Preview for this Week (11.20-11.26), BTC's Correlation with Global Stock Indices Drops to the Lowest Level Since 312; Funding Rate Reaches a Two-Year High, Approaching the Previous Level of $69,000 at the End of 2021, Indicating…

○/Author: DC Research Institute

Lao Li Mortar

Table of Contents for this Week's Research Report:

1. Key Events Forecast for Macro-Economic Data and the Crypto Market this Week;
2. Review of Key News in the Crypto Industry;
3. Community Interaction and Sharing;
4. Interpretation of Important Events, Data, and Deepcoin Research Institute;
5. Institutional Perspectives and Overseas Views;
6. Top Gainers in the Crypto Market Last Week and Selection of Hot Community Coins;
7. Attention to Project Token Unlocking and Negative Data;
8. Top Gainers in Crypto Market Concept Sectors;
9. Overview of Global Market Macro Analysis;
10. Future Market Judgment by Deepcoin Research Institute.

1. Key Events Forecast for Macro-Economic Data and the Crypto Market this Week:

November 20 (Monday): US October Conference Board Leading Economic Index; The Philippines will issue tokenized bonds to institutions; CKB mining rewards halving; Blur will launch the second season airdrop.

November 21 (Tuesday): US October Existing Home Sales Annualized; Federal Reserve's Powell interviewed by Fox News; Bank of England Governor Bailey speaks and testifies in Parliament; Reserve Bank of Australia releases minutes of November monetary policy meeting. SEC delays decision on GlobalX's Bitcoin spot ETF to December 22, sets a comment period.

November 22 (Wednesday): US October Durable Goods Orders; Final value of University of Michigan Consumer Sentiment Index for November; Federal Reserve releases minutes of November monetary policy meeting.

November 23 (Thursday): Eurozone November Manufacturing PMI preliminary value; European Central Bank releases minutes of October monetary policy meeting. ACDE discusses the launch of ETHDevnet#12.

November 24 (Friday): Japan's October Core CPI Annual Rate; Germany's Q3 Unadjusted GDP Annual Rate final value; US November Markit Manufacturing and Services PMI preliminary values; ECB President Lagarde speaks; US stock market closed for Thanksgiving. AVAX will unlock 9.5 million tokens worth $1.069 billion, accounting for 2.7% of the circulation.

November 26 (Sunday): 36th OPEC Ministerial Meeting.

2. Review of Key News in the Crypto Industry (Exclusive Compilation):

Data:

• Grayscale GBTC's negative premium rate narrowed to 10.11%, the lowest level since August 12, 2021.
• Average Bitcoin transaction fees have risen by over 1000% this month.
• The amount of Bitcoin held by long-term investors has reached a historical high.
• Active supply of Bitcoin and Ethereum has reached historical lows.
• The number of addresses holding at least 0.1 BTC has reached 4.5 million, a historical high.
• 81,954 addresses hold at least $1 million worth of Bitcoin.
• Since 2018, investment in Web3 gaming projects has reached $19 billion.

Projects and Platforms:

• ARK Ark Fund increased its holdings of Coinbase stock by over $30 million last week.
• Total NFT sales in the past 30 days have increased by over 65%.
• Tether plans to invest $500 million in Bitcoin mining over the next 6 months.
• Polygon's ecosystem distributed 217 million MATIC to 70 addresses.
• Tether: Judge dismisses class-action lawsuit against Tether and Bitfinex, plaintiffs abandon appeal.
• Solana's market cap surpasses USDC, currently ranking sixth, following Bitcoin, Ethereum, Tether, BNB, and XRP.
• Starknet surpasses Arbitrum to become the second-highest daily active address Layer 2.
• CBOE Digital will launch Bitcoin and Ethereum margin futures trading and clearing on January 11, 2024.

Macro Policies and Regulations:

• ECB President: Europe should establish a European agency equivalent to the US SEC.
• Probability of the Fed maintaining interest rates in December is 100%.
• SEC delays decision on Global X's spot Bitcoin ETF until February next year.
• SEC delays decision on Franklin Templeton's spot Bitcoin ETF.
• US Treasury Secretary Yellen discusses cryptocurrency regulation at the Asia-Pacific Economic Cooperation meeting.
• Bipartisan lawmakers urge regulators not to enforce the SEC's crypto accounting disclosure.
• SEC has issued nearly $5 billion in fines to the cryptocurrency industry within a year.

