[Aim Rich Investment Strategy] Bitcoin, fears of short-term weakness turn… How to respond?

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Aim Rich Cryptocurrency Investment Information (2021.2.23)
<Figure 1=Market trend score as of 14:00 on the 23rd (100 points, left)/Market rise/fall intensity (right)/Data=Aim Rich Financial Engineering Research Institute>

◆Cryptocurrency market conditions <weak>

The cryptocurrency market, which rebounded after the plunge, is being pushed back to the level it had plunged the previous day. The previous day’s bitcoin price, in response to the comments of US Treasury Secretary Janet Yellen, temporarily plummeted to $48,000 and recovered to $53,000 overnight, but fell as sales continued to open in the morning of the day. As the short-term downtrend continued, the bitcoin market capitalization also collapsed $1 trillion.

In the parliament the previous day, the nominee Yellen urged the passage of Biden’s stimulus package, and at the same time suggested that he would review the corporate tax and capital income tax hikes and take a group action to bring a fair trade competition with China. In addition, he criticized Bitcoin as “a very inefficient way of moving money” and mentioned the issue of money laundering through Bitcoin.

Although institutional demand is still alive and the effects of inflation due to liquidity funds in the market are expected to continue for the time being, the short-term outlook for the cryptocurrency market has been darkened as technical indicators have been overbought due to the recent rapid rise.

Last night, the New York Stock Exchange was weak in general when finance minister Janet Yellen made a statement about an increase in the capital gains tax. After the opening, concerns over the end of the liquidity market increased, and the decline increased. The Dow index rose by 0.09%, but the S&P 500 index fell 0.77% and the Nasdaq index fell 2.46%.

As of 14 o’clock on the 23rd, the price of bitcoin based on CoinMarket Cap is $31,745.60, the 24-hour trading volume is about $89 billion, and the market cap is about $971.9 billion. The total cryptocurrency market cap is $1.5907 trillion, and the market cap share of Bitcoin is 61.6%.

The total cryptocurrency market cap decreased by 4.50% compared to the previous day, and the market cap excluding bitcoin decreased by 5.42% compared to the previous day, making Bitcoin stronger than Altcoin, and the market cap of Bitcoin decreased by 3.94% compared to the previous day. The market share increased by 0.55% compared to the previous day, which means that the number of altcoins declined relative to that of Bitcoin as the market overall also fell.

<Figure 2=Status of Real-Time Cryptocurrency Market/Data=Aim Rich Financial Engineering Research Institute>

On the other hand, according to the Weiss Crypto Index, the market, which had maintained a slight weakness after opening, fell sharply after 10:30 as the selling trend became stronger, and it was analyzed that it formed the first low around 12 o’clock. In particular, selling is concentrated on small and medium-sized stocks. W50, a cryptocurrency market index including bitcoin, is -6.08%, W50X, a cryptocurrency market index excluding bitcoin, is -6.95%, WLC, an index focused on large stocks, is -5.77%, and WMC, a medium-sized stock-oriented index. -7.62% WSC, an index centered on small stocks, recorded -10.30%.

<Figure 3=Longs/Shorts cumulative trading volume ratio of major exchanges in the past 24 hours/Data=Aim Rich Financial Engineering Research Institute>
<Table 1=Ratio of Longs/Shorts trading volume of major exchanges as of 14:00 on the 23rd/Data=Aim Rich Financial Engineering Research Institute>

As of 14 o’clock on the 23rd, the ratio of buy:sell cumulative transaction volume in the last 24 hours was 47%:53%, showing a high sell ratio, and as of 14 o’clock, the long/short ratio result of each exchange was also analyzed to be strong overall. done. (Refer to Table 1)

At the same time, on the cryptocurrency derivatives exchange BitMEX, the basis of bitcoin futures was around 52.5, and the basis of Contango and Ethereum futures was around 1.65. The price of bitcoin futures on the Chicago Merchandise Exchange (CME) is falling. February futures traded at $52,325.0, up $1395.0 (-2.60%) from the previous day.

