Week 7 On-chain Data: Bullish Momentum Stalls, Short-Term Market Sentiment to Remain Subdued

Original Article Title: "The Cryptic Market, Is the Continuous Decline a Reflection of Sentiment or Substantial Selling? | WTR 2.24"

Original Source: WTR Research Institute

Weekly Recap

For the week from February 17th to February 24th, the highest point of Bitcoin approached $99,475, while the lowest point neared $93,388, with a fluctuation range of about 6.53%.

Observing the distribution of holdings, a significant amount of Bitcoin traded around 95,000, providing a certain level of support or resistance.

• Analysis:

1. 1.52 million coins held between 60,000-68,000;

2. 2.75 million coins held between 90,000-100,000;

• The probability of a short-term drop not breaking below 87,000-91,000 is 60%;

• The probability of a short-term rise not breaking above 110,000-115,000 is 40%.

Important News Highlights

Economic News

1. The minutes of the Federal Reserve's January meeting showed that members believed "considering a pause or slowing the reduction of the balance sheet until the debt limit issue is resolved may be appropriate."

2. Fed's Bullard: PCE inflation data is unlikely to be as concerning as CPI, once inflation falls, interest rates can further decrease.

3. Fed's Kudlow expects the January PCE inflation rate to be 2.4% (previously 2.6%), with core PCE inflation rate at 2.6% (previously 2.8%).

4. Fed's Bostic stated: Despite significant uncertainty, the Fed should still be able to carry out two 25-basis-point rate cuts this year.

5. Fed's Bullard: PCE inflation data is unlikely to be as concerning as CPI, once inflation falls, interest rates can further decrease.

Crypto Ecosystem News

1. SoSovalue statistics show that twenty states at the state level in the United States are initiating BTC reserve-related legislative processes, with fifteen states' bills formally accepted by the House and entering the committee review stage, forming actionable legal drafts.

2. The U.S. legislation allowing Utah to invest in BTC has passed the state Senate committee and will now proceed to the Senate for a second and third reading, ultimately leading to a vote.

3. The BTC Reserve Bill has been passed in the House of Representatives, so if approved by the Senate, Utah's Republican Governor, Spencer Cox, only needs to sign the bill for BTC to become a reserve asset.

4. FOX Business reporter Eleanor Terrett stated that the U.S. Securities and Exchange Commission (SEC) is very interested in staking and has even requested a memo from industry insiders detailing the various types of staking and their benefits. It is expected that the regulatory agency will soon release guidance on staking, as it is a topic they are actively discussing.

5. QCP Capital mentioned that since Trump took office, multiple ETF applications related to altcoins have been submitted to the U.S. Securities and Exchange Commission (SEC). It is still uncertain whether this will serve as a catalyst for Trump's positioning of the U.S. as a global cryptocurrency hub and pave the way for further ETF approvals by 2025.

6. On the options front, Delta implied volatility has shifted towards a call skew across all tenors, indicating that the market is preparing for the second stage of a bull market. With easing inflation concerns, the S&P 500 hit a new high, the U.S. dollar index fell to the 107 level, and the macro backdrop seems increasingly supportive of risk assets.

7. According to The Wall Street Journal, the U.S. Securities and Exchange Commission (SEC) has agreed to drop the lawsuit against Coinbase, which sought to regulate the company as a securities exchange. The dismissal of the lawsuit marks the end of the SEC's years-long tough stance on the crypto market, which could boost the sentiment of cryptocurrencies previously accused of being securities.

8. Bybit's multi-signature address was involved in a hack, where approximately $1.429 billion worth of ETH was stolen (around 514,000 ETH). Bybit's CEO responded, saying, "Bybit has the ability to reimburse, can bear this loss, has processed 70% of the withdrawals, and the peak of the run on the exchange is over."

· Long-Term Insights: Used to observe our long-term situation; Bull Market/Bear Market/Structural Shift/Neutral State

· Medium-Term Exploration: Used to analyze which stage we are currently in, how long it will last, and what conditions we will face

· Short-Term Observations: Used to analyze the short-term market conditions; as well as the emergence of certain directions and the likelihood of events under certain premises in the long-term view

Long-Term Insights

• Short-Term Speculator Cost

• Spot Total Selling Pressure

• High-Weighted Selling Pressure

• Long-Term Participant Ratio

(See Short-Term Speculator Cost Chart Below)

The current price has dropped below the short-term speculator cost, potentially causing most short-term speculators to incur losses. In this situation, they usually reduce selling or hold flat due to psychological reasons. As selling pressure decreases, some buyers step in to share the cost, creating some support.

(See Spot Total Selling Pressure Chart Below)

Although spot selling pressure has increased slightly, it remains near a one-year low overall.

The market does not have much substantial selling, likely due to psychological factors and prevalent emotions.

(See High-Weighted Selling Pressure Chart Below)

High-weighted selling pressure is also gradually decreasing and approaching the low-zone area.

(See Long-Term Participant Ratio Chart Below)

The long-term participant ratio has seen some minor increase, indicating that long-term participants still relatively favor the market's current stage.

Medium-Term Exploration

• BTC Exchange Net Position Trend

• ETH Exchange Net Position Trend

• Liquidity Supply Amount

• Network Sentiment Positivity

• Futures Liquidation Structure

(See BTC Exchange Net Position Trend Chart Below)

The BTC exchange net position trend continues to show an accumulation trend. On-chain activity is gradually moving away from frequent trading of BTC and is more focused on accumulation at present.

Under the current conditions, one must also consider the liquidity inherent to the exchange.

The current risk may not lie in the accumulation of BTC on the buy side but rather in whether the liquidity is sufficient to support the market price.