Institutional Research Reports and Perspectives:

• Survey: 45% of institutional investors expect to allocate to cryptocurrencies in the next three years.
• Bloomberg analysts: SEC suggests that cash-settled creation be adopted for spot Bitcoin ETFs on exchanges, requiring revisions to be submitted in the coming weeks.
• Bitfinex analysis: "A large influx of capital" into Bitcoin may occur next year.
• Kevin O'Leary: Approval for spot Bitcoin ETFs may take another 18 months.
• JPMorgan: The impact of Bitcoin halving is unpredictable and has already been priced in.

3. Community Interaction and Sharing:

Regarding what constitutes left-side and right-side trading. Left-side trading involves subjective counter-trend trading, such as selling at the peak and buying at the low. Right-side trading involves objective trend-following trading, such as following the trend and breakout trading.

Regarding the long/short ratio, we have introduced this concept many times before. Simply put, it is the ratio of long positions to short positions. When it is greater than 1, it indicates more long positions, and when it is less than 1, it indicates more short positions. If there are too many long positions, closing long positions can trigger a pullback. The opposite is also true.

Regarding USDT price, historical USDT prices up to 7.5 are instantaneous prices in extreme market conditions, with a short duration. This is one scenario. Another scenario is if the future USD to CNY real exchange rate reaches 7.5, then the USDT price may reach this level, and the duration will be longer. Currently, USDT still has a small premium. The real onshore and offshore exchange rates are currently around 7.16, and the reason for the exchange rate decline is due to the weakening expectation of future rate hikes by the Federal Reserve and the strengthening expectation of rate cuts.

4. Interpretation of Important Events, Data, and Deepcoin Research Institute:

Regarding the 7-day average funding rate for Bitcoin perpetual contracts last week, it was approximately 0.02%, reaching a near two-year high, close to the level at the end of 2021 when Bitcoin was rising towards $69,000. Deribit data also shows that by the end of December, a large number of call options for Bitcoin will be betting on prices reaching $40,000 or even $45,000.

The Deepcoin Research Institute believes that last week's market optimism led to a high funding rate for perpetual contracts. The comprehensive funding rate for seven consecutive days has approached the level reached in 2021 when Bitcoin rose to $69,000. This phenomenon warrants caution, especially after the news of blind bullishness in the market and the repeated postponement of ETF applications. We should guard against a significant decline similar to that in November 2021, after a two-year interval, due to cyclical effects. The latest data shows that after recent market optimism led cryptocurrency futures traders to pay abnormally high funding rates to maintain long positions, the funding rates for mainstream coin futures have begun to return to normal levels. However, we need to be cautious. If the funding rate remains at high levels in the future, we should consider taking profits and reducing positions at relatively high levels, and seek ideal positions on the left side to hedge potential pullback risks.

Since the release of US CPI data on Tuesday, Bitcoin has fallen by 2%, while global stock indices have risen by 2%, as the market bets that the Fed has stopped raising interest rates and will shift to cutting rates next year. Data shows that the 30-day correlation coefficient between Bitcoin and MSCI's global stock index from Morgan Stanley Capital International is currently -0.23, the lowest since early 2020.

Deepcoin Research Institute believes that the monthly correlation coefficient between BTC and global stock indices has dropped to the lowest level since around 312 in 2020. This indicates that recent factors influencing the crypto market are more affected by the market's own news, as the previous hot topic revolved around the approval of Bitcoin spot ETFs. The recent market has been influenced by the delay of several ETFs, resulting in fluctuations after the expected rise in the previous period. On the other hand, global stock markets are more influenced by macro news. The easing of multilateral relations around the APEC summit has brought expectations of a boost to the stock market. Of course, the correlation coefficient between the two has mostly been in line with historical data, so in the future, they are likely to continue to move in the same direction. Therefore, while focusing on the news of the crypto market itself, we should also pay attention to macro market news and data, such as the macro analysis content we compile weekly.

5. Institutional Perspectives and Overseas Views:

According to Bitfinex analysis, as market indicators indicate that the Fed may shift to a more dovish stance in 2024, Bitcoin may see "a large influx of capital." The latest data from FedWatch shows that the probability of the Fed maintaining the target interest rate at its meeting on December 13 is almost 100%. Data also shows that futures traders currently expect the Fed to cut rates at least four times by the end of the December 2024 policy meeting. Bitfinex analysis suggests that a shift from the Fed's current monetary tightening stance to a more accommodative policy could have a positive impact on risk assets, including high-beta cryptocurrencies, leading to more capital flowing into riskier asset categories such as cryptocurrencies. Additionally, if the Fed signals a reversal of interest rates in 2024, it would indicate that the central bank expects economic indicators to rebalance, which could further promote a more optimistic sentiment among investors.

