Insights into Data 02 Issue OKX Coinglass Unearthing Value Data and Cultivating Mature Trading Mindset

Abstract: In the cryptocurrency market, data has always been crucial for making trading decisions. How do we navigate through the data fog to discover actionable insights that optimize trading decisions? This remains a focal point of ongoing market attention. OKX has launched the “Insight into Data” column in collaboration with mainstream data platforms like Coinglass and AICoin, aiming to systematically explore data methodologies based on common user needs to provide a structured framework for market reference and learning.

The second installment focuses on various data dimensions essential for different trading scenarios, co-developed by OKX Strategy Team and Coinglass Research Institute. Topics include capturing trading opportunities and cultivating a scientific trading mindset, offering valuable insights for traders.

Contents:
– What are the high-value data dimensions for novice users?
– Why is diversified asset allocation crucial for advanced users?
– Timing is crucial: How can traders identify optimal trading opportunities?
– Are there underrated data indicators overall?
– How can one cultivate a more scientific trading mindset?

Conclusion:
Coinglass Research Institute: Novice users often lack investment experience and professional knowledge, preferring straightforward and intuitive data indicators. These indicators typically hold higher reference value as they quickly reflect market sentiments and trends. Examples include greed and fear indices, long/short ratios, ETF fund flows, and CME open interest changes. These indicators intuitively reflect market emotions and investor behaviors, aiding users in understanding market trends swiftly and making informed decisions.

How do they interpret these simple data points?
Key tips for quick data interpretation include:
– Regularly monitoring indicators like ETF fund flows, greed and fear indices, and long/short ratios. Using charting tools to intuitively analyze the relationship between indicator changes and price trends.
– Reviewing historical trends of these indicators and comparing them with price charts to understand their fluctuations and corresponding market responses.
– Learning basic analytical methods, mastering technical and sentiment analyses.
– Paying close attention to market news and analyses from cryptocurrency experts to accumulate more market knowledge and experience.
– Practicing through simulated trading, using data for post-analysis to enhance data interpretation and application capabilities.

OKX Data Team: We summarize four key aspects and corresponding analysis tips for user reference:
1. Price trend data:
Types: Current price, historical price trends, moving averages (MA), relative strength index (RSI), Bollinger Bands.
Value: Price trend data helps users understand market trends, identifying buy and sell timing.
Analysis tips:
– Moving Averages (MA):
Price above MA: Likely in an uptrend.
Price below MA: Likely in a downtrend.
Short-term MA crossing long-term MA: Potential trend reversal indicator.
– Relative Strength Index (RSI):
RSI > 70: Market potentially overbought, consider selling.
RSI < 30: Market potentially oversold, consider buying. - Bollinger Bands: Price near upper band: Potential resistance, consider selling. Price near lower band: Potential support, consider buying. Narrowing bands: Potential indication of imminent significant breakthrough. 2. Volume data: Types: Volume data. Value: Volume data reflects market activity, helping users judge trend strength and sustainability. Analysis tips: - Volume-price relationship basic principles: Volume increases, price rises: Indicates upward trend continuation. Volume increases, price falls: Indicates deeper declines, emphasizing trend reversal. - Volume change patterns: Features: Previous market relatively subdued, both volume and price may be at lower levels. Volume starts gradually increasing, but the increase is gradual, not sudden. Prices typically rise slowly with increased volume. During this process, there may be slight adjustments with volume contraction and price decline. Possible meanings: May indicate gradual entry of significant funds (or "smart money"). Significant funds typically do not buy in large quantities at once to avoid pushing prices up. The market may be forming a new uptrend. Investor confidence may be recovering. Features: Increased trading activity: More investors participate in trading, possibly due to rising prices attracting more attention. Possible implications: A possible trend change signal is that some long-term holders may choose to sell profits at highs, while new buyers enter, leading to a surge in volume. Although a large volume may indicate changes, it does not always mean an immediate trend reversal. The market may continue to rise or enter a consolidation phase. - High volume after deep decline: This often occurs after the market has experienced a significant decline. The sudden appearance of high volume trading may indicate: Features: Selling pressure may ease, after a long period of sharp decline, most investors who want to sell may have sold, reducing selling pressure. Buying pressure may surge, some investors may consider the price low enough and start buying in large quantities, leading to a surge in trading volume. Although this may be a signal that the market is starting to stabilize, it does not necessarily mean that prices will immediately rebound. The market may need time to consolidate before a true reversal. Note: Individual currency volume during an overall market decline: May reflect special factors of that currency (such as project development, partnership relationships, etc.), requiring fundamental analysis to determine its sustainability and subsequent trends. 