Original | Odaily Planet Daily
Author | Nan Zhi
After the short-term pullback following the approval of the Bitcoin spot ETF, BTC led the cryptocurrency market into a one-way uptrend. As the upward trend accelerated, the market entered an extremely fervent stage, with contract rates for various currencies soaring, with most reaching 0.2% to 0.3%, and the average rate for Bitcoin in March reaching as high as 0.055%, indicating that it has entered the high range of the bull market in 2021. At 23:00 yesterday, BTC broke through 69,000 USDT in the short term, reaching a high of 69,080 USDT, surpassing the previous high of 69,040.1 USDT set in November 2021. According to OKX market data, BTC only stayed above the previous high for less than 1 minute and fell to 59,000 USDT after 3:55 am.
After the flash crash, most leverages were cleared, and the rates began to return to rational levels, with Binance's current BTC rate at 0.04%, a decrease of approximately 0.05% from the highest rate of 0.09% before the flash crash. Currently, only three currencies have rates higher than 0.1%.
After the leverage has been cleared, will it continue to rise lightly, or will it maintain its inertia for a pullback? Based on the rate data from the bull market in 2021 and the trends of BTC, ETH, and SOL, Odaily Planet Daily will analyze the relationship between the rate decline and future trends.
Relationship between Rates and Price Trends
To maintain the display effect, the year 2021 is divided into two periods: January to May and August to December. The trend chart is as follows. The following rules can be intuitively obtained from the chart:
The rates and price trends generally move in the same direction. When the overall direction is upward, the rates also rise.
The rates reach the top before the prices and then decline with the flash crash.
However, the decline in prices is not a sufficient condition for the decline in rates.
Is the Decline in Rates a Sufficient Condition for an Uptrend?
Rate Range: Due to the different heights of the highest rates for each token, the rate decline range for BTC is set between 0.02% and 0.07%, and for ETH and SOL, it is set between 0.02% and 0.1%.
Time Interval: The rates are collected every eight hours in 2021, and the daily rates are averaged three times, with the difference being the average for today minus the average for yesterday.
Price Source: Prices are taken from the historical data provided by CoinGecko.
Uptrend Criteria: Considered from two dimensions, "whether the rates rebound significantly the day after a substantial decline" and "whether the lowest price within three days after the rate decline is also the lowest price within seven days (i.e., whether it will continue to decline within seven days)."
Based on the above parameters and statistical methods, the data is shown in the table below, from which we can conclude:
The bottoming of prices is positively correlated with the bottoming of rates. The greater the decline in rates, the higher the probability of a rebound.
When the decline is not significant (approximately in the range of 0.02% to 0.03%), it can be considered unrelated to the subsequent market trends, with a fifty-fifty chance of an uptrend or downtrend.
The correlation coefficients for different currencies differ significantly. BTC and SOL need to decline significantly to serve as the basis for an uptrend, while the decline in ETH rates tends to rebound, but it has little to do with the extent of the decline.
Conclusion
The decline in rates to a certain extent can serve as a reference for future trends, but the extent of the rate decline in this case is not deep, and it falls within the range of minor impact that is not suitable for reference. However, in the context of a bull market, there are often situations where high leverage and high rates lead to a flash crash, which may be used as a reference for subsequent trends.
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