The latest research report from Bernstein suggests that Bitcoin is expected to become a global macro political asset, and the market value of Bitcoin is expected to exceed $3 trillion by mid-2025. The fundamentals of cryptocurrencies have never been better. As of now, the market value of Bitcoin is $726.5 billion.

According to blockchain analytics company Glassnode, the Bitcoin Net Position Change indicator (measuring the amount of tokens held in wallets compared to the same date four weeks ago) rose to 31,382.43 BTC ($11.6 billion) on Sunday, the highest level since May 11, 2023. This brings the total balance held by exchanges to 2.35 million BTC. By market value, BTC has risen by 7.5% this month, continuing the 28% increase in October.

6. Top Gainers in the Crypto Market Last Week and Selection of Hot Community Coins:

The top gainers in the past week for altcoins are as follows: AIOZ saw an increase of 183.77%, with approximately 1.8 times the potential for further increase; SKL, AKT, VLX, and RNDR saw increases of about 50%-60%. These top ten coins on the list may continue to offer potential trading opportunities this week, but caution should be exercised in case of a market-wide pullback.

In terms of declines, BRC20 tokens that ranked in the top three for 24-hour trading volume on November 17 experienced price corrections. RATS saw a 24-hour decline of 26.9%, SATS saw a 24-hour decline of 11.58%, and CSAS saw a 24-hour decline of 26.08%.

The following are hot community coins discussed in the DC community, with the following selections for reference only and not constituting trading advice:

• WLD: Not recommended due to regulatory unfriendliness and recent whale activity.
• MAV: Currently unremarkable, with resistance at $0.335 and $0.39, and support at $0.21 and $0.2.
• SOL: Strong performance due to competition with Ethereum and positive regulatory developments.
• DOGE: Potential double bottom pattern on the daily chart, with resistance at $0.095 and support at $0.076.
• TIA: Currently in an uptrend, with support at $6.3 and $5.75.
• APT: Support at recent high points near $8.27-$8.5, and support at $6.3 and $5.77.
• TRB: Subject to manipulation, limited upside potential even in a rebound, with resistance near $107.34.
• AMB: Relatively weak, not favored by major funds, and not recommended for attention.
• LDO: Strong performance during the recent market-wide pullback, with short-term resistance near $2.564 and medium-term resistance near $2.82 and $3.33.
• APE: Historically weaker than the overall crypto market, with limited potential for sustained growth without significant positive news. Resistance is heavy, with reference to the $2.15-$2.6 area.

YFII: Short-term support near $920, with potential for further upside as long as it does not fall below. Key resistance is near $1265, with medium-term resistance near $1550-$1600.

7. Attention to Project Token Unlocking and Negative Data:

According to Token Unlocks data, this week will see the unlocking of tokens for AVAX, ID, LOOKS, and other projects. Specifically:

• Avalanche (AVAX) will unlock approximately 9.54 million tokens, worth about $218 million, on November 24 at 8:00 AM.
• SPACE ID (ID) will unlock approximately 18.49 million tokens, worth about $4.83 million, on November 22 at 8:00 AM.
• LooksRare (LOOKS) will unlock approximately 37.5 million tokens, worth about $2.94 million, on November 27 at 7:01 AM.
• Euler (EUL) will unlock approximately 13,500 tokens, worth about $36,800, on November 23 at 12:00 PM.
• Acala (ACA) will unlock approximately 4.66 million tokens, worth about $26,000, on November 25 at 8:00 AM.

This week, attention should be paid to the potential negative effects of these token unlocks, and it is advisable to avoid spot trading and seek short opportunities in contracts. Of particular note is the significant unlocking of AVAX tokens.**

This year, Sol's retaliatory surge from the bottom has activated the once new public chain sector. As one of the three most prominent new public chains for users and ecosystems in 2021, Avax also has the opportunity for a rebound. Avax's TVL and on-chain transaction volume rank seventh among all public chains, comparable to Sol. Compared to other old tokens that are basically useless, public chains have users, ecosystems, economic models, and consumption, providing a certain underlying value support and higher certainty, making it less likely to be eliminated in the next two years. However, there is a high probability of a significant pullback this week due to unlocking, so it's advisable to wait for the right opportunity.

