In-depth interpretation: Is the current price range the 'springboard' for the main rise in this cycle?

Preface

Since I wrote the article "Using "God's Perspective" to Discover the Inner Operating Rules of BTC" in February this year, I have never written a long tweet again. On the one hand, I feel that I can explain simple logic clearly, so there is no need to increase the reader's fatigue with long explanations. On the other hand, my busy work schedule prevents me from thinking about a complete data system. Especially when I write articles, I like to use pictures and text to explain clearly; sometimes the time spent on drawing pictures even exceeds the time on coding.

Recently, I often receive private messages from my friends urging me to update. I hope that I can share my views on the current stage of the bull market and confirm it based on the data on the chain. In fact, many excellent data analysts have analyzed this. For example, Ni Da @Phyrex_Ni in his article on June 11th, combined with macro events, on-chain structure, exchange stocks, etc., described the current latest trend. Real data fundamentals. The link is as follows: https://x.com/Phyrex_Ni/status/1800210944188190983…

However, I still hope to express some of my personal experiences from different angles than what everyone usually sees. View. After conceiving for a long time, after two days of writing, drawing, annotating and proofreading after work, I finally completed this article of nearly 3,500 words. If you are a BTC HOLDer or a trend trader, I believe that after reading the full article, it can provide you with some different references and ideas.

Without further ado, let’s get to the point...

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The chip structure on the URPD chain can be used as an extremely important reference for trend judgment. It is different from the technical theories we commonly use such as K-line, volume price, moving average, etc., but uses the dense area formed by the movement of chips on the chain to observe who is buying (buying intention) and who is selling (selling risk) , in order to predict which direction the market may move next with greater probability.

A chip-intensive area formed by changing hands for a long time is often the "launching board" for the next stage. The firmer the chip structure (thickness) and the wider the price span (width), the greater the probability of upward development. " Thick " means that the willingness to buy in this range is strong and can handle chip distribution in other low-cost ranges. Moreover, due to high expectations for the future, the selling risk generated when prices fluctuate will also be biased. Low. "has width" means that the chips are well dispersed and will not generate concentrated selling pressure. As long as it is not a sudden black swan event, the chip-intensive area will form a "resistance and stickiness" effect on the price, that is, it will not be sensitive to price and will not be easily penetrated.

Looking at this cycle, there are two impressive "springboards":

A, the US$25,000-30,000 range;

B, US$41,000-44,000.

The formation of the A interval took 220 days from March 23 to October 23; the formation of the B interval took 67 days from December 23 to February 24. Therefore, we can see that the formation of a thick price range must be based on "months". During this period, both bulls and bears need to experience fierce confrontations before a consensus on the "bottom" can finally be formed.

The picture below is the URPD data on October 15, 2023. After 220 days of changing hands, an accumulation of 467w BTC was formed in the range of US$25,000-30,000, accounting for 24% of the total circulation of #BTC at that time. It can be said that this is a very exaggerated and sky-high data. Almost all selling risks have been released here, and the next "take-off" is a matter of course.

On January 6, 2024, which is the eve of the approval of spot ETF, BTC formed 2 million pieces at 41,000-44,000 US dollars after 67 days of changing hands. The accumulation of BTC. Among them, 169w were transferred from the A interval (i.e. the 25,000-30,000 interval). This is a process of exchanging low-priced chips for high-priced chips, allowing short-term chips that are expected to benefit from trading ETFs to get off the market early.

At the same time, there are still 2.98w chips of firm belief left in the A range. This is also an important reason why after the ETF passed, BTC fell back from 46,000 to 38,000, but did not continue to fall back to the A range. Most of the active chips are in these two ranges. The chips in the low zone do not want to sell, and the chips in the high zone do not want to give up. This naturally creates conditions for another jump.

Currently, the chip structure on the chain is quietly forming the C range!

This is a large range from US$60,000 to US$70,000, which includes 2 small ranges, namely US$60,000-64,000 and US$66,000-70,000. For convenience of expression, we temporarily call them C1 and C2 intervals.

As of June 11, 1.08w chips have been accumulated in the C1 interval, and 1.89w chips have been accumulated in the C2 interval (please ignore the chip movement of Mt.Gox here). Among them, 103,000 pieces were transferred from the A interval, and 97,000 pieces were transferred from the B interval. From the time span point of view, this process has gone through 104 days (The conditions in "months" have been met).

If you want to ask me how long it will take to accumulate? I don't know. But based on previous data, in theory, as a "launching board", a price span as wide as US$10,000 should not be needed (US$5,000 is enough). Therefore, both C1 and C2 are likely to become the bottom range for consensus formation in the future. If it is C1, then we have to wait for the chips of C2 to be gradually digested, and then slowly transfer to C1 to continue to form a stronger interval structure. Or a new accumulation area is formed between C1 and C2.

Of course, this alone is not enough...

To become the "launching board" for the next stage, another important condition must be met, namely the "# mentioned above ##The chips in the low area don’t want to sell, and the chips in the high area don’t want to give up”. We can use another set of data to see whether the current situation is satisfied.

1. Has the seller’s risk been released?

Using the realized profit and loss data chart, you can clearly see the total amount of realized profit and realized loss of BTC every day. Through its relative size, you can better understand the market cycle and investor sentiment.

