Understand the major indicators that affect the market from the on-chain data that breaks the "information cocoon" for the first time.
Author/ Hedy Bi
Produced by OKG Research
"An uncontrolled, uncontrollable mob is the voice of the madness, not the voice of the people," President Kennedy said the day after Martin Luther King Jr. was assassinated in Memphis. A shooting across the ocean last weekend not only brought more support to Trump (polymarket data), but also warmed up the Bitcoin market.
But this should not be a signal or indicator for the crypto market. Ethereum co-founder Vitalik Buterin also wrote today against making political voting choices based on "whether or not to support crypto."
Regarding the impact of the United States on the crypto market, this will be one of the key directions of the research institute's industry analysis this year. Looking back to May this year, OKLink Research Institute has proposed that the dispute between the two parties in the United States will affect the performance of the crypto market because it represents whether the US financial market recognizes virtual assets and promotes a wider range of compliance and even supports the further development of virtual assets and related industries.
In addition, with the opening of the US Bitcoin spot ETF channel and the participation of financial institutions, we cannot deny that the "US" related factors have an increasing impact on the crypto market. In the previous article "Data Interpretation of Crypto Market Repositioning: The Pain of Transformation under the Global Liquidity Dilemma", the author has analyzed the current crypto market and a new positioning of Bitcoin for readers, that is, the crypto market has gradually transformed from a niche market that was once a safe haven to a field that is highly sensitive to economic dynamics. Bitcoin has transformed from "digital gold" to an "amplifier" of US stock markets such as Nasdaq.
The "American" complex of the crypto market is not limited to the financial or political level. It is a multi-dimensional and complex issue. But we can still find out the lifeblood of this market through a type of data - on-chain data. With the maturity of blockchain technology and the development of on-chain analysis tools such as multi-chain browsers such as OKLink, the information cocoon of transactions in the crypto market has been broken. With its tamper-proof and traceable characteristics, on-chain data provides the market with unprecedented transparency. In this context, the author invited Ai Yi and Phyrex, special analysts of the special topic "Digital Solution to the Truth of Web3" produced by OKG Research and PANews, to jointly discuss the "American" complex of the crypto market and give you a real on-chain world with data.
| OKG Research: A sword of Damocles in the crypto market: The Federal Reserve's monetary policy is based on decisions made on the U.S. economy, and the situation of U.S. cryptocurrency spot ETFs and election factors cannot be ignored. |
The "American" complex of the crypto market, in the final analysis, still comes down to the US economy. The three of us have always agreed that this is the underlying logic. The Federal Reserve's monetary policy based on the judgment of the US economy is undoubtedly a sword of Damocles hanging over the cryptocurrency market. The timing of the interest rate cut and its relationship with the economic situation are the focus of market attention. Phyrex added that the interest rate cut decision, in particular, can directly affect the market's capital liquidity and investors' risk preferences, thus having a significant impact on the cryptocurrency market.
The Federal Reserve's monetary policy is based on the current state of the U.S. economy, and the current state of the economy is reflected by several important indicators. The three macroeconomic indicators I recommend here are the monthly unemployment rate, CPI, and PPI. Phyrex further introduced that if you look at the long term, you need to look at the three indicators of non-agricultural data, CPI, and core PCE . Aunt Ai shared that in addition to the three indicators of monthly unemployment rate, CPI, and PPI, other indicators she would personally look at include weekly initial jobless claims, monthly unemployment rate, core PCE (personal consumption expenditure deflator), and the University of Michigan Consumer Confidence Index, which are all important bases for the Federal Reserve to formulate interest rate policies, and said that the difference between the actual performance of these data and market expectations often triggers violent market fluctuations.
