At the macroeconomic level, the Fed’s July F OMC meeting kept the benchmark interest rate and the scale of bond purchases unchanged, in line with market expectations. The Chairman of the Federal Reserve also expressed that the current level of employment and inflation data do not support interest rate hikes. However, the Fed discussed the conditions for T aper ( cutting debt purchases) and believed that there were some signs but had not yet reached the substantive requirements. Therefore, it is necessary to pay close attention to the August (Jackson Hall meeting) statement.
July Exchange B TC and E TH mention the currency trend more obvious, B TC cumulative amount of coins to mention ultra-60000, E TH is also a 1- 00 million-mentioned currency, indicating that the market is still money to buy the dips low.
B TC chain valuation metrics S SR , S TH – MVRV , N VT etc reflect market is extremely undervalued signs have emerged in July, the market price and a good buying opportunity. The proportion of long-term investors in E TH has gradually increased, and the N UPL indicator reflects that short-term investors have also shown signs of low-level surrender and exit, and the probability of market bottoming has greatly increased.
Changes in institutional holdings were relatively flat in July, and major institutions such as companies and funds maintained stable fluctuations in their holdings in July.
Operators market forces basically stabilized, but the progress of the miners sea deployment is still relatively slow and therefore were not so smooth recovery force, from the beginning of the current 8 7 0 E H / up to 1 S 20EH / nearby. With the rise calculate the force, is also the difficulty of mining Yue 3 7 1 second after the first day usher in policy suppress the increase, there is a positive boost confidence in the market. Throughout history, every time the difficulty of mining drops sharply, it is a good time to buy bottoms.
Since 6.4 the huge volume of $ near million dollars, the report said 6 .4 position near the million dollars is not the main ship, and when July bitcoin fell to near $ 30,000, there is a lot of money flowing into the whale wallet , And the trend of withdrawing coins on exchanges has increased significantly. We believe that the main players are still optimistic about the market outlook and are buying bottoms. The vicinity of US$30,000 is expected to become a medium and long-term support area for this round of adjustment.
1. The macro environment
There are signs of debt reduction, but the expected conditions have not yet been met. It’s too early to raise interest rates.
In the July FOMC meeting, the Federal Reserve kept the federal funds target rate of 0-0.25% unchanged, and maintained the scale of bond purchases unchanged, in line with market expectations. In this FOMC statement, the biggest change is the addition of “the economy has made progress toward the goal of reducing debt purchases (has made progress), and the committee will continue to evaluate this progress at the next meeting.” This statement It was the first time that it appeared in a meeting statement, reflecting the Fed’s belief that the conditions for Taper are becoming more mature, but they are not sufficient at the moment, and we still need to wait for a while. This can be seen as the Fed is blowing the air for Taper.
Summarizing the Fed’s July meeting on interest rates, it is believed that the conditions for curtailing monetary policy are favorable for the long-term. However, the US dollar meets the substantive requirements, which is only one full employment and inflation target from Taper. There is no change in the wording of the inflation issue, and the description of “inflation process” has been added, stating that it has not entered the “inflation process” at present, which corresponds to “temporary inflation”. The wording of the job market has not changed much, Powell still expressed strong confidence in the job market. Not worried about the Delta epidemic, saying that “one wave is weaker than one wave.”
This report believes that considering that the fundamentals of the U.S. economy currently has an environment for monetary policy tightening, and the Fed’s statement has not undergone a directional change, it is still not appropriate to underestimate the possibility of the release of Taper expectations from August to September. Therefore, we need to pay close attention to the Fed’s statement in August. However, it is only at the stage of arbitrage reduction in debt purchases, and it is still very early to raise interest rates.
2. Data on the chain
1. Exchange deposit and withdrawal
(1) BTC exchange traffic
In July, the Bitcoin reserve balance of centralized exchanges fluctuated greatly, showing a volatile downward trend. From July 1 to July 10, there was a net outflow (net coin withdrawal), with a net outflow of 38,000 coins. From July 10 to July 19, the exchange BTC reserve balance suddenly increased. The coinbase exchange net inflow was close to 30,000, and the exchange BTC reserve balance hovered around 2.5 million for a few days. Since July 27, the exchange reserve balance has dropped sharply, with a net withdrawal of more than 60,000 coins, which fluctuated downward in the next few days. As of July 31, the balance of BTC reserves on all centralized exchanges was 2.45 million, a decrease of 2% from May.
The decline in the exchange’s BTC reserve balance is related to the intensive accumulation of funds at a low level. The main force in the market deliberately pressured the plate to create panic, and the giant whales were buying intensively at around $30,000. In the past 5 weeks, the total position of 100BTC-10000BTC addresses has increased by 130,000 BTC, and 40,000 BTC have been bought in the past 10 days alone.
