Original source: EMC Labs
The market, project, currency and other information, opinions and judgments mentioned in this report are for reference only and do not constitute any investment advice.
macro market
In the golden autumn of October, people who are well aware of the cycle and firmly hold on to it are pleased to welcome a rich harvest!
After a long period of ambiguity and shock, stimulated by the expectations of spot ETFs, BTC broke out of the shock box that had been suppressed for half a year, returned to the upward channel with a monthly increase of 28.54%, and continued the journey of recovery.
EMC Labs judged in the September Briefing: Whether the situation is good or not, BTC Q4 may once again challenge the years high of US$32,000 that bullish forces in Q4 will push BTC to break through the previous high of US$32,000. Today, this prediction has been fulfilled by the market in the first month. The market trend is so sharp and unexpected.
The global macro-financial market is not optimistic. The Nasdaq fell another 3.25% in October, following its largest monthly decline of the year in September. There was no interest rate hike in November, and there is still suspense about whether there will be a rate hike in December. This, coupled with the pressure of the US economic recession, caused the Nasdaq to decline for three consecutive months after the AI hype subsided, and the rebound this year has come to an end. The macro-financial market has a serious wait-and-see atmosphere.
NASDAQ monthly trend
With the outlook unclear, funds on the market chose to enter gold as a safe haven, pushing the price of gold up 8% and approaching historical highs.
Gold price daily trend
In contrast, the crypto market, which stopped falling and rose slightly in September, experienced a breakthrough in October. The surge in volume broke through the upper edge of the 32,000-dollar shock box that had plagued the market for half a year, pushing the price to the 35,000-dollar line.
According to the Emergence Engine signal, the repair period of this cycle began in January and has lasted 10 months, with a total of 7 months of gains recorded. Among these seven months, Octobers increase was second only to January, which was the desperate rebound, and was the second largest increase month this year. The sharp increase in volume shows that many forces are determined and full of passion to break through the box suppression.
BTC monthly trend
Behind the surge, monthly stablecoin inflows of $900 million are the direct cause. While $900 million isnt much, its the only month this year that its seeing positive inflows. It may mean that the attitude of OTC funds is changing.
The market performance of BTC in October fully confirms EMC Labs’ judgment that “with the support of strong on-chain data, the market will rise rapidly once capital inflows resume.”
This month, the trend of BTCs recovery period from short to long continues, but as the price of the currency rises, there are signs of slowing down. The short-term surge triggered a wave of selling among long and short traders, and the selling has now come to an end. However, the scale of profits is still huge and has become a potential factor affecting price fluctuations.
The on-chain data deteriorated in October and was repaired after the surge. The market outlook should continue to be carefully observed.
Based on multi-dimensional factors, EMC Labs believes that the trend of the repair period continues, and October has fulfilled our previous judgment. From November to December, the market will fluctuate upward along the upward channel amid the long-short divergence.
crypto market
In October, BTC opened at $26,961 and closed at $34,656, an increase of 28.54% and an amplitude of 32.03%.
BTC daily trend
From the perspective of technical indicators, October is also a fruitful month.
This year, BTC entered a box structure (purple area in the picture above) after mid-March, with the lower edge of the box at $25,000 and the upper edge at $32,000. When it broke through the upper edge on October 23, BTC fluctuated in the box structure for more than 6 months and more than 180 days. During this period, it hit the upper edge twice in April and July but failed, and continued to test the lower edge in June, August, and September. Along the supports. Among them, from August to September, it fell below the rising channel since the beginning of the year (blue area in the above figure).
During this period, most of the selling chips came from short-handed giant whales.
In the September briefing, we pointed out that there is plenty of time for downward testing in August and September. The market began to attempt an upward move at the end of September and tested support again in the first half of October, finally embarking on a furious upward trend on the 15th, pushing the price from $26,000 to $35,000 in 11 trading days.