◆Main cryptocurrency prices <weak>

As of 14:00 on the 23rd, the domestic bitcoin (BTC) price fell 6.07% from the previous day to 5,7998,000 won, Ethereum (ETH) fell 6.96% to 1,887,000 won, and Polkadot (DOT) rose 6.94%. It recorded 39,900 won. Ripple (XRP) fell 6.05% from the previous day to 606 won, Bitcoin Cash (BCH) fell 7.28% to 664,700 won, Ada (ADA) fell 6.40% to 1,170 won, and Stellar Lumen (XLM) fell 7.58% to 488 won. , Chainlink (LINK) is trading at 32,590 won, down 9.52% from the previous day, and Litecoin (LTC) is trading at 22,400 won, down 7.25%.

<Figure 4=Upbit BTC/KRW Daily Chart/Data=Trading View>
<Figure 5=Top 10 Coin Price (As of February 23, 14:00)/Image=Coin Market Cap>

At the same time, the global cryptocurrency market price based on CoinMarket Cap is declining among the top 10 stocks by market cap as of the last 24 hours. The international Bitcoin (BTC) price is $52,076.63, down 8.63% from the same time the day before. Ethereum (ETH) fell 11.68% to $1,685.55, while Binance Coin (BNB) fell 13.01% to $248.16. Cardano (ADA) fell 1.99% to $1.05, Polkadot (DOT) fell 7.40% to $35.46, Ripple (XRP) rose 2.65% to $0.5503, Litecoin (LTC) fell 12.76% to $196.70, Chainlink LINK) fell 12.15% to $29.03, while Bitcoin Cash (BCH) fell 14.38% to $593.55.

◆ Analysis of major media and market experts <neutral>

As the bitcoin price, which exceeded $58,000 and hit an all-time high, plummeted to the $49,000 range and the market capitalization fell to $1 trillion, some pointed out that attention should be paid to the temporary downside risk caused by the bitcoin profit-taking sale, and the report ended the rally. There are many opinions that it will enter the adjustment section. However, there are many opinions that those who were tired of the continued uptrend may feel relieved from this sale, and rather, it may be an opportunity to buy bitcoin at a low price, which was continuing the uptrend.

① Decrypt may seem uneasy about the fact that the largest price drop in history occurred within only 24 hours, but it can be seen as the inherent volatility of bitcoin, and rather, it could be an opportunity to buy bitcoin at a low price, which continued to rise. Evaluated.

② Bitcoin investor Raul Pal, a former hedge fund manager, said, “I feel relieved with this bitcoin selloff.” “You have finally come to an opportunity to buy a low price.”

③ CNBC Cryptotrader show host Ran NeuNer argued that “Bitcoin will outpace the market cap of gold by the end of the year 2022.”

④ Max Kaiser, a renowned cryptocurrency analyst from Wall Street, recently tried to pass a stimulus package that could issue trillions of dollars to counter the economic downturn caused by the corona crisis. This could lead to hyperinflation, which could lead to a one-sided upward flow of Bitcoin. Tesla’s announcement of its Bitcoin investment will also be aimed at responding to this inflation risk. Other S&P500 companies will follow Elon Musk Tesla’s CEO and invest in bitcoin as a hedge against fiat currency,” he said. “Bitcoin price could rise to 4,000%.”

⑤ Cryptocurrency analyst and trader Collin Wu expressed the view that despite Ethereum prices retreating below $1,800, on-chain indicators are still positive. He pointed out that during the recent surge in Ethereum prices, the liquidity indicators of the exchange have fallen to the lowest level, pointing out that Ethereum continues to pull out of the exchange as Ethereum prices rise. Colin Wu recently said that it seems that large Ethereum holders are preparing for the next step by increasing their stake in Ethereum 2.0, and predicted that the rally will not end as such.

⑥ Billionaire investor Mike Novogratz, the founder of Galaxy Digital, a US cryptocurrency investor, said in an interview with local media, “The US Securities and Exchange Commission (SEC) said, “From the perspective of US investors, Bitcoin ETF (listed index fund) “We recognize that it is a better bitcoin investment channel,” he said. “It will be difficult to reject it.”

