Original title: "The summer of super liquidation is coming to an end, when will the market explode? | WTR 8.26"

Original source: WTR Research Institute

Review of this week

This week from August 19 to August 26, the highest price of Bingtang Orange was around $64995, the lowest price was close to $57787, and the fluctuation range reached about 12%.

Observing the chip distribution chart, there are a large number of chips traded around 63000, which will have a certain support or pressure.

• Analysis:
1. 59000-63000 is about 1.6 million pieces;
2. 64000-68000 is about 1.11 million pieces;
• The probability of not falling below 57000~61000 in the short term is 82%;
• The probability of not rising below 71000～74000 in the short term is 67%.

Important news

Economic news

1. At the Jackson Hole meeting on Friday, Powell said: The time has come for the Fed to adjust its monetary policy, and it does not seek further cooling of the labor market. The cooling of the U.S. labor market is "obvious", and it is no longer overheated, and the confidence in the return of inflation to 2% has increased.

2. The market interpreted it as "Powell's strongest signal of rate cuts so far", saying that he intends to take action to avoid further weakness in the US labor market.

3. The US dollar plummeted and fell below 101, falling to 100.6 points, and the US dollar index is expected to fall for the fourth consecutive week, the longest consecutive decline since April 2023.

4. Matrixport Research Report, as gold, oil, US bonds and the US dollar are all close to support levels, a turning point may appear, and the US macroeconomy will undergo major changes, but its impact will take several months to fully manifest. When US bond yields rise and gold prices rebound at the same time, it usually means that the economy is in a unique and somewhat contradictory environment, and BTC is likely to become the main beneficiary asset.

5. After Powell's speech, the interest rate market increased its bets on the Fed's interest rate cuts. The probability of a 50 basis point rate cut in September has increased, and the Fed is expected to cut interest rates by nearly 100 basis points before the end of the year.

6. Nick Timiraos, the "Federal Reserve mouthpiece", said that this speech showed that Powell's shift to monetary policy has been completed and Powell has shown a comprehensive dovish stance.

7. Strategist Kathy Jones said the signal is very clear, that is, the Federal Reserve is ready to cut interest rates, and concerns about the state of the labor market now outweigh inflation risks.

8. Strategist Elias Haddad said that with the Federal Reserve about to ease monetary policy and the US economic growth is still quite strong, this is undoubtedly a shot in the arm for the stock market to rise, and the positive trend of the stock market is expected to continue until next week, or at least until the next employment data is seen.

9. The minutes of the Federal Reserve meeting showed that "the vast majority of members" believed that a rate cut in September might be appropriate, and easing monetary policy too late or too little might excessively weaken economic activity or employment.

10. The US dollar index fell below 101 to 100.92 points, and Capital Economics expects the US dollar index DXY to fall to 98 by the end of 2025.

Crypto Ecological News

1. Company X (formerly known as Twitter) disclosed its shareholder list, revealing that when Elon Musk acquired the platform for $44 billion in 2022, multiple companies related to cryptocurrency and artificial intelligence participated in the investment.

2. Tom Lee, co-founder of Fundstrat, said in an interview with CNBC that the possibility of Trump's election in November may boost asset prices, including BTC, and that cyclical stocks, small-cap stocks and BTC will perform better. These are obvious policy differences.

3. Anthony Scaramucci, managing partner of SkyBridge Capital, said he was optimistic about the future of BTC, and that "oversupply" seemed to be coming to an end. He interpreted it as a positive sign for price trends, believing that BTC was still in its early stages and was a technology rather than a means of storing value.

4. Wyoming Governor Mark Gordon said the state plans to issue a stablecoin pegged to the US dollar in 2025, and the state is currently working to support stablecoins through US Treasury bonds and repurchase agreements.

Long-term insights: used to observe our long-term situation; bull market/bear market/structural changes/neutral state
Medium-term exploration: used to analyze what stage we are currently in, how long this stage will last, and what situation we will face
Short-term observation: used to analyze short-term market conditions; and the possibility of some directions and certain events occurring under certain conditions

Long-term insights

• Long-term investor position structure
• Illiquid whale positions
• 30-day net positions on exchanges
• High-quality selling pressure

（Figure below: Long-term investor position structure）

Long-term participants for more than half a year show from the chart that they are still buying.
Reduce the risk of a long-term market downturn.
Demand is starting to increase.

（Figure below: Illiquid whale positions）

Special whale groups are also starting to increase their purchases.

（The following figure shows the 30-day net position of the exchange）

Since the market began to enter a period of heavy selling pressure in late June, and now after a large number of liquidations, the market's buyer power has gradually increased in late July, and the selling pressure has begun to decrease.

（The following figure shows high-quality selling pressure）

High-quality selling pressure shows that the market has entered a low-level selling pressure state, which is usually more suitable for adding positions or partial buying in a bull market.

Mid-term exploration

• Liquidity supply
• Network sentiment positivity
• USDC purchasing power comprehensive score
• Realized market value of each age group
• Profit impact

（Figure below Liquidity supply）

Liquidity supply is slowly decreasing, which may lead to a lack of upward momentum.
Due to the lack of overall volume, the speed may also slow down.

（Figure below Network sentiment positivity）

Network sentiment is still rising, and the current trend state may not weaken.
The heat in the market may not decrease. Under the current state, the rest time may be slightly accelerated.

（USDC Purchasing Power Comprehensive Score in the Figure Below）

Institutional users still have a high demand, and the current growth in purchasing power may support the overall correction of the market.

（The figure below shows the realized market value of each age group）

24h-3 months of chips, the overall market value growth is slow.
It is possible that the main body of the current market is still supported by chips that have been held for a long time.

