In the cryptocurrency market, data has always been an important tool for making trading decisions. How can we navigate through the data fog and uncover valuable insights to optimize our trading decisions? This is a topic that the market has been paying continuous attention to. OKX has specially planned the “Insight into Data” column in collaboration with mainstream data platforms such as AICoin and Coinglass, aiming to explore more systematic data methodologies from common user needs and provide them as a reference for the market to learn from.
The following is the content of the first issue, which revolves around perceiving market changes and discusses the methodology of “data” jointly constructed by the OKX strategy team and AICoin Research Institute, hoping to be helpful to you.
OKX Strategy Team: The OKX strategy team is composed of a group of experienced professionals dedicated to promoting innovation in the global digital asset strategy field. The team brings together experts from various fields such as market analysis, risk management, and financial engineering, providing solid support for the strategic development of OKX with their profound professional knowledge and abundant business experience.
AICoin Research Institute: AICoin Research Institute is based on the AICoin platform and is committed to providing in-depth data interpretation and investor education to Web3 users. AICoin is a Web3 data service provider that focuses on market data analysis, professional K-line charts, signal strategy tools, asset management monitoring, and news.
Table of Contents
Toggle
Perceiving market changes in real time, what dimensions of data must be constantly monitored?
What indicators can help users better grasp the changes in macro trends?
Timing is crucial, which data can help capture the best opportunities?
For large funds, what data is needed to build a scientific and robust trading strategy?
Conclusion
Risk warnings and disclaimers
AICoin Research Institute: We believe that the following dimensions can help investors better perceive market changes.
First, price fluctuations and trends. First and foremost is the latest price, as real-time price changes best reflect the current market sentiment. Next is price trends, which are usually measured by technical indicators. Common ones include MA, EMA, MACD, RSI, as well as various custom indicators developed by technical analysis researchers.
Second, trading volume, mainly total trading volume and large transactions. Total trading volume can efficiently measure market activity. Large transactions mainly refer to the trading situation of large traders, such as whale buy and sell orders, which may indicate significant market fluctuations. We have also monitored and analyzed several important data types in the past and made them available for users to analyze and receive alerts, including major orders based on CEX order book and transaction data, large transaction behaviors, chip distribution, etc.
Third, fund flows. This primarily includes net fund inflows/outflows: observing the inflow and outflow of funds can help us better judge the supply and demand situation in the market. Recent ETF net inflow data is a good example. If ETF funds flow in large quantities, it indicates that the market is still an incremental market. We have also collected and shared this type of data for users’ reference. In addition, it is necessary to pay attention to the fund flow of major exchanges and understand the buying and selling pressure in the market. Generally, reference can be made to the data of large withdrawals and deposits on exchanges, as well as the balance of exchange wallet addresses.
Fourth, observing market sentiment and social media dynamics. Look at market sentiment indicators, such as the Fear & Greed Index. We would like to specifically recommend OKX’s contract data indicators, such as the long/short position ratio and the average position ratio of elites. These indicators have important reference value for medium-term and short-term market trends. As a leading CEX, OKX’s open access to such large-scale trading data is of great significance to the market.
Of course, social media and news should also be closely monitored. Social platforms like Twitter, Reddit, and mainstream news media in the industry can help us capture market sentiment and potential hotspots.
Fifth, on-chain transaction data, including transaction volume, active addresses, etc., can help us understand the activity level of on-chain activities. It is recommended to pay attention to changes in the addresses holding smart money and changes in tokens of projects that are the focus of community KOLs. For tokens using the POW mechanism like Bitcoin, changes in hash rate and mining difficulty can reflect miners’ confidence and network security. The most critical points are the halving period and the impact of miner shutdown price on coin price.
Sixth, macroeconomic data and policies, including economic indicators such as US non-farm data, CPI, etc., which help us understand the overall economic situation. In addition, changes in regulatory policies in various countries directly affect the implementation and promotion of the cryptocurrency market in those countries, and are also one of the indicators of market changes.
OKX Strategy Team: Perceiving market changes is crucial for users. We recommend paying attention to data in at least the following four dimensions:
First, price trends. Price changes are the most direct signals of market changes. Users need to pay attention to short-term and long-term price trends and use technical indicators such as moving averages (MA), relative strength index (RSI), and moving average convergence divergence (MACD) to assist in decision-making.
Specifically:
Moving averages (MA): including simple moving averages (SMA) and exponential moving averages (EMA), can be used to smooth price fluctuations and identify trend directions.
Relative strength index (RSI): can measure the speed and changes of price movements and identify overbought or oversold situations. Generally, an RSI value above 70 indicates overbought, while below 30 indicates oversold.
Moving average convergence divergence (MACD): can determine price trend changes by the difference between short-term and long-term moving averages.
Second, market volatility. Volatility is an important indicator of market changes. It can assist in judging market stability and potential investment risks. Volatility is usually measured by standard deviation or the VIX index. The fear and greed index, which combines various indicators (including volatility), can also comprehensively assess market sentiment and potential volatility.
Third, fund flows and transaction distribution. By analyzing fund flows and transaction distribution, one can quickly understand the overall fund movement and cost distribution in the market, and then more accurately judge market sentiment, price fluctuations, and key support and resistance levels.