⑦ US Mayor Francis Suarez in Miami said, “There will be bigger and bigger cryptocurrency events after Tesla’s BTC purchase. Tesla’s investment news is part of the process of transforming the cryptocurrency industry into a mainstream culture.”

⑧Ayusi Jindal, an analyst, predicted, “If Bitcoin clearly crosses the $57,500 resistance line, it is possible to break through $60,000.” “If you look at the four-hour chart, there is a major bullish trend line of about $54,000,” he said. “Bitcoin is maintaining a bullish momentum of over $50,000.” He warned, “If BTC does not break through the $57,500 barrier, it is likely to be lowered. In this case, the price could retreat to the $54,000 and $54,250 support lines.” “If the downtrend continues, it could be threatened with a $50,000 lead.”

(Negative opinion)

① Cryptocurrency analyst Michael Van der Pope analyzed that “Bitcoin has undergone a large correction over the past 24 hours,” and “the weakness at the beginning of this week suggests that a further decline is possible in the future.” According to him, historically, it is difficult for bitcoin prices to show strong strength in March. In 2017, 2018 and 2020, BTC has undergone massive adjustments, while 2016 and 2019 have undergone minor price adjustments. He pointed out that if the trend is the same now, BTC will drop to $37,000. He predicted that if Bitcoin stays between $42,000 and $44,000, it will be able to prevent a major decline.

② Coinnis special analyst’JIn’s Crypto’ diagnosed that “a temporary adjustment occurred on the 22nd due to a profit-taking sale on the bitcoin price, and it was pushed up to around the 55,000 dollar level.” He said, “BTC price fluctuations were lower compared to February 8th, and the cumulative fluctuations on the 30th were measured lower than before January 8. This means that the price fluctuations compared to the BTC trading volume are decreasing. You should be careful about the short-term downside risks that follow.”

③ China’s state-run media Xinhua said, “Bitcoin’s skyrocketing has a reasonable side, but you have to be careful with the risk. Bitcoin and the fiat currency system naturally compete on a counter-point. In the future, it will be bound by strong regulations of each country’s regulatory authorities. It has to be. Investors should be wary of the FOMO sentiment,” he warned.

④Bitcane’s founder Jihan said, “BTC’s valuation charts should also consider inflation like legal currency.” During the first 10 years of cryptocurrency, inflation was very low and commodity prices declined.

⑤ The president of the Federal Reserve Bank of Boston (Yeon Eun) in the United States said, “It is personally amazing that bitcoin continues to thrive,” he said. “With time, the price of bitcoin will face downward pressure.”

⑥ Timothy Lane, Vice President of the Central Bank of Canada (BOC), said, “The recent surge in bitcoin prices is not a trend, but a speculative madness. Cryptocurrency has a serious flaw as a payment method,” he pointed out.

◆Comprehensive Analysis of Bitcoin Market Price <Weakness>

Bitcoin daily market price (see Figure 6) is attempting to rebound after confirming support near the moving average line on the 20th following the sharp rise the previous day. Since there has been no such adjustment period since the start of the increase in mid-December, a slight adjustment is inevitable for further increase. Therefore, while maintaining the mid- to long-term buy perspective, short-term outlook is predominantly falling, so short-term trading-minded investors will be wise to clear up their holdings when rebound.

Technically, the adjustment to the 20th moving average is very natural, but it is not good that the rebounding market price plunged again. Moreover, since the fibonacci 1 retracement price has collapsed during the intraday, if it fails to recover quickly, it may break the low price the previous day, so be careful. In the on-chain transaction volume index of Figure 13-1, spot transaction volume has increased compared to the previous day, and of these, it can be seen that the proportion of the amount sold (refer to the Figure 14 index) is large.

In addition, today is the expiration date for Bitcoin and Ethereum options on the DRBT exchange. As a result of the 14:00 simulation, the same-day settlement price was expected to be about $53,000 and $1,760, respectively, so it would be a good idea to use it as an opportunity for volume control rather than buying when rebounding.

