Funds balance the market spread and provide liquidity to the market through arbitrage.
Ninth, the economic data and indicators of the United States, such as CPI and non-farm data, are valuable in guiding the Federal Reserve’s interest rate policy and predicting the overall flow of funds in and out of the market.
OKX Strategy Team: We believe that users can refer to the following five key indicators:
First, the overall market capitalization of cryptocurrencies is an important indicator of market size and development trends. Changes in market capitalization can reflect the overall health of the market and investor confidence. When the overall market capitalization continues to grow, it usually indicates an upward trend in the market, and vice versa.
Second, the overall market trading volume reflects the level of market activity. High trading volume usually indicates high market sentiment, which may be accompanied by significant price fluctuations. Users can analyze changes in trading volume to judge the strength of market trends and identify market peaks and troughs.
Third, the market share of BTC/ETH market capitalization is an important indicator for understanding market structure. When the market share of BTC or ETH increases, it may indicate that more market funds are concentrated in these two major cryptocurrencies, which is often seen as a signal of market hedging. Conversely, a decrease in market share may indicate that investors are exploring more opportunities in altcoins.
Fourth, the inflow and outflow of funds in ETFs can reflect the market sentiment of institutional investors. A large inflow of funds into ETFs usually indicates that institutional investors are optimistic about the market outlook, while outflows may indicate a weakening of confidence. Analyzing the movement of funds in ETFs can help users judge the medium to long-term trend of the market.
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. For example, an increase in interest rates may lead to capital outflows from high-risk assets, while increased economic uncertainty may prompt investors to seek cryptocurrencies as a hedge. Paying attention to the economic calendar helps users anticipate changes in macro trends.
AICoin Research Institute: This issue can be analyzed in several stages:
First, in the position-building stage, we recommend focusing on the following indicators:
– EMA indicator: The crossover of short-term (e.g., 12-day moving average) and medium-term (e.g., 26-day moving average) moving averages can indicate buying opportunities, such as “golden cross” (short-term moving average crosses above long-term moving average).
– RSI indicator: RSI below 30 is usually considered oversold and may present a good buying opportunity.
– BOLL indicator: When the price touches the lower Bollinger Band with signs of a rebound, it can be a buy signal.
– There are many types of technical indicators with various uses. It is recommended for investors to choose indicators that suit their own needs.
In addition, in terms of data indicators, we need to understand trading volume, active addresses and new address counts, on-chain transaction volume, and the trend of large orders.
Secondly, in the profit-taking and stop-loss stage, the following indicators can be considered:
– Fibonacci retracement: Fibonacci retracement levels, such as 38.2%, 50%, 61.8%, etc., can be used to set profit-taking and stop-loss points.
– EMA: Price falling below key moving averages, such as 120-day or 250-day moving averages, can serve as stop-loss signals.
– RSI: When RSI is above 70, it is usually considered overbought and may be a signal to consider profit-taking.
– In addition, when using data indicators for profit-taking and stop-loss, it is also important to consider trading volume, the trend of large transfers, and a decrease in network activity: a significant decrease in on-chain transactions and active addresses may indicate reduced market interest, which is a signal to consider stop-loss. Of course, relevant regulatory policies or unfavorable news also have important reference value for our investments. Finally, we also have one suggestion, which is risk management: set clear profit-taking and stop-loss points, smooth the purchase price through batch position building to reduce the risk of a single position; regularly review and adjust with a mindset of reflection and gains.
OKX Strategy Team: We believe that holding position bias, basis, and technical indicators have strong reference value.
Specifically, the position bias (Long Short Ratio) reflects the long/short ratio of market participants. A high long ratio usually indicates optimistic market sentiment, with investors inclined to buy; a high short ratio indicates pessimistic market sentiment, with investors inclined to sell. By analyzing the position bias, users can judge the main trend and sentiment of the current market, and choose the appropriate timing to build positions.
Basis refers to the difference between the futures contract price and the spot price. Basis can be positive (futures price higher than spot price) or negative (futures price lower than spot price). Basis reflects market participants’ expectations of future price changes. If the basis is positive, it usually indicates that the market expects future prices to rise (contango); if the basis is negative, it usually indicates that the market expects future prices to fall (backwardation). Basis can be used to monitor market sentiment and formulate arbitrage strategies. For example, a rapid increase in basis may indicate bullish market sentiment, while a rapid decrease in basis may indicate bearish market sentiment.
