In the cryptocurrency market, data has always been an important tool for people to make trading decisions. How do we cut through the data fog and uncover effective data to optimize trading decisions? This is a topic that the market has been paying continuous attention to. OKX has specially planned the “Insight into Data” column, and has jointly collaborated with mainstream data platforms such as AICoin and Coinglass to explore more systematic data methodologies from common user needs, hoping to provide a reference for the market to learn from.
The following is the content of the first issue, jointly discussed by the OKX strategy team and the AICoin Research Institute, focusing on sensing market changes and building “data” methodologies, hoping to be helpful to you.
OKX Strategy Team: The OKX strategy team, composed of experienced professionals, is committed 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 OKX’s strategic development with deep professional knowledge and rich business experience.
AICoin Research Institute: The AICoin Research Institute, based on the AICoin platform, 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 candlestick charts, signal strategy tools, asset management monitoring, and news.
Content Index
Toggle
1. Sensing market changes at the first time, what are the dimensions of data that must be constantly focused on?
2. What indicators can help users better grasp macro trends?
3. Timing is the key to victory, which data is helpful in capturing the best timing?
4. For large funds, which data should be considered to build a scientific and robust trading strategy?
Conclusion
Risk warning and disclaimer
AICoin Research Institute: We believe that the following dimensions can help investors better sense market changes.
First, price fluctuations and trends. First is the latest price, real-time price changes can best indicate the current market sentiment. Secondly, price trends are usually measured through technical indicators, including MA, EMA, MACD, RSI, and various custom indicators developed by technical analysis researchers.
Second, trading volume, mainly total trading volume and large volume trading. Total trading volume can efficiently measure market activity. Large volume trading mainly examines the trading situation of large holders, such as the buying and selling of whales, which may indicate significant market fluctuations. We have also monitored and analyzed several important data in the past and made them open for user analysis and early warning, including main large orders based on CEX order book and transaction data, large volume transaction behavior, and chip distribution.
Third, fund flow. Mainly net fund inflow/outflow: observing fund inflow and outflow can help everyone better judge the supply and demand in the market. Recent ETF net inflow data is a good proof. If ETF funds flow in a large amount, it indicates that the market is still an incremental market. We have also collected and shared such data for users’ reference. In addition, monitoring the capital flow of exchanges is necessary to understand the buying and selling pressure in the market. Generally, the capital flow of exchanges and the balance of wallet addresses of exchanges can be referred to.
Fourth, observing market sentiment and social media dynamics. Look at market sentiment indicators, such as the Fear & Greed Index. We particularly recommend OKX’s contract data indicators, such as the long/short position ratio, the average long/short position ratio of elites, and other indicators, which are of great reference value for the short- and medium-term market trends. OKX as a leading CEX, the open trading big data is of great reference significance for the market.
Of course, social media and news should also be timely monitored. Social platforms like Twitter, Reddit, and mainstream news media within the industry can assist us in capturing market sentiment and potential hotspots.
Fifth, on-chain transaction data, including transaction volume, active addresses, etc., can help us understand the activity of on-chain transactions. It is recommended to pay attention to changes in the addresses of smart money and the changes in the tokens of projects in the focus of the community KOL. For tokens with POW mechanisms such as Bitcoin, changes in hash rate and mining difficulty can reflect the confidence of miners and network security. The most critical are two points: halving cycle and the impact of miners’ shutdown price on coin price.
Sixth, macroeconomic data and policies, including economic indicators such as US non-farm payrolls and CPI, are helpful for us to understand the overall economic situation. In addition, changes in regulatory policies in various countries have a direct impact on the landing and promotion of the cryptocurrency market in the current country, and are also one of the indicators of market changes.
OKX Strategy Team: Sensing market changes is crucial for users. We recommend focusing on at least 4 dimensions of data:
First, price trends. Price changes are the most direct signal of market changes. Users need to pay attention to the short-term and long-term trends of prices, 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 Average (MA): including Simple Moving Average (SMA) and Exponential Moving Average (EMA), can be used to smooth price fluctuations and identify trend direction;
Relative Strength Index (RSI): can measure the speed and change of price changes and identify overbought or oversold conditions. Usually, RSI value above 70 indicates overbought, and below 30 indicates oversold;
Moving Average Convergence Divergence (MACD): can determine the change in price trends 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 VIX index, or by synthesizing fear and greed indices of multiple indicators, to comprehensively evaluate market sentiment and potential volatility.
Third, fund flow and transaction distribution. Comprehensive analysis of fund flow and transaction distribution can quickly understand the overall capital movement and cost distribution in the market, and then more accurately judge market sentiment, price fluctuations, and key support and resistance levels.
Fund flow is an important indicator to judge market sentiment and trends. By monitoring the inflow and outflow of funds, investors can understand the overall movement of funds in the market, and then understand the market trends. Inflow funds are orders that are traded at the ask price or higher, and outflow funds are orders that are traded at the bid price or lower. Net fund inflow is equal to inflow minus outflow. The size of single fund inflow is ranked by transaction amount, which can be divided into large orders, big orders, medium orders, and small orders, for easy viewing.
