Crypto market secondary fund Metrics Ventures October market observation introduction:
1/ The Bitcoin market has the conditions to start a bull market.The Bitcoin market already has the prerequisites to start a bull market, with a high proportion of long-term currency holders and a healthy chip structure.
2/ But it should be noted that we still judge that the so-called bull market will not happen overnight. This round of market is mainly driven by leveraged funds, but the real bull market still needs new funds to enter.Overheating will inevitably bring about adjustments. When the leverage clean-up is completed and the cost of holding currency falls back to the moving average, it will still be a very good time to add positions.
3/ The macro environment is favorable for the crypto market.The trends in the U.S. dollar index, unemployment rate, and U.S. bond interest rates indicate that the macro environment will be more favorable to the crypto market.Looking for market targets that may become emerging tracks at this moment and observing the path and speed of incremental funds entering the market will be the focus of our next research.
This article is MVC’s review and comments on the overall situation and market trends of the crypto asset market in October.
A real rise caused by false news allowed Bitcoin to break through the bull-bear dividing line.
Things started to go wrong on October 17. After the fake news about ETF adoption was refuted and posts were deleted, the price of Bitcoin actually stabilized and did not fall.
According to common sense, after the rumors are refuted, the rise caused by false news will be affected by the dual selling pressure of hold-up selling and chasing stop-loss, which should swallow up all the gains or even hit a new low. However, the price of Bitcoin unexpectedly fell in the next three days. The market has remained stable throughout the day, which means that some funds on the market have ignored the ETF news and begun to enter the market firmly.
For the long-term trend of Bitcoin,We generally call the weekly MA 120 (120-week moving average) the bull-bear dividing line.When Bitcoin rises above the weekly MA 120 for the first time after completing its decline from the previous bear market cycle, it can be regarded as the end of the bear market cycle. Similar time points can be seen in December 2015, April 2019 and April 2020. When the Bitcoin price breaks through WMA 120, there will be a considerable trend, and it can even be regarded as the beginning of a new bull market cycle. starting point.
The logic behind the dividing line between bull and bear is still the logic of Bitcoin chip distribution. In our monthly report in October, we repeatedly emphasized the necessary conditions for the start of a new bull market cycle, that is, the investment costs of long-term and short-term holders in the market must be equalized, so that the bull market After the start, there will be no selling pressure from historical hold-up orders, only selling pressure from profit-making orders, but the selling pressure from profit-making orders can be absorbed by new funds.
The meaning of WMA 120 in terms of chips can be approximately regarded as the comprehensive cost of long-term currency holders. The current price of WMA 120 is around US$32,000, and the market price at the time of writing this article is around US$33,700. We believe that the current chip structure of Bitcoin has the prerequisites to start a bull market. This is also the meaning of the title of this monthly report Cai It’s already done and just waiting to be served.”
From the data of Glassnode, we can see that the current proportion of long-term currency holders who have held the currency for more than 155 days is as high as 76%+, and the long-term chip lock-up is stable, while the main cost range of short-term currency holders with a currency holding period of less than 155 days is The first line is US$29,000-30,000, and the current profit ratio exceeds 86%.
Although this data has been changing dynamically, the chip structure of the Bitcoin market has illustrated the current chip pattern: long-term investors have a high proportion of positions and are willing to hold positions firmly. The main cost range is at the $32,000 line of WMA 120. Currently, it is basically at a floating profit (Microstrategy’s weighted cost is also at a floating profit, which is not easy). The proportion of short-term investors’ floating chips is small, and the main cost is below US$30,000. It is also currently basically at a floating profit. The current chip structure means that This long bear market cycle of cutting and changing hands has come to an end. The chips on the market have passed through the cutting and opening of positions. The height of the subsequent market will largely depend on the willingness and speed of new funds entering the market.The new crypto cycle of 2025-2026 can consider this month as the starting point.
The chip structure of ETH is not as healthy as that of BTC. The cost for short- and medium-term investors of ETH is around US$1,770. The current market price is US$1,788, which is just at a floating profit. The cost-intensive area for long-term investors of ETH is around US$2,200. Currently, Long-term ETH currency holders are still in the trapped zone, and there are still large selling pressure restrictions. This is the fundamental reason why the recent ETH/BTC exchange rate is still in the process of bottoming out.