3. Fundamental data: Types: Project announcements, partnership relationships, technical progress, token economics, regulatory dynamics. Value: Fundamental data provides information on the long-term potential and risks of projects, aiding in making wiser investment decisions. Analysis tips: - Focus on important announcements: Evaluate the potential impact of announcements on project development. - Understand technical progress: Focus on the completion of development milestones to assess technical feasibility. - Analyze token economics: Understand token supply mechanisms, inflation rates, and use cases. - Track regulatory dynamics: Assess regulatory changes' potential impact on projects. 4. Market sentiment data: Types: Social media mentions, fear and greed indices, derivatives market funding rates. Value: Market sentiment data reflects investor psychological states, aiding in judging potential market reversal points. Analysis tips: - Social media heat: Sudden heat increase: May indicate short-term price volatility. Sustained high heat: Monitor for potential overhype. - Fear and greed indices: Extreme fear (0-25): May be a buying opportunity. Extreme greed (75-100): May be a selling opportunity. - Funding rates: Sustained high positive rates: Strong bullish sentiment, may face corrections. Sustained negative rates: Strong bearish sentiment, potential for rebound. Coinglass Research Institute: For advanced users, we recommend starting with the following dimensions: - Potential currency screening: Identifying currencies with growth potential through criteria such as price, market cap, circulation, and exchange listings for precise investment layout. - Asset portfolio allocation: The key to asset portfolio allocation lies in using correlation analysis to select assets with lower correlation. This method effectively diversifies portfolio risks, enhancing overall stability and returns. - Derivatives arbitrage opportunities: Use funding rate arbitrage calculators to discover arbitrage opportunities and conduct funding rate arbitrage to increase overall asset returns. - Portfolio monitoring: Using portfolio monitoring tools to test profits and risks of different investment schemes, regularly reviewing and adjusting to optimize allocation strategies. - Risk management tools: Using various risk management tools and techniques such as stop-loss orders and hedging strategies to control investment risks. OKX Strategy Team: Based on our observations, common tools for these users include dollar-cost averaging strategies, portfolio arbitrage, and large order splitting. Dollar-cost averaging involves periodically buying to lower overall holding costs during price declines, selling for profit during price rebounds, cyclically and continuously repeating arbitrage. Portfolio arbitrage is a strategy that helps users hedge arbitrage and reduce trading risks. This strategy can choose to trade different or similar currencies/markets simultaneously, using market fluctuations and price differences, automatically and timely for your profit. Portfolio arbitrage strategies can effectively help you reduce potential losses of potential losses to cope with future market uncertainty. Large order splitting is also a convenient trading strategy provided to large traders. This strategy can help users split large orders into small orders and then batch orders, and orders through the strategy of intelligent settings can minimize the impact of large orders on the market and maintain a higher average transaction price level, thus greatly reducing the trading cost of large traders. Coinglass Research Institute: Capture the opportunity is very important. In the previous question, we introduced some more important data dimensions. These important data dimensions, to users to find the best time to buy and sell will play a very important role. I'm here to briefly introduce the two stages of building and profit and loss. Building phase: 1. Liquidation Heat Map: When liquidation intensity is highly concentrated in a specific price range, it indicates that prices may move to that area. Investors can build positions based on the direction of concentrated liquidation levels. 2. ETF fund inflows: For example, the daily inflow of BTC ETF funds far exceeds its average daily inflow, which may indicate increased market interest in BTC. Therefore, investors may consider building or increasing positions. 3. Bitcoin Fund Rate Long-Term Below Benchmark Rate (0.01%): This usually indicates that the market is undergoing consolidation or nearing the bottom phase, making it suitable to build positions at the bottom. 4. Large increase in positions: A large increase in positions indicates more capital inflows into the market, thereby enhancing market activity. This couldFutures contract prices have experienced unsustainable increases, leading to market adjustments and even crashes. Conversely, if the funding rate remains low for an extended period, it indicates excessively pessimistic market sentiment and may lead to over-selling. In such cases, the market often experiences unexpected reversals, bringing potential trading opportunities. 1. Open Interest: For example, a sudden decrease of over 10% in Bitcoin contract open interest reflects insufficient market confidence, making it suitable to reduce positions or take profit/stop loss. 2. Large Liquidation: A rapid price drop leading to a large number of liquidations may result in a quick market rebound. Investors can enter the market during a rebound from the bottom. 3. Increased outflow of spot assets: An increase in the outflow of spot assets indicates increased selling pressure in the market, signaling profit-taking or stop-loss. Because a large amount of selling may lead to price declines, taking profit can lock in profits before the price drops, while stop-loss can prevent greater losses. 