During a bull market, realized profits (RP, green bars) tend to dominate, because as the market becomes stronger, low-cost chips will continue to come in and be cashed out profit. Realized losses (RL, red bars) tend to dominate during bear markets, as BTC purchased at high prices exit at a loss, especially peaking when a market capitulation event occurs (i.e., a bear market bottom).

During the peak stage of the last bull market, that is, during the period from 2021.1.9 to 2021.4.20, the RP value exploded many times. This shows that as the price rises, a large number of low-cost chips have experienced multiple concentrated profit cashouts, which has brought huge selling pressure to the market. Once subsequent funds cannot be accepted, the RL value (red column) will gradually rise, eventually completing the conversion of the bull-bear cycle.

In this cycle, that is, during the period from 2024.3.5 to 2024.3.18, there was also an explosion in the RP value, and its scale was no less than the previous bull top stage.

But the difference is that after this concentrated profit was realized, there was no continuous RP peak (The RP peak on May 28, 2024 in the picture is due to data interference caused by the movement of ancient chips from Mt. Gox, which affects We can ignore this). Therefore, we can think that the current market sentiment is relatively stable, and the profit realization on March 18, 2024 is a release of seller risk, rather than the peak of the bull market.

We can also observe it from another angle, that is,

exchange mainstream asset buyer power/seller pressure data.

It assumes a simple model, that is: the inflow of BTC + ETH into exchanges (denominated in US dollars) is considered seller pressure; the inflow of stablecoins is considered buyer power. Red negative value: Indicates seller pressure, the inflow of stablecoins is less than the BTC+ETH seller inflow. Positive green value: Indicates buyer momentum, stablecoin inflows exceed BTC+ETH seller inflows.

We can see from the picture above that during the period from 2021.1.8 to 2024.5.10, the seller’s pressure on the exchange continued to remain high, and as the price rose weakly, A sudden amplification (5.19 incident) is a signal that the bull market has peaked. In this cycle, as prices climbed all the way, seller's pressure peaked on March 13, 2024.

did not continue to maintain high levels since then, but weakened rapidly. Combined with the analysis of exchange traffic potential in the previous tweet, both #BTC and #ETH on exchanges are currently in a state of low liquidity.

By combining these data, we can draw a conclusion,

that is, the current market meets the condition of "the chips in the low area do not want to be sold".

2. Are short-term high-priced chips cut off and sold?

We introduce the Bitcoin Seller Risk Ratio, a risk management tool, to assess market risk. The model is calculated by adding up all profits and losses realized on the chain and dividing by the realized market capitalization. So the essence is to compare the total value of dollars spent by investors on a daily basis to the total realized market capitalization.

When the value is close to the red line below (

low value), it indicates that most #BTC are sold relatively close to cost and the market has reached some degree of equilibrium. This situation can also indicate that "profits and losses" in the current price range have been exhausted and the market is in a low-volatility environment.

When the value is close to the blue line below (

High value), it indicates that investors are selling #BTC at a higher profit or loss relative to their cost basis. This situation may require the market to re-find its balance, often accompanied by highly volatile price movements.

Looking from the chart, high risk ratios often appear when bull markets soar or bear markets plummet, that is, investors either cash out high profits or leave the market with losses. In the early stages of bear markets and bull markets, the frequency of low risk ratios shows that high-cost investors at this time are unwilling to leave the market, and most of the BTC sold are short-term chips close to the cost price. This is also a period of market equilibrium in a low volatility environment. For example, it is a similar situation now.

As the bull market progresses, the risk ratio gradually increases, which means that the risk of market sellers is increasing. By the late bull market, it is almost impossible for the risk ratio to fall below the red line.

Through the observation of this data, we can draw another conclusion, that is, the current market also meets the condition of "not giving up chips in high areas".

Conclusion

At this point, the entire data reasoning logic has been explained. I think there is a high probability that the current price range will be the "launching board" before the main rise in this cycle starts. This conclusion is based on the current data, but the data will change, so there is no guarantee of the future situation100 % is consistent with the analysis.

Could it be that now is the bull market peaking stage? If such a possibility exists, the following conditions must be met:

1. A large number of chips in the low area leave the market in the high area, especially the chips in area A and area B formed in this cycle. They are not buying at the bottom of the bear market. There are bound to be some people who are not willing to ride the roller coaster of another cycle.

2. RP peaked multiple times, and the peak value became lower and lower, while RL began to gradually increase.

3. Seller pressure in the exchange continues to remain high, and the exchange’s traffic potential begins to amplify.

4. The seller's risk ratio appears to have continuously high values, and the high points gradually decrease.

5. A black swan event occurs, seriously deviating from market expectations.

The more of the above conditions are met, the more likely it is that the bull market is in the peaking stage.

What I describe is a set of well-founded and closed-loop methodologies. Do not regard this as a prediction of the market's long or short market or price. These models combine my long-term observation and tracking of data, as well as my accumulation of experience, and are one of the most intuitive and effective methods for judging the top of the bull market. If your friends also agree, you can use this as a reference, think carefully and draw your own conclusions.

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