Many people feel that the market is too fast this time. In fact, this market is still a very rapid leveraged capital market and an oversold rebound on the market. From Coinglass’s network-wide BTC contract position data, we can find that even on October 16, the day when the fake news surged, the number of open BTC contracts across the network was still at a very low level of around 11.67 B, and the short and long positions were relatively high, and the rates Slightly negative, the relatively depressed positions are mainly short orders.
However, when the price of BTC stabilized at US$30,000, leveraged funds grew explosively. In just two days, the open positions and balances of BTC on the entire network have exceeded the high point of the year, reaching the level of 14.97 B, and the funding rate has also increased. It has reached the highest peak of the year, and the enthusiasm for going long is extremely high.
What’s even more interesting is that, as of the writing of this article, the number of open BTC contracts on Binance is about 3.7 B, which has not yet returned to the August high of 4.54 B. However, CME, OI, the main force in increasing positions in this round of leveraged funds, It has risen from the August high of 2.33 B to the recent 3.58 B. BitMexs OI has risen from the August high of 261 M to 300 M. Bitmexs funding rate and premium have simultaneously reached BTC in October 2021 at 60,000 The U.S. dollar is at a first-line level, and the enthusiasm of investors from the United States in this round is evident...
In fact, in terms of market sentiment alone, there were some interesting changes in sentiment in October. We still remember that in the first two weeks of October, a lot of arguments about crypto is dead and no bull market after halving suddenly appeared in the market. When we communicated with many old friends, we would smile knowingly when we talked about this. All this is so similar to the deep bear at the end of 2019, which is also a sentiment indicator that prompted us to make up our mind to start buying the bottom.
For ETH and Altcoin, the performance of ETH is still lagging behind BTC. For Altcoin, this round of simple oversold rebound is particularly strong. There is no special theme or narrative in the market, except for some projects taking advantage of the opportunity. In addition to the release of good news such as the transformation of token economics or changes in fee models, the ones that have rebounded the most are still the oversold varieties that have suffered huge declines in the early stage and are generally oversold relative to hitting new lows in November 2022. For fund funds, these Oversold rebound varieties seem to have a larger increase, but the actual liquidity is still very weak and the transaction value is low.
As for the market that broke through WMA 120 for the first time at the end of the bear market, after the first breakthrough in December 2015, it continued to fluctuate for 5 months before starting a unilateral upward trend. After the first breakthrough in April 2019, it fell below twice more in December 2019 and April 20, before the unilateral market began.
From the perspective of chip distribution, BTCs breakthrough of WMA 120 is a sign that the bear market has completed its change of hands, but there is still a certain time window before the real bull market starts. The meaning of this period is to allow the market chips to use WMA 120 as the cost center and continue to Precipitate the change of hands, realize the cost, and wait for the new funds to enter the process.
As for when new funds will come in, because what will come in still requires market innovation at the industry or track level, and it is difficult to get the answer from transactions. The timing of the halving may be a more meaningful anchor. If the market still has the opportunity to step back or fall below WMA 120 before the halving, it will still be a potential opportunity to add positions.
If the most common question we encountered in early October was Can it still rise?, the most common question we encountered recently is Can it still fall? We believe that the market certainly still has the opportunity to fall. I think our current cycle position is closer to January-February 2020 than the Echo Bubble of January-August 2019.
The reason for this conclusion is that the period from January to August 2019 is actually relatively consistent with the position in the cycle from January to August 2023. They are both Echo Bubbles after deleveraging and clearing out were completed at the lowest point of the bear market. , essentially large-scale short covering. The reason why there was so much room for rebound from January to August 2019 was because many institutional investors were in a bear market mindset and opened short positions intensively at the BTC 6000-7000 level, which provided fuel for the rising market. Many investors who had experienced 2019 This should be extremely impressive. Most of the money investors made from the rebound at the beginning of the year was lost by short selling after June.