(Profit shock in the figure below)

There is a large amount of profit shock, which may form a resistance effect and hinder the market from going up.

Short-term observation

• Derivatives risk factor
• Option intention transaction ratio
• Derivatives trading volume
• Option implied volatility
• Profit and loss transfer volume
• New addresses and active addresses
• Bingtangcheng Exchange net position
• Yitai Exchange net position
• High-weight selling pressure
• Global purchasing power status
• Stablecoin Exchange net position
• Off-chain exchange data

Derivatives rating: The risk factor enters the red zone, and the risk increases.

(Figure below: Derivatives risk factor)

With the market rebound, the risk factor is still in the red zone. Although the red zone means that the risk of derivatives is high, whether the market will continue to rebound is less affected by derivatives.

（Figure below: Option intention transaction ratio）

The option trading volume and the proportion of put options have both decreased slightly.

（Figure below: Derivatives trading volume）

The derivatives trading volume did not rise in this market rebound, and of course it is still at a medium-low level. From the side, this rebound has not yet ignited the full enthusiasm of the market.

（Figure below: Option implied volatility）

The implied volatility has not changed.

Sentiment rating: Neutral to bullish

(Profit and loss transfer volume in the figure below)

After several weeks of slump, the market's positive sentiment (blue line) finally rebounded this week. At the same time, panic sentiment (orange line) continued to decline.
Whether the blue line will continue to rebound in the future is still the focus of attention for whether the market can continue to rebound.

（Newly added addresses and active addresses in the figure below）

Newly added and active addresses are at a low level.
Spot and selling pressure structure rating: BTC inflows are accumulated, and ETH has a moderate outflow.

（Net position of Bingtangcheng Exchange in the figure below）

BTC is continuously flowing out in small amounts, gradually digesting the large amount of chips that flowed in before.

（Net position of E-Tai Exchange in the figure below）

ETH exchange net position is in a state of continuous outflow accumulation. Although there are many voices in the market that are bearish on ETH, judging from the net position of the exchange, ETH's net position in the exchange has hit a new low again.

（High-weight selling pressure in the figure below）

There is no high-weight selling pressure at present.

Purchasing power rating: Global purchasing power is in a state of loss, and stablecoin purchasing power has recovered significantly.

（Global purchasing power status in the figure below）

America's purchasing power is still in a state of loss.

（USDC exchange net position in the figure below）

USDC exchange net position has recovered significantly.

Off-chain transaction data rating: There is a willingness to buy at 56,000; there is a willingness to sell at 70,000.

(The following is the Coinbase off-chain data)

There is a willingness to buy at prices around 56,000 to 62,000;
There is a willingness to sell at prices around 65,000 to 70,000.

(The following is the Binance off-chain data)

There is a willingness to buy at prices around 56,000 to 62,000;
There is a willingness to sell at prices around 65,000 to 70,000.

（Bitfinex off-chain data in the figure below）

There is a willingness to buy at a price around 55,000;
There is a willingness to sell at a price around 70,000.

Summary of this week:

Summary of news:

1. This quarter has experienced many liquidations, compensations, and sell-offs by various governments in 2022 and long before.

2. Cryptocurrency is sluggish under the selling pressure, and its performance has long lagged behind the Nasdaq and gold prices.

3. Now that many liquidations are coming to an end, the pressure on cryptocurrencies has eased. At the same time, the turning point of the Federal Reserve's monetary policy is approaching, which can allow cryptocurrencies to quickly enter a new rhythm.

4. Keep up with the traditional capital bull market.

5. Whether it is accidental or inevitable, in previous cycles, Bitcoin performed well from autumn to spring, and was weak in summer.

6. The last quarter after the halving in 2020 performed extremely well, and we look forward to the performance in the fourth quarter of this year.

Long-term insights on the chain:

1. Long-term investors continue to buy;
2. Special whales also began to increase their purchases;
3. Long-term net positions show that the large amount of selling pressure flowing into the market has disappeared and turned into withdrawals;
4. High-quality selling pressure shows that it has returned to the low selling pressure area.

• Market tone:
The selling pressure is relatively low, and the market is relatively stable at present.

On-chain mid-term exploration:

1. The supply of liquidity has slowed down;
2. The positivity of network sentiment is still rising, and there is still a trend in the market;
3. Institutional users still have high demand;
4. The entry of new users has slowed down;
5. The current market has a large profit impact, and resistance may need to be digested.

• Market tone:
Slowdown
The trend is still there, and the volume growth in the market may slow down.

On-chain short-term observation:

1. The risk factor is in the red zone, and the risk is increasing.

2. The number of newly added active addresses is relatively low.

3. Market sentiment rating: neutral to bullish.

4. The overall net position of the exchange shows an accumulation of BTC inflows and a moderate outflow of ETH.

5. Global purchasing power is in a state of loss, and the purchasing power of stablecoins has recovered significantly.

6. Off-chain transaction data shows that there is a willingness to buy at 56,000; there is a willingness to sell at 70,000.

7. The probability of not falling below 57,000~61,000 in the short term is 82%; among them, the probability of not rising above 71,000~74,000 in the short term is 67%.

• Market tone
The overall market sentiment is neutral to bullish. The market has hit the initial resistance range in the short term (near the short-term holder cost line of 63K). The short-term market performance may slow down the pace of short squeeze, and then further squeeze. But the following short-term rise and fall is no longer important. What is more important is the main upward trend in the future.

Risk warning: The above are market discussions and explorations, and do not have directional opinions on investment; please be cautious and prevent market black swan risks.

This article comes from a contribution and does not represent the views of BlockBeats.

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