In addition, I believe that there are also overall capital inflows and outflows, such as the inflows and outflows of BTC spot ETFs and the impact of the US election on the crypto market. Aunt Ai and Phyrex also said that the Republican Party’s positive attitude towards the cryptocurrency market and the changes in Trump’s approval rating are also political factors that cannot be ignored. This support has injected additional optimism into the market. In addition to monetary policy, Aunt Ai also emphasized the importance of intuitive indicators such as CME holdings, BTC ETF inflows and outflows, and Coinbase Bitcoin premiums. These indicators can directly reflect the American people’s willingness to invest in cryptocurrencies such as Bitcoin and changes in their sentiment.
| OKG Research: On-chain data mainly reflects the advance expectations of users in the cryptocurrency market rather than directly reflecting the impact of US economic events. |
In a TS I participated in with Phyrex on PANews, I mentioned that the overall crypto market mainly looks at "expected expectations". From the on-chain data, we can see that the logic reflected by the data is more of "anticipation in advance". Phyrex gave an example that if the market expects the Republicans to win, it will drive up overall liquidity, and expects the Federal Reserve to cut interest rates in September, further increasing liquidity. These expectations will eventually be reflected in the on-chain data. Aunt Ai pointed out that the on-chain data does not directly reflect the immediate impact of US economic events on trading volume and frequency, because the results of US economic events are announced at a fixed time, and the market feedback will be faster, especially the funds in the centralized exchange platform.
In summary, the impact of US economic events on the crypto market is that expectations of the event affect market sentiment and capital flows, thereby indirectly affecting the cryptocurrency market. The transmission mechanism will first be from centralized exchanges to on-chain assets.
| OKG Research: The two indicators of "capital flow" and "BTC chip distribution" in the on-chain data are important indicators for judging the subsequent direction of the crypto market. |
The "fund flow" in the on-chain data has always been an indicator we pay attention to, which mainly includes large-amount changes, distribution of whale addresses, and inflow and outflow of funds. The first two can be easily seen in the on-chain data tool. Regarding the flow of funds, I will use the market value expansion of USDT and the inflow of funds of BTC spot ETF to see how much funds have flowed into the entire market. In terms of outflow, large-amount changes can help us make a good judgment.
Regarding outflows, Aunt Ai talked about "expectations of selling coins". The US government is one of the largest Bitcoin holders, so the direction and flow of whale' on-chain assets is what we pay the most attention to. Last week, we also tracked the sales marked as "German addresses" and "US addresses".
Phyrex's new perspective on BTC chip distribution is also worth in-depth analysis. Because this round of crypto market cycle is different from the past: the market cycle was driven by the original innovation of the crypto market, but this time it is the Bitcoin spot ETF that leads this round of market cycle. In addition, Bitcoin currently accounts for about 50% of the entire market. Therefore, Bitcoin has become a data that we need to focus on.
Here, he also introduced the URPD indicator, which is the BTC chip distribution map, which can clearly show where the investors currently participating in the turnover are concentrated.
| OKG Research: The on-chain data that breaks the "information cocoon" for the first time is as important as an "electrocardiogram". From a cyclical perspective, on-chain data is the criterion. From a short-term perspective, on-chain data, especially large-scale changes, is the reason. |
If we look back at finance, finance makes money by relying on information asymmetry, because it is essentially an intermediary. However, on-chain data is considered to be the first to break the information barriers and access restrictions of the "information cocoon" to a large extent. People from all over the world can access any transaction record on the blockchain, including the transfer parties and the amount. This low-cost and efficient acquisition of information only requires learning to use tools and finding the right tools, such as the OKLink multi-chain browser. After obtaining information, analyzing the value behind the data is the most necessary step.
In terms of on-chain data analysis, Phyrex emphasized the accuracy of on-chain data in judging cyclical changes in the market, especially in the analysis of long periods and large cycles. Aunt Ai proposed that on-chain data can also reflect the activities of the crypto market in real time, including information in multiple dimensions such as trading volume, holdings, and the number of active addresses. For investors, this information is like an "electrocardiogram" of the crypto market, assisting investors in making accurate market judgments, and its impact and reaction speed even surpass any traditional financial industry.
The author believes that from a macro-cycle perspective, on-chain data is the criterion for judgment. In the short term, on-chain data, especially large-scale fluctuations, are the cause of fluctuations. Through the accurate, direct and rapid response of on-chain data, the impact of these fluctuations on market sentiment will be magnified, thereby affecting investor behavior.
Finally, the author asked Phyrex and Aunt Ai if they were given only one indicator to look at the crypto market, and they gave the answers of URPD and Token price respectively. And here, I want to reiterate that point of view: With the repositioning of the crypto market, no one can escape the Kondratieff wave.
This article only represents personal opinions based on data analysis and does not constitute investment advice for any potential investment targets.
