Table of Contents:
BTC Technical Analysis;
Overview of the Crypto Market, Quick Read on Weekly Popular Coins' Price Fluctuations/Fund Flows;
Spot ETF Fund Inflows and Outflows;
On-Exchange BTC Balances Hit New Historical Lows;
Interpretation of Contract Funding Rates;
1. BTC Technical Analysis:
After reaching a new high of around $107,777, BTC has pulled back, aligning with the prediction that "the overall trend will rise first and then correct." Overnight, SEC documents revealed that MicroStrategy continued to increase its Bitcoin holdings, purchasing 15,350 BTC last week at an average price of $100,386, which helped push Bitcoin prices to new historical highs alongside the Nasdaq.
The daily chart showed a bullish candle with a small upper shadow, indicating that a pullback is expected before a rebound today. The overall strategy remains unchanged: there are no historical resistance levels above the recent highs, while support can be referenced at the weekend's pullback low of $100,610 and around $99,212. As long as these levels are not broken, the market is likely to continue its bullish trend. The trend indicator on the 4-hour chart has shown bullish signals since December 12, suggesting that a pullback buying strategy may be appropriate.
2. Overview of the Crypto Market, Quick Read on Weekly Popular Coins' Price Fluctuations/Fund Flows
Data shows that over the past week, significant net inflows in the crypto market, categorized by concept sectors, were concentrated in Avalanche ecosystem, Ethereum ecosystem, Layer 1, Binance Smart Contracts, and Real World Assets (RWA). Additionally, several coins experienced substantial rotational increases. The top 200 by market capitalization include tokens such as FARTCOIN, VIRTUAL, AAVE, ONDO, ENA, and ENS.
3. Spot ETF Fund Inflows and Outflows.
Data indicates that Bitcoin spot ETFs exhibited a strong trend of fund inflows over the past week, with a net inflow of $2.17 billion for the week, maintaining this trend for five consecutive trading days. This suggests that investor interest and confidence in Bitcoin spot ETFs are gradually increasing. Among them, BlackRock's IBIT ETF topped the list with a net inflow of $1.51 billion, bringing its historical total net inflow to $35.88 billion, further solidifying its leading position in the field. Fidelity's FBTC ETF also performed well, with a net inflow of $598 million for the week, bringing its historical total net inflow to $12.31 billion. These figures indicate that Bitcoin spot ETFs managed by large financial institutions are attracting increasing attention from investors.
In stark contrast to the strong performance of Bitcoin spot ETFs, Grayscale's GBTC ETF saw a net outflow of $221 million last week, with its historical cumulative net outflow reaching $21.05 billion. This may indicate a shift in some investors' perceptions of Grayscale's GBTC or that they are seeking other more attractive investment opportunities.
Meanwhile, the total net asset value of Bitcoin spot ETFs has reached $114.969 billion, accounting for 5.71% of Bitcoin's total market capitalization, with a historical cumulative net inflow of $35.602 billion. Additionally, the total assets managed by ETFs listed in the U.S. have surpassed the $10 trillion mark for the first time, with $40 billion already invested in the cryptocurrency sector. This trend indicates that cryptocurrencies, as an emerging investment field, are gradually gaining recognition and acceptance from mainstream financial institutions and investors.
4. On-Exchange BTC Balances Hit New Historical Lows.
Data shows that over the past 7 days, centralized exchanges (CEX) experienced a cumulative net outflow of 37,708.42 BTC, indicating a trend of holding Bitcoin in the market. CoinbasePro, Binance, and Bitfinex had the largest outflows, with 16,090.22 BTC, 11,724.57 BTC, and 2,527.98 BTC, respectively. This phenomenon may reflect large investors' confidence in holding Bitcoin for the long term and potential changes in market trends.
We believe that this large-scale BTC outflow may be related to several factors. As the price of Bitcoin rises, the increase in outflow may indicate that investors have confidence in Bitcoin's long-term value, choosing to transfer assets to personal wallets to reduce holdings on exchanges, thereby lowering potential security risks and enhancing control over their funds. Additionally, as the cryptocurrency market matures, more investors may prefer long-term holding over short-term trading, which could also lead to increased outflows. These data provide important insights into market sentiment and investor behavior, offering valuable references for understanding the dynamics of the Bitcoin market.
5. Interpretation of BTC Contract Funding Rates and Long/Short Ratios.
According to contract data, BTC contract funding rates remain at a positive level of around 0.1%.
The actual funding rate of around 0.1% is normal and healthy compared to historical levels. For instance, during a recent significant price increase when the market entered a FOMO state, the funding rate could have skewed to 0.3% to 0.5% or even higher. However, during this recent round of BTC reaching new historical highs, the funding rate has remained relatively healthy, consistently around 0.1% since December 10, and there were no extreme deviations even during yesterday's significant price increase.
We often see reports claiming that the funding rate arbitrage annualized yield is 10.95%, which is calculated based on a 0.1% rate, averaging 0.3% daily, leading to an annualized yield of 1,095 basis points or 10.95%.
Regarding the long/short ratio, taking last Friday as an example, the long/short ratio on Binance was approximately in the range of 0.88-0.94, with a slight advantage for short positions, meaning that the number of long positions was slightly less than that of short positions among all users. This is relatively normal during a phase of rising prices, as short-term speculators may take profits on long positions and short positions may enter, resulting in this slightly below 1 data level; however, on that day, the large holders' long/short ratio maintained between 1.73-1.85, indicating that among major positions, longs held a relative advantage of 63-65%. The market later experienced a volatile upward trend and reached a new historical high on Monday of this week.
The commonly observed positive funding rate of around 0.1% already indicates that the proportion of long positions is relatively high. However, some individuals like to completely oppose the long/short ratio and funding rate data. In reality, the often-seen long/short ratio below 1 indicates a relatively higher number of short positions, but in terms of holdings, longs still dominate, as the design logic of the funding rate is that a positive value indicates a bullish market, and it is based on the scale of long and short positions for mutual payments; when the proportion of long positions is high, it results in a net payment to shorts.
The fact that the long/short ratio shows a slight advantage for shorts does not carry as much significance as the data on holdings, as the matching and liquidity mechanisms can lead to this slightly below 1 data level during a phase of rising prices due to short-term speculators taking profits on long positions and short positions entering. The important data should focus on the overall long/short ratio of holdings and the long/short ratio of large holders.
When expressing the long/short ratio, it should also include the number of long/short positions or the ratio of holdings/active buy/sell volume (overall long/short holdings ratio)/large holder long/short ratio to avoid ambiguity, as the two values often show opposing situations. However, understanding the different types of long/short ratios will clarify their respective meanings.
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