After experiencing the emotional catharsis in August 2019, the market entered a four-month correction. This stage is similar in nature to the period from June to October 2023. They are both callback stages after the completion of short covering, which belongs to the markets exit period. After clearing, the process of naturally changing hands to accumulate chips. Just because the rebound in early 2023 was smaller, the pullback appears less severe.
The reason why we believe that the market script that is more similar to January 2020 is being staged ahead of schedule is because first, we have now gone through the process of short covering and chip exchange. Second, the last short position in the market is now at 33, Capitulation and liquidation of positions below 000 US dollars, short-selling willingness and momentum are relatively small. Next year’s halving is imminent, and rush funds have begun to act. Now institutional investors generally have lower positions, and there is still room to add positions, so the market is more in line with 2020 Characteristics of January of the year.
Since the market has been positioned in January-February 2020, many people will subconsciously wonder whether a 3-12 level tragedy will happen next. First of all, looking at the chip structure, BTC has entered a new trading range of 32,000-41,000 US dollars. According to the current potential that has not accelerated, there is still the possibility of hitting the 40,000 US dollars line. ETH also has the possibility of accelerating towards WMA 120, which is $2,200 first-line upside momentum.
However, we still judge that there will not be a so-called bull market that will happen overnight, because the current market situation is still driven by existing funds and leveraged positions. There is currently no data support for new funds entering the market, and the number of open positions is currently high, and there is panic. The index is in the greedy zone,Bitmex’s funding rate and contract premium are both within the bull market range of 2021. The periodic overheating of the market will definitely bring about a purge of leverage. Once this round of market accelerates, there is still a very high chance that we will see a large-scale deleveraging. Downtrend. When the leverage cleanup is completed, we observe a decline in OI and fee data, and when the BTC price returns to near the long-term cost moving average, it is still a very good time to add positions.
As for when this decline will come, we don’t want to predict it easily. From June to August 2019, rates and contract premiums climbed for two consecutive months. The sentiment was even more overheated than the bull market. People who easily hit the top and continued to short suffered huge losses. Even if the market reaches the top of acceleration, it will give us a sufficient time window to think and make decisions.
We believe that starting from November, the chip structure of BTC has entered a bull market preparation state. Before next years halving, it is expected to continue the process of frequent shaking of positions, accumulation of chips, and solid long-term holding costs, while ETH still has to wait for the breakthrough of WMA 120 , whether to fall or not, whether to plummet or not, and when the leverage will be washed out, these are not the core contradictions. How to buy smartly is the core contradiction. At the current moment, look for market targets that may become emerging tracks, and observe the entry of incremental funds. The path and speed of the market will be the focus of our next research.
In addition to the endogenous market structure of the crypto market, we have also observed recent good news at the macro level, especially at the funding level, whether it is a higher-than-expected unemployment rate, a tendency to approach the top of U.S. bond interest rates, and the high level of the U.S. dollar index. All points point to a macro-easing environment that is more conducive to the encryption market. But we think these are not important. Many investors did not dare to buy the bottom in October because they were worried that the decline in the equity market would affect the risk appetite of the crypto market.However, the encryption market and the equity market have been significantly decoupled. In the next moment, we have to look forward to what kind of innovations the builders of the encryption market will present to us, and which of them will become the entrance to new funds, thus starting a new encryption bull market cycle.
The dishes are ready and waiting to be served.
To sum up, this round of Bitcoin’s breakthrough of the dividing line between bulls and bears marks the end of the bear market. Both long-term and short-term currency holders have made profits. The market sentiment has turned from pessimistic to frivolous. The market is mainly driven by leveraged funds, but the real bull market is still to come. Add additional funds to enter the market; the key is to patiently accumulate leading assets and wait for the incremental funds to sound the clarion call for a new round of bull market.
about Us
Metrics Ventures, also known as MVC, is a data- and research-driven secondary market liquidity fund led by a team of experienced crypto professionals. The team has expertise in primary market incubation and secondary market trading, and plays an active role in industry development through in-depth on-chain/off-chain data analysis. MVC cooperates with senior crypto community influencers to provide long-term enabling capabilities for projects, such as media and KOL resources, ecological collaboration resources, project strategies, economic model consulting capabilities, etc.
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