Technical indicators, such as overbought/oversold (RSI and Stochastic Oscillator), can help users determine whether the market is in overbought or oversold conditions. When RSI is above 70, the market may be overbought, and prices may experience a pullback; when RSI is below 30, the market may be oversold, and prices may rebound. These technical indicators help users choose the timing of position building during extreme market sentiment.
Finally, there are profit/risk management tools that can help users visualize and manage the potential returns and risks of each trade. Users can set profit-taking and stop-loss points, calculate the risk-reward ratio of each trade, and formulate reasonable exit strategies.
AICoin Research Institute: This issue mainly depends on the capital goals and the ability to tolerate drawdowns. Here is a simple analysis of some arbitrage indicators suitable for large capital references:
– Focus on opportunities for spreads in futures and spot markets.
– Pay attention to price disparities and timeliness opportunities across different exchanges for the same underlying asset.
– Monitor arbitrage opportunities in contract funding rates.
– Pay attention to arbitrage opportunities between on-chain and off-chain transactions.
– Consider market depth, open interest data, etc., of corresponding underlying assets to determine whether they can accommodate large capital arbitrage.
– Pay attention to the stability of exchanges. Super large platforms like OKX can better accommodate large capital arbitrage operations.
Currently, AICoin provides analysis and alerts for multiple dimensions of data, hoping to provide effective references for the trader community.
OKX Strategy Team: Based on our observations, the asset allocation of large capital users is more diversified. For this type of user, common tools include dollar-cost averaging strategies, portfolio arbitrage, and large order splitting. Dollar-cost averaging strategy reduces overall holding costs by regularly buying during price declines and selling during price rebounds. Portfolio arbitrage helps users hedge risks and reduce trading risks by simultaneously trading different or similar currencies/markets, taking advantage of market oscillations and price differences. Large order splitting is a convenient trading strategy for large traders. It helps users split large orders into smaller orders and place them in batches. Through intelligent settings, the strategy minimizes the impact of large orders on the market and maintains a higher average execution price, thereby greatly reducing the trading costs for large traders. These strategies, combined with their respective characteristics, can help large capital users achieve diversified allocation and achieve stable investment goals.
Dollar-cost averaging strategy (multi-currency portfolio, regular buying) is a strategy that reduces overall holding costs by periodically buying at low prices. It involves continuously buying in batches during price declines and taking profits when prices rebound, repeating the process in a continuous cycle to achieve arbitrage.
Portfolio arbitrage is a strategy that helps users hedge risks and reduce trading risks. This strategy involves simultaneously trading different or similar currencies/markets and taking advantage of market fluctuations and price differences to achieve timely and automatic profit-taking. Portfolio arbitrage can effectively help users reduce potential loss risks in response to future market uncertainties.
Large order splitting is a convenient trading strategy provided to large traders. This strategy helps users split large orders into smaller orders and place them in batches. By intelligently setting orders, the strategy minimizes the impact of large orders on the market while maintaining a higher average execution price, thereby greatly reducing the trading costs for large traders.
The above are the insights provided in the first issue of OKX’s “Insight Data” column, focusing on the perception of market changes and how to establish scientific trading strategies. We hope to provide systematic data methodologies for the trader community to better grasp market trends and make wise trading decisions. In future articles, we will continue to explore more practical data usage/analysis methods to provide references for traders with different investment preferences.
This article is for reference only. The content of this article represents the author’s opinion and does not represent the position of OKX. This article does not intend to provide (i) investment advice or recommendations; (ii) solicitations or offers to buy, sell, or hold digital assets; (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins and NFTs) involves high risk and may experience significant volatility. You should carefully consider whether trading or holding digital assets is suitable for your financial situation. For your specific circumstances, please consult your legal/tax/investment professionals. Please be responsible for understanding and complying with applicable local laws and regulations.
This article provides official content and does not represent the position or investment advice of this site. Readers must do their own careful evaluation.