<Figure 6=BTC/USDT (Binance) daily price (as of 14:00 on the 23rd)/Chart=Trading View>

The price of Binance BTC/USDT, which was calculated by the institute’s quant program, is $53,072 (pink line). The current market price is at $53,072 and lower than the market price of the day, but it is higher than the lower price of the previous day, so 1) When the Fibonacci 1 retracement point ($50,154) recovers 2) The purchase was $53,072 after confirming the support of the previous day’s low price and the 20th moving average line. Will be the primary liquidation goal. For more detailed analysis based on market data, see ‘7. Please refer to the’Quantitative Analysis’ section.

<Figure 7=Deribit (DRBT) BTC Option Simulation Result of Expected Water Payment Price on February 23 (at 14:00)/Data = Aim Rich Financial Engineering Research Institute>

◆Technical Analysis <Strengthening>

As of 14 o’clock on the 23rd, the technical analysis of the daily price movements of bitcoin on Upbit, a domestic cryptocurrency exchange, and Binance, a foreign exchange, all showed’active buy’. Looking at the detailed evaluation items, 7 of the oscillator indicators were’buy’, 0’sell’, and one’neutral’ opinion on Upbit, and’active buy’ opinion came out, and the moving average indicator was 10’buy’ and It was summarized as a’buy’ opinion with two’sells’.

<Figure 8=Upbit: BTC/KRW (Daily) Technical Analysis Summary Table/Data=Investing.com>

If you look at the detailed items of Binance, among the oscillator indicators,’Buy’ is 8,’Sell’ is 0, and’Neutral’ is 0, sending a’active buy’ signal.The moving average indicator is’Buy’ is 10, ‘Sell’ was summarized as’Buy’ into two.

<Figure 9=Binance: BTC/USDT (Daily) Technical Analysis Summary Table/Data=Investing.com>

◆Quantitative analysis

◇Crypto Fear & Greed Index <Strengthening>

The’fear and greed index’ provided by the cryptocurrency data provider Alternative.me maintained the status of’extreme greed’ with 94 points as of the previous day. This indicates that despite the plunge in the market, investor sentiment continues to be extremely overheated. The index closer to 0 indicates extreme fear in the market, and closer to 100 indicates extreme optimism.

<Figure 10=Crypto Fear and Greed Index/Data=Alternative.Me>

◇Comparison of return by asset compared to the beginning of the year (%) (as of February 23, 14:00) <Strengthening>

U.S. Treasury Secretary Janet Yellen’s remarks put a brake on the rising bitcoin price. As of 14:00 on the 23rd, the yield of US CME Bitcoin futures, which had soared, was only 70.27%, up 2.96% from last Thursday. However, it still ranks first among the valuation asset classes and maintains a large margin gap with oil futures (+29.57%), which is the second place.

On the previous day, oil prices continued to rise as demand increased due to economic resumption in the eurozone and a cold wave in Texas. As the time to normalize drilling facilities was delayed, the supply-demand imbalance continued. Gold prices also rose amid continued fear of inflation. Meanwhile, interest rates are approaching the psychological resistance line of 1.5%. Although it is lower than 1.6% before the coronavirus, the rate of interest rate increase is flowing more rapidly than market expectations. During the same period, the dollar fell 1.04%, but the S&P 500 and gold yields fell 1.48% and 1.83%, respectively.

<Table 2=Status of increase/decrease in return by asset category/Data=Chicago Commercial Exchange, USA>
<Figure 11=Year-to-Year Return by Asset Category/Data=Trading View>

◇Comparison of yield by cryptocurrency compared to the beginning of the year (%) (as of February 23, 14:00) <Strengthening>

Bitcoin, which had soared, is returning the rate of return. Among the top market cap stocks, Binance Coin (BNB), Cardano (ADA) and Polkadot (DOT), which boasted tremendous gains in recent years, are still maintaining high growth rates despite falling returns. Cardano and Polkadot have grown rapidly as the adoption rate of smart contract platforms is much lower than that of Ethereum, but their functions have grown rapidly as they received attention as a next-generation project that could replace Ethereum, and Binance Coin’s strong uptrend was accompanied by the growth of the Binance ecosystem as a whole. It is analyzed that the deflation mechanism that burns a certain amount of tokens for adjustment has been affected.