4. Significant changes in long/short ratio: When there are significant changes in the long/short ratio in the market, it usually indicates extreme market sentiment fluctuations. In such cases, prices are likely to experience significant fluctuations, requiring investors to be more vigilant. You may consider adjusting your positions and setting profit-taking/stop-loss orders to cope with the market's volatility. Greed status: The greed and fear index is a tool for measuring market sentiment. When the index remains above 80 for an extended period, the market is considered to be in a state of extreme greed, usually leading to overvalued prices. Gradually reducing positions or taking profit is advisable, as the market may face the risk of a pullback. Investors are advised to consider multiple data indicators rather than relying solely on a single indicator when looking for the best timing. Utilizing multiple data indicators can help investors more comprehensively predict market changes, reduce the misleading effects of a single indicator, and improve decision-making accuracy and efficiency. OKX Strategy Team: Regarding this issue, we recommend traders to comprehensively utilize positioning tendencies, basis, and technical indicators to more accurately grasp the best buying and selling opportunities, and objectively determine the timing for taking profit/stop loss. 1. Positioning tendency (Long Short Ratio): The positioning tendency reflects the ratio of long and short positions in the market. A high long ratio typically indicates optimistic market sentiment, with investors tending to buy, while a high short ratio indicates pessimistic market sentiment, with investors tending to sell. By analyzing the positioning tendency, users can judge the current market's main trend and sentiment, and thus select the appropriate timing for opening positions. 2. Basis: The basis refers to the difference between the futures contract price and the spot price. The basis can be a positive value (futures price higher than spot price) or a negative value (futures price lower than spot price). The 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). The basis can be used to monitor market sentiment and formulate arbitrage strategies. For example, a rapid increase in the basis may indicate a bullish market sentiment, while a rapid decrease may indicate a bearish market sentiment. 3. Technical indicators - Overbought/Oversold: Through technical indicators such as the Relative Strength Index (RSI) and Stochastic Oscillator, users can determine whether the market is in an overbought or oversold state. When the RSI is above 70, the market may be overbought, and prices may pull back; when the RSI is below 30, the market may be oversold, and prices may rebound. These technical indicators help users select the timing for opening positions in extreme market sentiment. 4. Return/Risk Tool: This tool helps users visualize and manage the potential return and risk of each trade. Users can set profit-taking and stop-loss points, calculate the risk-return ratio of each trade, and thus formulate a reasonable exit strategy. By using this tool, users can better control risk and ensure optimal returns in market volatility. Coinglass Research Institute: Different investors have different investment methods, risk tolerance, and investment goals, so they also choose different data indicators when analyzing the market. The changing market environment and conditions also affect the value of certain indicators, making them more meaningful in certain periods and less important in others. Although each indicator has its unique role and significance, in practical application, a single indicator often fails to fully reflect the market situation. Therefore, we recommend that investors consider multiple dimensions of data indicators, conduct comprehensive analysis, and make informed judgments to more accurately grasp market trends and investment opportunities. The comprehensive use of multiple data indicators, such as fundamental data, technical analysis indicators, and market sentiment indicators, helps investors gain a more comprehensive understanding of the market, reduce the misleading effects of a single indicator, and improve decision-making accuracy and efficiency. OKX Strategy Team: Some dimensions of data indicators may be underestimated in the cryptocurrency market, but they are relatively important for market analysis and investment decision-making: 1. ETF Inflow/Outflow: The flow of funds into and out of cryptocurrency ETFs reflects institutional investors' market attitudes. A large inflow of funds into ETFs usually indicates that institutional investors are optimistic about the market outlook, while outflows may suggest a weakening of institutional confidence in the market. Analyzing ETF fund flows can help users judge the medium- to long-term trends in the market. 2. Options Market Data: Options market data includes implied volatility, open interest in call and put options, etc. These data reflect market expectations of future price volatility. Options market data can provide forward-looking indicators of market sentiment. For example, changes in implied volatility can forecast significant price fluctuations, and an increase in call options may indicate a bullish market expectation. 3. Stablecoin Flows: The inflow and outflow of stablecoins (such as USDT, USDC) reflect market fund flows and investors' hedging needs. When a large amount of stablecoins flows into an exchange, it may indicate that investors are preparing to buy cryptocurrencies; conversely, a stablecoin outflow from an exchange may indicate investors cashing out. Analyzing stablecoin flows can provide clues to fund movements. 4. Network Effect Metrics: Network effect metrics include active users, developer activity, social media attention, etc. These metrics reflect the network effect and ecosystem health of blockchain projects. A strong network effect usually signifies higher project stickiness and growth potential, suitable for medium- to long-term investment decisions. 