Among them, fund flows are important indicators for judging market sentiment and trends. By monitoring the inflow and outflow of funds, investors can understand the overall movement of funds in the market, thereby understanding market trends. Inflow funds are orders executed at the ask price or higher, while outflow funds are orders executed at the bid price or lower. Net fund inflow is equal to inflow minus outflow. The size of a single fund inflow can be sorted by transaction amount and divided into large, medium, and small orders for easy viewing.
Transaction distribution shows the amount of trading at different price levels, reflecting investors’ trading distribution. By analyzing transaction distribution data, it is possible to understand investors’ profit or loss situations. By comparing the current price, profit regions and loss regions can be distinguished. Key data includes profit ratio, average cost, resistance level, support level, 90% and 70% transaction ranges, and transaction range coincidence. High coincidence indicates concentrated capital transaction positions and smaller price fluctuations. Following these data can enable more accurate judgment of market trends and price changes.
Fourth, fundamental data. For the cryptocurrency market, fundamental data includes project technical progress, tokenomics, partnership relationships, regulatory dynamics, etc.
AICoin Research Institute: Based on past market changes, we believe the following macro indicators are suitable for in-depth tracking by cryptocurrency traders:
First, total market capitalization. The total market capitalization of cryptocurrencies reflects the size and health of the entire cryptocurrency market. The growth of total market capitalization usually indicates the overall development of the market and an increase in participants.
Second, Bitcoin dominance. It represents the proportion of Bitcoin’s market capitalization in the total cryptocurrency market capitalization. A high Bitcoin dominance usually indicates a decrease in market risk appetite, with investors leaning towards more stable assets, while a lower proportion may indicate funds flowing into altcoins. In addition, we also track Ethereum’s market dominance, which is a similar indicator worth paying attention to.
Third, on-chain activity data, mainly referring to active addresses, transaction volume, and amount. In addition, for Bitcoin, the Bitcoin hash rate reflects the computing power and security of the Bitcoin network, while miner revenue and expenditure balance reflect whether miners are in a profitable state. These indicators are critical for understanding the health of the mining industry.
Fourth, liquidity and trading volume, including the trading volume of cryptocurrency exchanges at different time periods and the inflow and outflow of funds from exchanges. Tracking the inflow and outflow of cryptocurrencies into and out of exchanges can indicate increased selling pressure or vice versa.
Fifth, stablecoin liquidity, mainly the market capitalization and circulation of stablecoins such as USDT and USDC. The inflow and outflow of stablecoins can indicate market buying and selling pressure.
Sixth, market sentiment index, mainly looking at the Fear & Greed Index and OKX’s trading big data indicators.
Seventh, DeFi data, where the total locked value in DeFi protocols can reflect the size and growth trend of the DeFi market to some extent.
Eighth, derivatives market data, with a focus on open interest in futures and options markets. The open interest in futures and options markets reflects market participants’ expectations and risk exposure. Funding rates, such as the funding rate in the futures market, can indicate the balance of power between long and short positions. Funding rates and price spreads are important tools for guiding large funds to arbitrage opportunities, while large trading volumes can indicate market liquidity.
In conclusion, by closely monitoring these dimensions of data, investors can gain a better understanding of market changes and make more informed trading decisions.Funds balance the market price differences through arbitrage while providing liquidity to the market.
Ninth, the economic data and indicators of the United States, CPI and non-agricultural data: the value of these two indicators lies in guiding the Fed’s interest rate policy and predicting the overall capital inflow and outflow of the market.
OKX strategy team: We believe that users can refer to the following five key indicators:
First, the overall market value of cryptocurrencies, which is an important indicator of market size and development trends. Changes in market value can reflect the overall health of the market and investor confidence.
Second, the overall market trading volume reflects the market’s activity level. High trading volume usually means high market sentiment, which may be accompanied by significant price fluctuations.
Third, the BTC/ETH market value ratio is an important indicator for understanding market structure.
Fourth, ETF fund inflows and outflows reflect institutional investors’ market attitudes. Large fund inflows into ETFs usually indicate institutional investors’ optimism about the market outlook.
Fifth, the economic calendar includes key economic events and data releases, such as GDP data, inflation rates, and interest rate decisions. These macroeconomic factors have a significant impact on the cryptocurrency market.
AICoin Research Institute: This issue can be analyzed in several stages. First, the warehousing stage: it is recommended to mainly refer to the following indicators: EMA indicator, RSI indicator, BOLL indicator, and data indicators such as trading volume, active addresses, new address quantity, on-chain transaction quantity, and major large order trends.
Second, at the profit-taking and stop-loss stage, Fibonacci retracement, EMA, RSI, and data indicators such as transaction volume and trends of large transfers, and a decrease in network activity can be considered.
OKX strategy team: We believe that holding tendencies, basis differences, and technical indicators are of reference value.
For large capital users, tools such as dollar-cost averaging, portfolio arbitrage, and large order splitting are commonly used.
Dollar-cost averaging involves periodically purchasing assets to lower the overall holding cost. Portfolio arbitrage helps hedge risks, while large order splitting reduces market impact and trading costs.
The above is the first issue of OKX’s “Insight Data” column, focusing on market perception and establishing scientific trading strategies. This article only represents the author’s views and does not provide investment advice. Holders of digital assets should carefully consider trading or holding digital assets based on their financial situation.
This article is for reference only and does not represent the position of OKX. It does not provide investment recommendations or solicitations, and digital asset holding involves high risks. You should carefully consider trading or holding digital assets based on your financial situation. Please consult your legal, tax, and investment professionals for advice. Please be responsible for understanding and complying with applicable laws and regulations.
