom support area long-term.

4. The  balance of the TC miner’s wallet continues to grow, and the untouched coins have reached a new high since 2012 , indicating that the miners have a clear willingness to sell.

5.  After the completion of the ETH London hard fork upgrade, a brief deflation was formed that night, and then the net block issuance returned to a positive value. The main reason for the deflation that night was the large-scale N FT investment that increased network congestion and other five major reasons. At present, although the Ethernet Square has deployed E IP1559 agreement, but the inflation rate is still between 4- between% complete and the difficulty bomb into E TH .0 later stage, the inflation rate will be down sharply and is expected to enter deflation. Overall, the deployment of IP1559 will still reduce the inflation rate, which is positive for the currency price.

6,  Expectation, the report said, compared to 2 021 Nian 2 Yuefen currency price at 4 .5 rises million dollars trend is mainly driven by the circumstances futures speculation is different is that the current trend is mainly driven by the spot market-based, and Fund participation in the coinbase exchange is also extremely active. Over the past few months, there have been a large number of giant whales attracting more than US$30,000. We believe that the current trend is benign and healthy. Before retail investors have shown sufficient enthusiasm , Maintain an optimistic judgment on market trends in general.

7.  Risk warning: the uncertainty that may be brought about by US regulatory policies.

For details, please read the main body of this report:

1.  Fundamental analysis:

TC fundamental analysis

Since late July, the BTC balance in the exchange’s internal reserves has undergone a short period of large withdrawals, with about 100,000 withdrawals in a day, which is the largest single-day withdrawal volume since June 2016. At present, the BTC reserve balance in the exchange is maintained at about 2.47 million, and the reserve balance has been reduced by more than 100,000 since the peak of this round, showing the strong buying power of the market.

shzwAIMnHqWC8hblViEX0V5l8r3bNe6nnger9Adu.png

Figure 1: The pressure on exchanges to withdraw BTC is rising, and the reserve balance is at a low point in nearly a year

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Figure 2: Recently, there have been 60,000 withdrawals in a single day on the exchange, which is the largest amount of withdrawals since June 2016

The ratio of the number of bitcoins remaining on the current exchange to the total number of bitcoins in circulation has dropped to 13.28%, which is close to the lowest point on January 2, 2021, and this trend has continued to strengthen since mid-May, reflecting current transactions There are fewer and fewer bitcoins remaining in the exchange. The bitcoin on the exchange is the main component of the market circulation. The less and less share of the bitcoin on the exchange indicates that the number of bitcoins available for trading in the market is gradually decreasing, resulting in Continuous supply shock (Supply Shock), in the case of increasing demand and declining supply of circulating disks, will play a very positive role in the fundamentals of Bitcoin, and will promote the price of Bitcoin to rise in the long run.

As of the writing date of this report (August 8th), the price of BTC was at USD 45,000, and the last time it rose to this price was February 2021. At that time, the funding rate was at an abnormally high position, and the growth of long-term people and positions accelerated, indicating that the price at that time was mainly driven by futures buyers. Due to strong buying demand, although the current round of the market is very fast, the BTC perpetual futures contract funding rate is still at a very low level. It shows that the current wave of rising trend is still in the early stage of the market outbreak, mainly driven by spot buyers. It is the real demand and the imbalance of supply and demand that caused the currency price to rise, and the rise is generally healthy.

Ycj3Nq7r3H7xYPtB98rTakq2toMEFbRKgRYn8KO6.png

Figure 3: BTC futures funding rate is still at a low level, indicating that this wave of rise is mainly driven by spot buyers, and the rise is healthy

So far, the main driving force of this wave of rise has come from the promotion of spot buying, and spot buying has been in a state of being net bought by whales during the 3-month bottom shock. For addresses holding 1,000-10,000 BTC, their total holdings have increased by 240,000 in nearly 3 months. The continuous increase of giant whales has aggravated the scarcity of chips in the market, leading to the continuous strengthening of the supply shock trend (supply shock, refers to the continuous buying of coins, resulting in the gradual decrease of the currency available for trading in the market, leading to the phenomenon of supply and demand imbalance) .

zB4bMkR95Q2jo8U3SuykxQdehIeXoFsaCKAHheMH.png

Figure 4: BTC futures funding rate is still at a low level, indicating that this wave of rise is mainly driven by spot buyers

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Figure 5: This round of correction has intensified the trend of weak hands transferring bitcoins to strong hands, resulting in more obvious imbalances between supply and demand, strengthening the trend of supply shocks, and conducive to the rise of currency prices

Judging from the distribution map of UTXO, in this round of decline, the range of 30,000 to 40,000 US dollars has formed a dense and tall “wall”. This “wall” is the trace of the market’s intensive change of hands in this range. Then, based on the above information, we can think that there is a lot of money to buy bottoms in the range of 30,000 to 40,000 US dollars, and this position will become a long-term support area in the future.

loAHh5Kd9LKaZlw7xoVFpZ5P9c0NwVybW5e1mfrO.pngFigure 6: US$30,000-40,000 will be the bottom area in the medium and long term

Miners continue to choose to hoard bitcoins, and the balance of miners’ bitcoin wallets continues to hit a new high in nearly three months, sending a signal to the market that miners are still optimistic about the currency price. We can confirm the same conclusion from the volatility trend of Bitcoin that has been unearthed. In the Miners unspent supply histogram chart, the horizontal axis represents block height (block time), and the vertical axis represents coinbase utxo (which can be understood as coins that have never been moved after being mined). How many coins have never been moved since they were mined. Since 312 last year, the number of bitcoins untouched by miners has risen rapidly, exceeding the 2012 level. It shows that the willingness of miners to hoard coins is increasing, and the awareness of long-term holding is constantly increasing.