Several key breakthroughs on 16, 23, and 24 saw large daily average volumes, indicating that long-capital investors are bold and refused to pull back after eating the air force. Instead, they waited for the moving average to move at a high level. It is expected that the market will continue to rise after adjustments in the market outlook.
capital supply
Since this year, we have observed that the data on the chain continues to improve, just like the pile of firewood getting dryer and drier. However, the violent upward explosion not only depends on the dehydration of the pile of firewood (internal factors), but also takes into account the ignited flames (external factors).
Now, we focus on the supply of stablecoins and examine external factors.
Major Stablecoin Supply
In previous reports, we pointed out that the main purchasing power of BTC’s rise during the recovery period came from the position covering of on-site funds. In fact, behind the 100% surge in BTC this year, overall funds have been outflowing, with a total outflow of US$14.6 billion from the beginning of the year to the end of September.
In our September report, we reported that stablecoin outflows were slowing.
In the first half of October, the outflow of stablecoins stagnated. On the 15th, stablecoins began to show positive inflows, and BTC immediately started to rise.
As of the 30th, the net inflow of stablecoins in October has reached US$900 million!
This is the first time this year that stablecoins have achieved positive monthly inflows, marking that the exit of on-site funds has been contained and over-the-counter funds have begun to enter the market.
This is the most optimistic external factor monitored by EMC Labs after on-chain data emerged from the bear market - stablecoins began to emerge from the bear market.
The net inflow of stablecoins and the start of BTC prices are within one day of each other, which is enough to prove that the most direct driving force for the violent rise comes from OTC funds entering the market through stablecoins.
Going further, we focus on USDT and USDC, which have the largest supply.
1.1 ~ 10.30 ——
USDT: +18.28 billion USD;
USDC: -$19.25 billion.
9.30 ~ 10.30 ——
USDT: +$1.4 billion;
USDC: -$10 million.
It can be seen that USDT has been experiencing net inflows throughout the year, while USDC has been experiencing significant outflows, and the bleeding began to stop in October. Asian funds (as well as Europe and South America), which primarily use USDT, have dominated BTC’s rally this year. This month’s significant breakthrough is more obviously due to the additional issuance of USDT of up to 1.4 billion US dollars.
For the study and judgment of the subsequent market, the observation of stable coins is indispensable.
Entering the first month of Q4, we received the first month of net capital inflow this year. If we continue to receive net inflows in 11 and 12 months, then a market stage called a bull market will be coming to us.
supply trends
Along with the violent rise of BTC in the second half of the month, the profitability of BTC on the chain has been greatly improved. The market-wide MVRV (Unrealized Profitability Ratio) reached 68%, the long-hand (LTH) MVRV reached 66%, and the short-hand (STH) MVRV reached 20%.
Market supply pressure
In the short term, the rapid and sharp rise has caused a sharp increase in market supply pressure, especially for short-term investors, where the 20% profit threshold has been reached. Sell-offs after satisfaction are inevitable, which may be the reason why BTC is consolidating between $34,000 and $35,000.
We further examine the profit/loss situation when selling BTC between long and short hands.
Profit and loss status of selling BTC
As the price of BTC rises, the selling profits of both long-term and short-term investors have increased significantly. Some of the long-term investors have obtained profits as high as 61 to 70%, while the profits of short-term investors were once close to 6%.
In addition to selling profits, we take a closer look at the selling scale of long and short lots.
LTH & STH 2 Exchanges
The 24th was a new high day for the rebound and also became the climax of long and short selling. On this day, 3,724 pieces were sold in long hands and 45,874 pieces were sold in short hands, both of which were several times the daily sales scale.
The 24th is the third largest selling day for long positions and the eighth largest selling day for short positions this year.
The take-profit selling after this wave of gains has now come to an end, and the current number of coins entering the exchange has dropped to about 20,000 coins per day.
Observed from the perspective of the exchange, as of the 29th, CEX holdings decreased by 5,000 pieces this month, and there was no greater selling pressure. However, compared with the outflow of 60,000 coins in September, this month’s outflow has been significantly reduced.