5. DeFi Activity Metrics: These include total value locked (TVL), user numbers of DeFi protocols, lending and liquidity provision conditions, etc. DeFi activity metrics reflect the health and growth potential of the decentralized finance market. High TVL and active user participation usually indicate strong demand and growth potential in the DeFi market. Coinglass Research Institute: Cultivating a scientific trading mindset requires systematic learning and practice. Here are some mature methodologies: 1. Maintain objectivity and rationality: Develop detailed trading plans and execute them resolutely, unaffected by market emotions. 2. Learn data analysis and risk management: Master technical analysis and fundamental analysis tools, and learn to set stop loss and take profit points. 3. Accumulate trading experience: Record the reasons, process, and results of each trade, summarize and reflect, and gradually establish an effective trading system. 4. Maintain an open mind: Continuously monitor industry news and expert opinions, update knowledge, and maintain sensitivity to market changes. 5. Establish trading rules: Establish clear trading rules and strictly adhere to them, avoiding the influence of greed or fear emotions. 6. Conduct simulated trading: Use simulated trading platforms for practice, validate and improve trading strategies, and reduce errors and losses in actual trading. 7. Learn quantitative analysis: Master quantitative analysis tools, build and test trading strategies, and ensure the effectiveness and stability of strategies. 8. Regularly review and adjust strategies: Timely adjust and optimize trading strategies based on market conditions and experience, maintaining their effectiveness and adaptability. By taking these methods, users can gradually cultivate a more scientific trading mindset, improve the success rate and efficiency of trading. OKX Strategy Team: From our experience, to become a mature investor, one needs to enhance three aspects of abilities. First, master fundamental data and indicators: 1. Understand macro trends: Understand key economic indicators (such as GDP, inflation rate, interest rates, etc.) and their impact on the market. Monitor global geopolitical conditions and significant events affecting the cryptocurrency market. Understand the market cycle and long-term trends of the cryptocurrency market. 2. Price and technical analysis: In-depth use of common technical indicators (such as moving averages, RSI, MACD, Bollinger Bands) and their principles and applications. Master the identification methods of trend lines, support levels, and resistance levels. Understand the identification and analysis methods of market structure (such as highs, lows, trend channels, etc.). 3. In-depth fundamental analysis: Learn to analyze the whitepapers, team backgrounds, and technical roadmaps of cryptocurrency projects. Understand the principles of token economics, including supply mechanisms, deflation/inflation models, usage scenarios, etc. Continuously monitor industry trends, technological innovations, and regulatory environment changes. Second, cultivate analytical and decision-making abilities: 1. Maintain critical thinking: Learn to question and verify information sources, especially market "hotspots" on social media. Cultivate the ability to think from multiple perspectives and consider possibilities opposite to your own views. Learn to identify market sentiment and signs of overreactions. Cultivate independent thinking and avoid blindly following "expert" opinions. 2. Build systematic trading strategies: Formulate clear trading plans based on personal risk tolerance and investment goals. Set clear entry and exit rules, including stop loss and take profit points. Learn to use different order types (such as limit orders, market orders, conditional orders, etc.) to execute strategies. 3. Establish strict trading discipline: Develop the habit of checking and analyzing before each trade to avoid impulsive trading. Strictly adhere to pre-determined trading plans and risk management rules. Learn to control emotions, especially when facing significant profits or losses. Keep a trading journal, recording the reasons, results, and emotional states of each trade. Third, practice and continuous improvement: 1. Systematic review and optimization: Regularly review trading records, analyze the reasons for success and failure. Use quantitative methods to evaluate strategy performance, such as the Sharpe ratio, maximum drawdown, etc. Continuously optimize trading strategies based on market changes and review results. Learn from failures and view each loss as an opportunity for improvement. 2. Maintain learning and market sensitivity: Pay attention to the views of industry-leading analysts but cultivate the ability to independently verify. Continuously monitor new financial technology developments, such as DeFi, NFTs, cross-chain technology, etc. Learn cross-market analysis, understand the relationship between traditional financial markets and the cryptocurrency market. These are the topics covered in the second issue of the "Insights into Data" column launched by OKX, focusing on the different data dimensions that different user groups need to reference in different scenarios, aiming to provide a systematic data methodology for traders of different experience levels 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 the trading community. Risk Warning and Disclaimer: This article is for reference only. The views expressed in this article are those of the authors and do not represent OKX's position. This article is not intended to provide (i) investment advice or investment recommendations; (ii) solicitations or offers to purchase, sell, or hold digital assets; (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins and NFTs) involves high risks and may experience significant fluctuations. You should carefully consider whether trading or holding digital assets is suitable for your financial situation. For your specific situation, please consult your legal/tax/investment professional. Please be responsible for understanding and complying with applicable local laws and regulations. This article is official content and does not represent the position and investment advice of this site. Readers must conduct a careful evaluation on their own.