4U4hDZFJOTUKqy0iQqDr7eYSZOlxzY7pXTokjUrO.pngFigure 7: Miners continue to choose to hoard coins, and the wallet balance hits a new high in several months

uQMTxc2Ccra2ARm4Z2THyVaSdGHYv71Naca7tIg8.pngFigure 8: Since 312 last year, the group of miners has gradually become coin hoarders and long-term investors

ETH fundamental analysis

ETH continues to maintain the trend of withdrawal. In the past 7 days, the overall change in the deposit and withdrawal of ETH on the exchange has not been large. The balance of ETH on the exchange has remained at about 19.6 million, which is only no significant increase or decrease from last week. However, the overall reserve balance in the ETH exchange shows a continuous downward trend, which is beneficial to the upward trend of the currency price.

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Figure 9: The exchange ETH balance has not fluctuated much in the past 7 days, maintaining at around 19.6 million

The recent event of ETH that has attracted much attention is no more than the London hard fork upgrade, in which the EIP-1559 protocol is the focus of attention. The EIP-1559 protocol changes the fee model of Ethereum, which is currently based on a base fee + tips model, in which the basic fee will be destroyed. According to the current destruction rate, 2-3 ETH are destroyed every minute, and the current annual inflation rate is around 4.5%.

Ilc6uxPy1CO21qqZHE5q1FeIlPe2KoDLiKHlHari.png

Figure 10: The ETH destruction rate is maintained at about 2 per hour

On the night of the hard fork upgrade on August 5, ETH experienced short-term deflation, but then the net issuance rose back to a positive number. There was a brief deflation on the night of August 5, mainly due to five reasons:

1. There are some large-scale NFT airdrops in progress, causing network congestion;

2. Many service providers (such as exchanges) have disabled some functions (recharge and withdrawal) during the network upgrade. Once the upgrade is completed and the network is stable, this suppressed demand will be released intensively;

3. Some miners set the Gas Limit below 30 million, making each block only use about 13.5 million Gas, which intensifies congestion; 

4. The ETH secondary market fluctuates and rises;

5. The user is sending a large number of transactions to try the EIP-1559 function.

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Figure 11: There was a brief deflation in the ETH issuance on the evening of August 5

According to the current fee payment situation, there is still a certain gap between ETH and deflation. After the difficulty bomb is completed, the difficulty of ETH mining will increase substantially, forcing miners to abandon the mining of the original chain, and Ethereum will switch to 2.0 POS. At that time, the inflation rate of ETH will drop significantly, and with the increase in demand and usage, the increase in basic costs will lead to a substantial increase in the amount of destruction, which may lead to deflation.

SHQlwfRZl0kRG1q31XT352M8jyEcCnxtegBlaLnd.png

Figure 12: The current annual inflation rate of ETH is between 4%-5%, EIP1559 can only reduce the inflation rate, and it is still difficult to achieve deflation

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Figure 13: The four stages of Ethereum’s upgrade (beacon chain, fee mode change, difficulty bomb, transfer to pos), it is expected to enter deflation after transfer to pos

2.  Outlook

The premium of “Kimchi” in South Korea has not risen significantly recently, but is still falling. Since South Korea does not have a well-known crypto fund and has a very strict capital control policy, this is a pure retail index. Combining the above information, we can find that the perpetual contract funding rate in the futures market is still relatively low, indicating that the current sentiment of retail investors has not been adjusted.

9g2EMXPmdd5QRR8LaPJRfUz8zLFUmENPjTt2qjfQ.pngFigure 14: South Korea’s “Kimchi Premium” Index reflects that current retail investor sentiment is still at a low level

The premium level of the US coinbase exchange relative to the Binance exchange hit a three-month high. The Coinbase exchange is the main battlefield for many institutional investors seeking regulatory compliance. In the past few months, the premium rate of the coinbase exchange has often fluctuated between negative and positive numbers. If there is a premium, the premium rate is not high. This time, the premium rate reached 0.15%, a three-month high, which is almost the same as during the bull market at the end of last year. It shows that the funds in the US market are stronger than those in the Asian market.

Based on the above information, this report believes that, so far, retail investors have not yet entered the frenetic mood, or even still in the stage of suspicion. Coupled with the fact that the rate of futures funds is still very low, it shows that the upward momentum comes from the promotion of the spot market, and that the funds in the US market are mainly promoted. Institutions continue to absorb funds at the bottom, aggravating the further imbalance between supply and demand, which is the fundamental reason for this rise. This is a very benign trend, and the market outlook continues to maintain an optimistic judgment.

izc0hUKVtHWtWjBxQGekitjsEHMPRzsv5alq959n.png

Figure 15: The coinbase premium rate hit a three-month high, indicating that this round of market quotations was mainly initiated by US investors

3.  Risk warning:

Regulatory uncertainty in the United States has increased.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/market-analysis-report-weekly-brief-version/
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