(2) ETH exchange traffic
In July, the exchange ETH reserve balance showed a downward trend as a whole. In July, the exchange ETH reserve balance decreased from 20.62 million to 19.73 million, ending the trend of slowing down more than a month of withdrawals.
The amount of Ether pledged by the Ethereum 2.0 beacon chain deposit contract increased by 400,000 in July, and the number of ETH locked in DeFi increased by 530,000 in July. The growth of DeFi and beacon chain pledges has accelerated the trend of ETH withdrawal from exchanges.
2. On-chain indicators
(1) Indicators on the BTC chain
The Stablecoin Supply Ratio (SSR) indicator is also known as the “Stablecoin Supply Index”. This indicator is the ratio of the market value of BTC to the total market value of stablecoins and can be used to reflect the abundance of market funds.
When Bitcoin hovered around $30,000, the value of this indicator fell to 8, which means that the market value of BTC is about 8 times the total market value of stablecoins. This indicator hit a new low in the past year, at the level before the start of the bull market in October last year. The lower the ratio, the larger the market’s stablecoin scale, the higher the BTC’s market capitalization scale, which means that the market “bullet” is more abundant.
MVRV (market-value-to-realized-value) is the ratio of the market value of the position to the realized market value. Realized market value is the market value of investors when they move on the chain (realize cap), which reflects the average on-chain movement value of all investors in the market, and can also be regarded as the fair value or average value of the on-chain movement.
When the market value of the position is higher than the average value of all investors moving on the chain, it indicates that the valuation has begun to rise, and when it reaches a certain level, it indicates that the current market price is much higher than the average price of the tokens transferred on the investor chain. , The valuation is high, the bubble is large, and there is a risk of falling.
When the market value of the position is lower than the average value of all investors moving on the chain, it indicates that the valuation is gradually decreasing. When it reaches a certain level, it indicates that the current market price is far lower than the average price of tokens transferred on the investor chain. , The valuation is lower, and the bottom is more likely to be proven.
STH-MVRV refers to the MVRV value of short-term holders. A very obvious feature of short-term holders is that when the market is good, they will be greedy influx, and when the market is bad, they will panic and surrender. Therefore, the MVRV value of short-term holders has obvious sharp peaks and troughs. When the STH-MVRV is higher than 2 or more, it represents the high valuation of the market bubble; when it is lower than 1, it is undervalued. When it falls below 0.75, it represents a serious underestimation. It is currently near 0.75, indicating that the current short-term investors have suffered serious losses, or the gradual departure of the market has caused the market value of their positions to drop to a very low level, and the probability of the bottom being proved is extremely high.
The NVT indicator is a relative valuation indicator of Bitcoin, and its principle is similar to the valuation method of stock price-earnings ratio. The NVT ratio refers to the relative ratio of the market value of Bitcoin to the dollar value of the number of Bitcoins transferred through the chain, that is, the market value of Bitcoin divided by the dollar value of the amount of money transferred on the chain, similar to the ratio of the market value of a stock to the net profit (price-earnings ratio) .
This indicator is used to reflect that the market value of Bitcoin exceeds the multiple of the value transferred on the chain. When the multiple is lower, it indicates that the market value of Bitcoin is closer to the value of Bitcoin network use, and the value of Bitcoin is underestimated at this time; on the contrary, when Bitcoin is When the market value is higher than the value of the amount of transmission on the chain, the higher the valuation.
When the indicator is lower than 1, it indicates that Bitcoin has entered the undervalued area, and every time it enters the undervalued area, it is a better time to buy. From May to July, this indicator was below 1 for a long time, and the market was severely undervalued. At present, the ratio of NVT price to Bitcoin price (premium rate) has bottomed out and rebounded, returning to above 1, and the market is gradually recovering from the downturn.
(2) Indicators on the ETH chain
The ETH locked in the smart contract has been on an upward trend since last year. Up to now, more than 25% of the total circulation of ETH has been locked in the Ethereum smart contract, and the number is about 9.5 million.
Since most of the ETH locked in the smart contract is used to pledge to provide liquidity, most of the ETH enters the loan agreement, such as AAVE, Maker, compound and other projects. The liquidity of this part of the locked ETH is poor, so the lock The increase in the position will reduce the few selling in the secondary market.
At the same time, the number of ETH in exchanges continues to decline, and the reduction in the number of remaining ETH tokens in centralized exchanges has a positive effect on the supply and demand relationship of ETH.
From the perspective of the holder structure of ETH tokens, the proportion of long-term holders (holding time greater than 1 year) is steadily increasing. In the past 12 months, the proportion of long-term holdings has increased from 56.38% to 62.18%. Even in the past two months, the proportion of long-term holdings has increased for two consecutive months.