As of 14:00 on the 23rd, Binance Coin (BNB) ranked first with 571.70%, Cardano (ADA) ranked second with 512.64%, Polkadot (DOT) ranked third with 334.89% and Chainlink (LINK) ranked 152.99% And Ethereum (ETH) ranked fifth with 134.89%.

<Figure 12=Ranking of the top 10 cryptocurrencies in market cap compared to the beginning of the year/Data=Trading View>

◇Bitcoin on-chain indicator analysis

① Analysis of Bitcoin transaction volume on the day

Analyzing the trading volume of BTC/USD’s on-chain data on the same day makes it easy to check the direction of the bitcoin market and respond to it. Indicator 1 in Figure 13 shows the spot trading volume of BTCUSD, BTCUSD or BTCUSDC on 10 major exchanges (Binance, Bitfinex, PoloniX, Bitex, Coinbase, Bitstamp, Kraken, HitbittyC, Gemini). Indicator 2 shows the trading volume of BTCUSD or XBTUSD indefinite futures on 7 derivatives exchanges (Binance Futures, OKX Futures, OKX Futures, Huobi Futures, FTX Futures, Kraken Futures, Delibit, BitMEX) in real time. Sum up and display.

<Figure 13=Comparison of total BTC spot trading volume and total BTC derivatives trading volume on major exchanges/Data=Aim Rich Financial Engineering Research Institute>

The bitcoin market price, which ended sharply the previous day, was pushed after the market price and rebounded without reaching the low price the day before. In indicator 1 of Figure 13, the amount of spot trading increased compared to the previous day, but the indicator in Figure 14 shows that the total number of sales has been high so far. On the other hand, from Index 2 of Figure 13, it can be seen that the trading volume of derivatives was very high as the market price fell sharply the previous day. In general, there are many cases where the trend changes after this day. As it can be seen that the index for measuring downturn volatility in Figure 14 also reached the highest level, it is possible that the low of the previous day was the first bottom in the trading volume index.

<Figure 14=Comparison of total daily BTC purchases and total sales of major exchanges/Data=Aim Rich Financial Engineering Research Institute>

② Bitcoin price and Korea premium index trend analysis <Neutral>

As the prices of Bitcoin and Ethereum plummeted and the kimchi premium index soared, the two became very close. However, judging by the indicator alone, it has not yet met or intersected, so it is expected that the mid- to long-term buy perspective should be maintained. Investors with a tendency to trade short-term would be better off closing their stocks when they rebound.

<Figure 15=Bitcoin Price and Bitcoin Kimchi Premium Index Trend Comparison/Data=CryptoQuant>
<Figure 16=Ethereum Price and Bitcoin Kimchi Premium Index Trend Comparison/Data=Cryptoquant>

<Neutral> Let’s take a look at the Coinbase Premium Index (a value minus the Coinbase Pro (USD) price minus the Binance price (USDT)), meaning that the higher the premium, the stronger the coinbase’s spot buying pressure.

When the coinbase premium index hit the lowest, the bitcoin price also hit the lowest, and immediately after this period, the price and index rebounded sharply. After that, it can be seen that when the price continued to rise and then fell, the index also fell below ‘0’. Currently, it has risen above ‘0’ and has turned bullish, so we can expect a short-term strength of the market price. However, it will be necessary to check whether the time to hold the (+) is shortened.

<Figure 17=Bitcoin Price and Coinbase Premium Index Trend Comparison/Data=CryptoQuant>

◇Analysis of the share of non-settled bitcoin options on the day

Looking at the analysis result (see Figure 18) of the percentage of outstanding contracts aggregated from the bitcoin options issued by major cryptocurrency exchanges (Deribit, OKEx, Bit.com), the proportion of selling was at 10:44.77% based on the number of contracts. As of 14:00, it has decreased to 30.87%, and it is analyzed that the price of bitcoin is expected to gradually rebound in the afternoon of the day, but the selling trend will continue, as it has decreased from 30.27% to 22.68% on a premium basis.

<Figure 18 = Analysis of non-payment agreements for Bitcoin options issued by Deribit as of 10:00 (upper) and 14:00 (lower) on the 23rd, data/data = Aimrich Financial Engineering Research Institute>

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