Eight, Top-performing Concept Sectors in the Crypto Market Last Week:

The performance of concept sectors in the past week is as shown in the image. In terms of recent seven-day gains, the Huobi Eco Chain Heco, BRC20, Cardano Eco, AI Artificial Intelligence, and Solana Eco sectors have led the way in terms of gains. It's important to pay attention to the rotational speculative market of the above-mentioned high-growth coins and their respective sectors.

Nine, Global Market Macro Analysis Overview:

Last Friday, the three major U.S. stock indexes fluctuated narrowly, with KWEB rising by 0.4%. At the close, the Dow rose by 0.01%, the Nasdaq rose by 0.08%, and the S&P rose by 0.13%. The yield on the 10-year U.S. Treasury bond rose by 0.023% to close at 4.437%, with a spread of -45 basis points compared to the two-year Treasury bond yield. The VIX fear index fell by 3.63%, and Brent crude oil rose by 4.01%. Spot gold has been on a continuous decline since May 2023, with a slight rebound from October 2nd to October 23rd, and a 0.03% drop yesterday, closing at $1980.78 per ounce. The U.S. dollar index has been steadily declining from its high in October 2022, with a slight rebound, closing down by 0.54% at 103.82.

Overall, the three major U.S. stock indexes collectively rose last week. The Dow rose by 1.94% for the week, the Nasdaq rose by 2.37%, and the S&P 500 rose by 2.24%. Large-cap tech stocks rose, with Google A up by 2.05%, Meta up by 1.91%, Amazon up by 1.13%, Apple up by 1.77%, Microsoft up by 0.25%, Tesla up by 9.15%, and Nvidia up by 1.99%.

In the A-share market, the three major indexes had mixed performances last week. The Shanghai Composite Index rose by 0.51%, the Shenzhen Component Index rose by 0.01%, and the ChiNext Index fell by 0.93%. On the market, Huawei's Ascend, Kunpeng, and Harmony-related concept stocks led the gains, while the short video concept, auto parts, computing power, driverless technology, and data rights verification sectors rose. On the other hand, free trade ports, pork, mid-cap stocks, and securities sectors declined.

In the Hong Kong stock market, all three major indexes rose. The Hang Seng Index rose by 1.46%, the Hang Seng China Enterprises Index rose by 1.25%, and the Hang Seng Tech Index rose by 2.25%. In terms of sectors, electronic components, Apple concepts, semiconductors, and application software led the gains, while lotteries, sports goods, film and television, and pharmaceutical outsourcing led the declines.

This week, there are many hot events overseas, including a speech by Bank of England Governor Bailey on Tuesday, the release of the November monetary policy meeting minutes by the Reserve Bank of Australia, the release of the November monetary policy meeting minutes by the Federal Reserve on Wednesday, the closure of the New York Stock Exchange for Thanksgiving on Thursday, and the release of the October monetary policy meeting minutes by the European Central Bank, as well as a speech by ECB President Lagarde on Friday.

Ten, Future Market Judgment:

The BTC daily chart shows that the recent weakness in the U.S. dollar is favorable for BTC's strength. However, the market has been maintaining a range-bound pattern, indicating some hesitation in market sentiment. The reason for the market's decline last week was mainly due to expectations that the approval of the Bitcoin spot ETF might be rejected and delayed again. The main reason for the previous rise was the various speculations about the ETF's positive news, which led to the rise. Therefore, the unfulfilled expectations led to the decline.

From a technical perspective, as long as BTC can hold above $31,800-$32,400 in the larger timeframe, there is still a chance to maintain a high-level range-bound market. In the short term, after testing the uptrend line, BTC has rebounded, and if it continues to close above $35,860, there is an opportunity for a rebound in the future. However, if it continues to close below $35,500, the future may test $33,200 and even $32,400-$31,800. The short-term upper resistance is currently near the recent high of $38,000, and the medium-term resistance is near the positions I analyzed earlier in early November, with upper resistance near $40,000 and around $42,976. Near the previous high of $38,000, it may be considered to short on the left side, with a relatively easy control of the risk-reward ratio.

Currently, the support below for ETH is near the recent low of $1905.7, and the short-term platform support is near $1944. The resistance of the downtrend line for ETH is near $2082, which is an ideal short position.

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DC Research Institute

November 20, 2023

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