The increase in the proportion of long-term holders is largely due to the prosperity of DeFi and the prosperity of the DeFi ecosystem, which has spawned demand for pledge/liquidity mining, arbitrage, etc. Even if you do not trade ETH tokens in the secondary market, you can get good results. Stable income, to a certain extent, shows that these investors are optimistic about the Ethereum ecosystem.
The relative unrealized profit and loss of short-term holders (STH-NUPL) indicates that short-term speculators have entered the surrender phase. The value of this indicator ranges from -1 to 1. When the value is positive, it reflects that the positions of short-term holders are generally profitable, and vice versa. In the recent decline, STH-NUPL continued to fall, indicating that it has basically entered a loss state from February to April.
This indicator can assist in judging short-term market enthusiasm. When the indicator is in an extreme state, it indicates that short-term holders’ enthusiasm for participation is also in an extreme state, extremely optimistic or extremely pessimistic. The emotional enthusiasm of this part of investors is often caused by market reversals. Important signal.
3. Institutional positions
In July, the holdings of various institutions around the world remained stable, with a total holdings of 1,474,800 bitcoins. Among them, quasi-ETF funds held 816,000, the national government confiscated and publicly held a total of 259,000, private companies held 174,000, and public companies held 215,000.
The overall position of fund institutions in July changed little, and the position at the end of July was around 800,000. These fund institutions include: 3iQ CoinShares Bitcoin ETF (BTCQ), 3iQ (QBTC), Grayscale Bitcoin (GBTC), ninepoint (BITC), Osprey (OBTC), Purpose Bitcoin ETF-CAD (BTCC), Purpose Bitcoin ETF-USD (BTCC) .U), Purpose Bitcoin ETF-USD hedged (BTCC.B), WisdomTree Bitcoin ETP (WBTC), 21Shares (ABTC), Bitcoin Tracker Euro (XBTE), Bitcoin Tracker One (XBT), Galaxy Bitcoin ETF (BTCX.B) , Galaxy Bitcoin ETF (BTCX.U), Iconic Funds Physical Bitcoin ETP (XBTI), VanEck Vectors Bitcoin ETN (VBTC), Coinshares Physical Bitcoin (BITC SW). Among them, the total holdings of exchange funds are 122,600, accounting for about 15% of all fund institutions’ holdings.
Most of the position data released by public companies have the average position price. From the data distribution point of view, 36 companies have announced their holdings of Bitcoin, of which 26 have announced input costs. Among these 26 companies, 9 companies have an average holding price of less than US$20,000, 7 companies have an average holding price of US$20,000-40,000, and 5 companies have an average holding price of more than US$40,000. Among companies with an average holding price of less than US$20,000, most of the holdings are between 100-1000. Companies with an average position price of USD 2-4 million have the largest holdings. Among them, Microstrategy and Tesla have tens of thousands of holdings, and Square, Marathon Digital Group and other holdings have more than 5,000 holdings.
4. Computing power market
Affected by China’s regulatory policies, Bitcoin’s entire network computing power plummeted to around 80EH/s in June, a 65% retracement from the historical high.
Nevertheless, due to the existence of the difficulty adjustment mechanism, the Bitcoin network ushered in the biggest difficulty reduction in history on July 3, and the network difficulty was lowered 4 times in a row. Coupled with the gradual deployment of machines in overseas mining markets, the whole Bitcoin network The computing power basically stopped the downward trend in July. Signs of recovery of computing power have appeared, but the Chinese miners’ machines have not yet been fully exported to the sea, and the deployment of foreign mines also takes a certain amount of time. Therefore, the recovery of computing power appears to be relatively slow, showing signs of a shock and weak recovery.
As of the publication date of this report, the hashrate of Bitcoin’s entire network has risen from 118EH/s, and the highest is above 120EH/s. The difficulty of the entire network is expected to usher in the first increase on July 31, with an estimated increase of about 4.7%.
In July, the selling intensity of miners got a large degree of environment, and the current willingness to reluctant to sell is relatively obvious. Although Chinese miners face the need for capital construction funds and even deleveraging and operating funds, which led to the dumping of Bitcoin in their wallets, from the data in the chart below, we have not seen signs of large-scale and high-frequency selling by miners. The most recent large-scale sell-off occurred in mid-June. Since then, the balance of miners’ wallets has shown an upward trend, conveying to the market that miners are still optimistic about the future price of Bitcoin.
Due to the drop in computing power, the short-term hash difficulty band of Bitcoin has crossed the long-term hash difficulty band, which is usually accompanied by a price drop in history. The core logic is that price drops or external force majeure causes miners to shut down their computing power. The former is due to reduced profits and miners choose to clear out actively, and the latter is usually accompanied by supervision, and supervision will also cause market panic, and panic will collapse the market. price.