In addition, the potential profit of short-term positions is still as high as 20%, and there is an urgent need for new short-term positions to enter the market to reduce the profit value. As the market improves, the potential profit of short-term investors during the recovery period can also rise to 40%, which is still larger than the current 20%.
However, short-hand trading is driven by emotions, and emotions are mainly affected by external factors. If there is a large-scale sell-off, it will cause price fluctuations, and we still need to continue to pay attention.
Long and short game
At present, long-term and short-term investors still hold huge profits, and the overall profit scale of BTC is close to 15.98 million, accounting for 81.82% of the total supply. In this case, the selling pressure continues to increase, and we need to take a closer look at the holding size of long and short hands to assess the true selling pressure.
Long-hand, short-hand, central exchange and miner BTC holding size
10.1 ~ 10.30 ——
Long hand: +34000
Short hand: -1000
CEX：-5000
Miner：+ 3000
Long hands and miners continue to accumulate, short hands and CEX continue to outflow. Although the price has achieved a monthly growth of 28.54%, the trend of from short to long continues, which are typical characteristics of the repair period.
Short-term holdings are still outflowing, while the long-term selling pressure wave will not occur until a higher MVRV value. While the pace of losses has slowed, market liquidity is still decreasing while purchasing power is recovering. Taken together, there is no risk of medium-term liquidity.
In previous monthly reports, we continued to track the group of short-handed giant whales. They dominated the markets swings during the correction over the past six months.
Short-hand giant whale sales volume
This group continued to reduce holdings in October to cash in on profits. The 310,000 coins currently accumulated in the bottom area have been sold out, and they are still selling inventory, with a net sale of 110,000 coins in October.
Against the background of net capital inflows, its selling behavior has been unable to affect the market. However, it still holds more than 6 million BTC and is still a selling force that cannot be underestimated. Especially when the market is weak, it is expected to have a more obvious impact on the short and medium term.
Data on the chain
From late September to mid-October, an uncertain outlook and a weak market caused a severe decline in new address data. After the rebound, new addresses on the chain rose rapidly driven by speculation.
BTC daily new addresses
Similar changes were seen in active entities and daily transfer data.
Bit Network Daily Active Entities
Bitcoin network daily transfer size
It should be noted that with the rise of Ordinals, the data structure of the Bitcoin network has changed, and the recent ebb in on-chain activity is also related to the subsidence of the speculative frenzy of Ordinals-based NTF and BRC-20 Meme coins.
Apart from these, on-chain activities are an important factor affecting currency prices and deserve long-term and in-depth tracking. The trend of medium and long-term currency prices cannot deviate from the activities on the chain.
Conclusion
In the September briefing, EMC Labs judged: There is a high probability that the long forces in the Q4 market will actively take action to push the market to challenge the years high of $32,000 again, and there is a high probability that there will be a historic breakthrough of the box that has besieged BTC for half a year. On the upper edge of the body, the end of the repair period has been a difficult year despite twists and turns.
October is coming to an end, and the prediction has been fulfilled by the market.
Regarding the market outlook, based on the combination of on-chain supply, on-chain activities and technical indicators, EMC Labs believes that after the surge, the current loose chips in the hands of long and short investors have realized profits, and the repair trend of from short to long continues. The trend of the repair period continues, and from November to December, the market will fluctuate upward along the ascending channel amid the long-short divergence.
Returning to the box, which is below $32,000, is an ultra-low probability event. If it happens, it will bring excellent opportunities to cover positions.
Internal factors that need to be focused on include the repair of on-chain data, BTC-ALTCOIN rotation, and the selling of short-handed whales. External factors include net inflows of funds, the trend of the Nasdaq, and the possibility of economic recession. On the contrary, the impact of the U.S. dollar interest rate hike may be the weakest. If interest rates are raised again in December, the market will most likely regard the boots as having landed.