(See ETH Exchange Trend Net Inflow in the following figure)

ETH's current accumulation state has slowed down, and even with a certain amount of inflow, there may still be potential selling pressure.

(See Liquidity Supply Amount in the following figure)

Currently, BTC's liquidity is poor and continues to decline. Market conditions may improve when liquidity improves.

(See Network Sentiment Positivity in the following figure)

The network sentiment remains at a relatively high level, indicating that the on-chain positivity is still high.

(See Futures Liquidation Structure in the following figure)

The current liquidation structure shows a significant ratio of long liquidation. Market stabilization is expected once the current liquidation trend stops.

Short-Term Observations

• Derivative Risk Coefficient

• Options Intentional Trade Ratio

• Derivatives Trading Volume

• Options Implied Volatility

• Profit and Loss Transfer Amount

• New Addresses and Active Addresses

• BitFresh Exchange Trend Net Inflow

• Auntie Exchange Trend Net Inflow

• Heavy Selling Pressure

• Global Buying Power Status

• Stablecoin Exchange Trend Net Inflow

• Off-Chain Exchange Data

Derivatives Rating: The risk coefficient is in the red zone, indicating high derivative risk.

(See Derivative Risk Coefficient in the following figure)

Since the high fluctuation of BTC, the risk index has entered the red zone for the second time, indicating a significant increase in liquidation risk for long positions in derivatives this week.

(See the chart below for Options Intent Transaction Ratio)

The put/call ratio is at a low level, and the trading volume is also low.

(See the chart below for Derivatives Trading Volume)

Since the continuous fluctuation, the derivatives trading volume has been decreasing, indicating a reduction in market activity.

(See the chart below for Options Implied Volatility)

The options implied volatility has not experienced significant fluctuations in the short term.

Sentiment Status Rating: Neutral

(See the chart below for Profit/Loss Transfer Amount)

Both the current market positive sentiment (blue line) and panic selling sentiment (orange line) are at extremely low levels. The market is expected to remain in a fluctuation mode.

(See the chart below for New and Active Addresses)

New and active addresses are at a low level.

Spot Market and Selling Pressure Structure Rating: BTC and ETH are in a state of significant outflow accumulation.

(See the chart below for Exchange Net Inflow Indicator for BTC)

The BTC exchange net inflow indicator shows continuous significant outflow accumulation.

(See the chart below for Exchange Net Inflow Indicator for ETH)

ETH Exchange Net Flow Continues Heavy Outflows Accumulation.

(See High Weighted Sell Pressure Below)

Currently No High Weighted Sell Pressure.

Buy Pressure Rating: Global Buy Pressure in a Drain State, Stablecoin Buy Pressure Unchanged from Last Week.

(See Global Buy Pressure Status Below)

Current Buy Pressure in a Drain State.

(See USDT Exchange Net Flow Below)

Stablecoin Buy Pressure Unchanged from Last Week.

Off-chain Transaction Data Rating:

Buying Interest at 93000; Selling Interest at 100000.

(See Coinbase Off-chain Data Below)

Buying Interest at price levels near 90000-93000; Selling Interest at price levels near 100000-110000.

(See Binance Off-chain Data Below)

Buying Interest at price levels near 90000-93000; Selling Interest at price levels near 100000-110000.

(See Bitfinex Off-chain Data Below)

There is buying interest around the 90000-93000 range; there is selling interest around the 100000-110000 range.

Weekly Summary:

News Summary:

1. The recovery momentum was interrupted, but the actual substantial selling pressure did not come from the recent exchange hack, but rather from FTX's compensation event.

2. The first phase of FTX compensation is expected to last until March 4th, with funds totaling around 65-70 billion USD, and the next phase occurring after May 30th.

3. On a macro level, the Fed's intention to cut interest rates seems to be gradually increasing, with two rate cuts possible this year, possibly accompanied by an end to balance sheet reduction.

4. Overall, the future macro fundamentals still appear relatively bullish.

On-Chain Long-Term Insights:

1. The market has broken through the short-term speculators' cost line, leading to potential hodling, further reducing market selling pressure;

2. Spot selling pressure still remains near a one-year low;

3. High-weighted selling pressure is close to a one-year low;

4. Long-term participant ratio has seen a slight rebound.

• Market Tone:

No substantial on-chain transformation has occurred, but there is a sense of subdued emotions and confusion.

On-Chain Medium-Term Examination:

1. BTC is in an accumulation phase;

2. ETH's accumulation trend has slowed down;

3. Liquidity supply is weak;

4. Current on-chain sentiment remains high;

5. Currently in a trend of long liquidation, waiting for stability.

• Market Tone:

Hesitant

With current weak liquidity, BTC remains relatively stable, with the risk bias leaning towards native assets like ETH.

On-Chain Short-Term Observation:

1. Risk factor is in the red zone, derivative risk is high.

2. New active addresses are in a low to mid-range.

3. Market sentiment rating: Neutral.

4. Exchange net flows overall show BTC and ETH in a state of significant outflows.

5. Global buying power is in a weakened state, while stablecoin buying power remains flat compared to last week.

6. Off-chain transaction data shows buying interest at 93000; selling interest at 100000.

7. The probability of not breaking below 87000-91000 in the short term is 60%; with a 40% probability of not breaking above 110000-115000 in the short term.

• Market Outlook:

Currently, there is very little on-chain new accumulation at the current price level, and the short-term holder's cost line is also stagnant near 92K, indicating that although there is no panic sentiment in the current market, short-term market demand/positive sentiment has entered an extremely low state. Expectations for this week continue to be volatile.

This article is contributed content and does not represent the views of BlockBeats.