Regardless of the reason, the final result is reflected in the price. The decline in the price has led to an increase in the attractiveness of Bitcoin’s valuation, which also means that the decline in the hash difficulty zone usually heralds the arrival of a phased bottom area. By observing the relationship between the historical hash difficulty zone and the price, every time the short-term hash difficulty zone crosses the long-term hash difficulty zone, it is the bottom area.
Since China’s Bitcoin computing power has remained above 50% for a long time, the current round of policy crackdowns has a positive side to alleviating the geographical concentration of Bitcoin computing power. The more decentralized computing power, the more secure the Bitcoin network, which will make the Bitcoin network more robust in the long run.
3. Technical analysis
One way to observe whether the market is at the top of the bull market is to judge whether the main force is sending out goods. It can be roughly inferred by observing the trading volume. At the end of a bull market, the main force shipped a large amount of goods near the top, which was reflected in the volume and price of the market. The large trading volume means that the main force is taking advantage of the situation to distribute chips. If it is a phased peak and the trading volume has not been enlarged, it indicates that the market does not have large funds to sell at this price. It is more likely that it is due to a market correction caused by insufficient buying orders.
At the top of Bitcoin’s past large-scale bull market, there have been signs of heavy volume peaking, indicating that the main force is indeed selling a lot of chips at the top to leave the market. However, around the current round of 65,000 US dollars, the market volume is quite sluggish, even lower than the volume when collecting chips at the bottom of the bear market. There is no sign of substantial distribution, indicating that the main force has not shipped significantly at this price
The transfer data on the chain also reflects the signs of the giant whale absorbing near $30,000. When Bitcoin fell to around $30,000, there was a huge amount of money to buy Bitcoin and mentioned it to the wallet address of the giant whale. The bubble size in the figure below (Figure 20) reflects the amount of BTC flowing into the wallet of the giant whale. The closer to 30,000 USD, the greater the inflow of BTC into the Whale Wallet. On July 29, there were more than 60,000 exchanges withdrawing coins, which was the largest single-day withdrawal amount since 2016. The Bitcoin Supply Raito indicator is the ratio of long-term investors’ holdings to short-term investors’ holdings. When the ratio goes up, it means that long-term funds are collecting chips while short-term speculators are leaving the market. These signs indicate that the big funds are still optimistic about the market outlook and the willingness to sell is not high. Then the vicinity of $30,000 is likely to be the bottom support area for a long time.
In summary, no matter whether it is market volume, on-chain data, or exchange data, it does not support that 65,000 US dollars is the big top of this bull market cycle. Nearly 30,000 US dollars may be the bottom area of this round of callbacks.
4. Report conclusion
At the macroeconomic level, the Federal Reserve’s July FOMC meeting kept the benchmark interest rate and the scale of bond purchases unchanged, in line with market expectations. The Chairman of the Federal Reserve also expressed that the current level of employment and inflation data do not support interest rate hikes. However, the Fed discussed the conditions for Taper (cutting debt purchases) and believed that there were some signs but had not yet reached the substantive requirements. Therefore, it is necessary to pay close attention to the August (Jackson Hall meeting) statement.
The trend of withdrawals of BTC and ETH on exchanges in July was more obvious. The cumulative amount of BTC withdrawals exceeded 60,000, and there were also more than 1 million withdrawals of ETH, indicating that market funds were still hunting at low levels.
The valuation indicators SSR, STH-MVRV, NVT, etc. on the BTC chain all reflect that the market has been extremely undervalued in July, and the market has shown a good buying price and timing. The proportion of long-term investors in ETH has gradually increased, and the NUPL indicator reflects that short-term investors have also shown signs of low-level surrender and exit, and the probability of market bottoming has greatly increased.
Changes in institutional holdings were relatively flat in July, and major institutions such as companies and funds maintained stable fluctuations in their holdings in July.
The computing power market has basically stopped falling, but the progress of miners’ overseas deployment is still relatively slow, so the recovery of computing power is not so smooth. It has risen from 80EH/ in early July to around 120EH/s. With the recovery of computing power, the difficulty of mining has also been raised for the first time after the policy suppression on July 31, which has a positive effect on boosting market confidence. Throughout history, every time the difficulty of mining drops sharply, it is a good time to buy bottoms.
Due to the huge trading volume of U.S. dollars near 64,000 U.S. dollars, this report believes that the vicinity of 64,000 U.S. dollars is not the location of the main shipment. When Bitcoin fell to near 30,000 U.S. dollars in July, a large amount of funds flowed into the whale wallet, and The trend of exchanges withdrawing coins has increased significantly. We believe that the main players are still optimistic about the market outlook and are buying bottoms. The vicinity of US$30,000 is expected to become a medium and long-term support area for this round of adjustment.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/monthly-research-report-on-encrypted-digital-assets-btc-and-eth/
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