Transaction distribution shows the number of transactions at different price levels, reflecting the trading distribution of investors. By analyzing transaction distribution data, you can understand the profit or loss situation of investors. By comparing the current price, you can distinguish profit areas and loss areas. Key data includes profit ratio, average cost, resistance level, support level, 90% and 70% transaction intervals, and the coincidence of transaction intervals. High coincidence indicates concentrated capital transaction positions and smaller price fluctuations. Following these data can more accurately judge 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 the overall changes in the market, we believe that the following macro indicators are suitable for depth tracking by cryptocurrency traders:
First, total market value. The total market value of cryptocurrencies can reflect the scale and health of the entire cryptocurrency market. The growth of total market value usually indicates the overall development of the market and an increase in participants.
Second, Bitcoin dominance. It represents the proportion of Bitcoin market value in the total cryptocurrency market value. A high Bitcoin dominance usually indicates a decrease in market risk appetite, with investors preferring more stable assets, while a lower proportion may indicate funds flowing into altcoins. In addition, we also calculated the Ethereum market value dominance, which is also 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 hash rate of Bitcoin reflects the computing power and security of the Bitcoin network, and the balance of miners’ income and expenditure reflects whether miners are in a profitable state, which is very important 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 to exchanges, a large amount of funds flowing into an exchange may indicate an increase in selling pressure, and vice versa.
Fifth, stablecoin liquidity, mainly the total market value and circulation of stablecoins, such as USDT, USDC, and the inflow and outflow of stablecoins can show market buying and selling pressure.
Sixth, market sentiment index, mainly looking at the Fear & Greed Index and OKX’s large trading data indicators.
Seventh, decentralized finance (DeFi) data. The total locked value in DeFi protocols can to some extent reflect the scale and growth trend of the DeFi market.
Eighth, derivatives market data, key of which is the open interest of contracts. The open interest of futures and options contracts can reflect the expectations and risk exposure of market participants. There are also funding rates, such as the funding rate in the futures market, which can indicate the contrast of long and short forces. The funding rate and spread are important tools for guiding large funds to arbitrage, and the influence of the funding rate and the shutdown price of miners on the coin price.Funds balance the market price differences and provide liquidity to the market through arbitrage.
Ninth, the economic data and indicators of the United States, CPI and non-farm data: the value of these two indicators lies in guiding the Fed’s interest rate policy and predicting the overall capital inflow and outflow trends in the market.
OKX Strategy Team: We believe users can refer to the following five key indicators:
1. Overall cryptocurrency market capitalization, which reflects the market’s overall health and investor confidence.
2. Overall market trading volume, which indicates market activity levels.
3. BTC/ETH market capitalization ratio, which is an important indicator for understanding market structure.
4. ETF fund inflows and outflows, reflecting institutional investors’ market attitudes.
5. Economic calendar, including key economic events and data releases, which have important impacts on the cryptocurrency market.
AICoin Research Institute: The issue can be analyzed in several stages:
First, the position-building stage, where the following indicators are recommended:
– EMA indicator
– RSI indicator
– BOLL indicator
In addition, users need to understand data indicators such as trading volume, active addresses and new address quantities, on-chain transaction quantities, and main large order trends.
Next, in the profit-taking and stop-loss stage, users can consider the following indicators:
– Fibonacci retracement
– EMA
– RSI
Further considerations include the analysis of trading volume, large fund transfer trends, and a decrease in network activity.
OKX Strategy Team: We believe that holding positions, basis, and technical indicators have strong reference value.
Specifically, the long/short ratio reflects the market participants’ long/short ratio, and basis reflects the difference between futures and spot prices, while technical indicators such as overbought/oversold indicators help users determine market extremes.
Finally, profit/risk tools help users visualize and manage the potential returns and risks of each trade.
AICoin Research Institute: For large capital users, some arbitrage indicators to consider include market arbitrage opportunities, cross-market price differentials, contract funding rate arbitrage opportunities, on-chain and off-chain arbitrage opportunities, and market depth and position data.
OKX Strategy Team: According to our observations, the asset allocation of large capital users is more diversified, and common tools for this group include dollar-cost averaging, portfolio arbitrage, and large order splitting.
Dollar-cost averaging is a strategy that lowers the overall holding cost by periodically buying during price declines. Portfolio arbitrage helps users hedge against risk and reduce trading risk, while large order splitting minimizes the impact on the market and reduces trading costs for large order traders.
This is the first issue of the OKX “Insight Data” column, focusing on market perception and scientific trading strategies. We hope to provide systematic data methodology for traders to better grasp market trends and make wise trading decisions. In future articles, we will continue to explore more practical data analysis methods for different types of traders.
This article is for reference only, and represents the author’s views, not OKX’s position. This article does not intend to provide (i) investment advice or recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins and NFTs) involves high risks and significant volatility. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For your specific circumstances, please consult your legal/tax/investment professionals. Please take responsibility for understanding and complying with applicable local laws and regulations.
This content is provided by the official website and does not represent the position or investment advice of this site. Readers must conduct their own careful assessments.