Summary: In the cryptocurrency market, data has always been a crucial factor for people to make trading decisions. How can we uncover effective data to optimize trading decisions? This is a topic that the market has been continuously focusing on. This time, OKX has specially planned the "Insight into Data" column, and has collaborated with mainstream data platforms such as AICoin and Coinglass to explore a more systematic data methodology based on common user needs, hoping to provide a reference for the market.

Below is the content of the first issue, in which the OKX strategy team and AICoin Research Institute jointly discuss the "methodology of perceiving market changes and constructing 'data'," hoping to be helpful to you.

OKX Strategy Team: The OKX strategy team, composed of experienced professionals, is dedicated to driving innovation in the global digital asset strategy field. The team brings together experts in 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 specializing in market data analysis, professional candlestick charts, signal strategy tools, asset management monitoring, and news.

1. Perceiving Market Changes in Real Time: Several Data Dimensions That Must Be Monitored Constantly

AICoin Research Institute: We believe that the following dimensions can help investors better perceive market changes.

First, price fluctuations and trends. The latest price and real-time price changes most accurately reflect the current market sentiment. Price trends are usually measured through technical indicators, including commonly used indicators such as MA, EMA, MACD, RSI, and various custom indicators developed by technical analysis researchers.

Second, trading volume, focusing on total trading volume and large transactions. Total trading volume efficiently measures market activity. Large transactions mainly involve monitoring the trading activities of large holders, such as whales, which may indicate significant market fluctuations. We have also monitored and analyzed several important data types in the past and made them available for user analysis and alerts, including main large orders based on CEX order book and transaction data, large transaction behaviors, and chip distribution.

Third, fund flows. This mainly includes net inflows/outflows of funds. Observing the inflow and outflow of funds can help everyone better judge the supply and demand situation in the market. Recent ETF net inflow data is a good example. If a large amount of ETF funds flows in, it indicates that the market is still in an incremental phase. We have also collected and shared such data for the reference of the general users. In addition, monitoring the flow of funds in and out of exchanges is necessary to understand the buying and selling pressure in the market. Generally, it is advisable to refer to the large amount of funds deposited and withdrawn from exchanges, as well as the balance of exchange wallet addresses.

Fourth, observing market sentiment and social media dynamics. Monitoring market sentiment indicators, such as the Fear & Greed Index, is recommended. We also recommend OKX's contract data indicators, such as the long/short position ratio and the average position ratio of elite long/short positions, which have important reference value for the medium-term market trend. As a leading CEX, OKX's open trading big data is important for the market.

Of course, social media and news should also be monitored in a timely manner, such as Twitter, Reddit, and other social platforms, as well as mainstream news media within the industry, to help capture market sentiment and potential hotspots.

Fifth, on-chain transaction data, including transaction volume, active address count, etc., can help us understand the activity level on the chain. It is recommended to pay attention to changes in the addresses of smart money and the changes in the project tokens focused on by community KOLs. For tokens with a POW mechanism like Bitcoin, changes in hash rate and mining difficulty can reflect miners' confidence and network security. Two key points are crucial: halving cycles and the impact of miners shutting down on coin price.

Sixth, macroeconomic data and policies, including economic indicators such as US non-farm payrolls, CPI, etc., are helpful for understanding 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 growth and decline.

OKX Strategy Team: Perceiving market changes is crucial for users. We recommend focusing on at least the following 4 dimensions of data:

First, price trends: Price changes are the most direct signals of market changes. Users need to pay attention to short-term and long-term price trends 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 averages (MA): including simple moving averages (SMA) and exponential moving averages (EMA), can be used to smooth price fluctuations and identify trend directions;

• Relative strength index (RSI): can measure the speed and change of price movements, identify overbought or oversold situations, with RSI values above 70 indicating overbought and below 30 indicating oversold;

• Moving average convergence divergence (MACD): can judge the change in price trend by the difference between short-term and long-term moving averages.

Second, market volatility: Volatility is an important indicator of market changes. It can help judge market stability and potential investment risks. Volatility is usually measured by standard deviation or the VIX index, or by a comprehensive fear and greed index of multiple indicators, which can also more comprehensively assess market sentiment and potential volatility.

Third, fund flows and transaction distribution: Comprehensive analysis of fund flows and transaction distribution can quickly understand the overall fund movement and cost distribution in the market, and then more accurately judge market sentiment, price fluctuations, and key support and resistance levels.

Among them, fund flows are an important indicator for judging market sentiment and trends. By monitoring the inflow and outflow of funds, investors can understand the overall fund movement in the market, thereby understanding market trends. Inflow funds are orders executed at the ask price or higher, while outflow funds are orders executed at the bid price or lower. Net inflow of funds equals inflow minus outflow. Single fund inflows are sorted by transaction amount and can be divided into large, medium, 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 and loss areas. Key data includes profit ratio, average cost, resistance level, support level, 90% and 70% transaction ranges, and transaction range overlap. A high degree of overlap indicates concentrated fund transaction positions and a relatively small price fluctuation. Following these data can more accurately judge market trends and price changes.

Fourth, fundamental data: For the cryptocurrency market, fundamental data includes the project's technical progress, tokenomics, partnerships, regulatory dynamics, etc.

2. Several Indicators That Can Help Users Better Grasp Macro Trends

AICoin Research Institute: Based on the overall market changes in the past, we believe the following macro indicators are suitable for in-depth tracking by cryptocurrency traders:

First, total market capitalization, which reflects the scale and health of the entire cryptocurrency market. The growth of total market capitalization usually indicates the overall development of the market and an increase in participants.

Second, Bitcoin dominance, which represents the proportion of Bitcoin's market capitalization in the total cryptocurrency market capitalization. A high Bitcoin dominance usually indicates reduced market risk appetite, with investors preferring more stable assets, while a lower proportion may indicate funds flowing into altcoins. In addition, we also track the Ethereum market capitalization ratio, which is also a similar indicator worth paying attention to.

Third, on-chain activity data, mainly referring to the number of active addresses, transaction volume, and amount. In addition, for Bitcoin, the hash rate reflects the computing power and security of the Bitcoin network, and the balance of miner income and expenditure reflects whether miners are profitable, 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 funds in and out of cryptocurrency exchanges can indicate increased selling pressure with a large inflow of funds, and vice versa.

Fifth, stablecoin liquidity, mainly the total market capitalization and circulation of stablecoins such as USDT and USDC. The inflow and outflow of stablecoins can show the buying and selling pressure in the market.

1. Perceiving Market Changes in Real Time: Several Data Dimensions That Must Be Monitored Constantly

AICoin Research Institute: It can be divided into several stages to look at this issue:

First, the position-building stage: It is recommended to mainly refer to the following indicators:

• EMA indicator: The crossover of short-term (e.g., 12-day moving average) and medium-term (e.g., 26-day moving average) can signal buying opportunities, such as "golden cross" (short-term moving average crossing above long-term moving average).
• RSI indicator: RSI below 30 is usually considered oversold and may be a good buying opportunity.
• BOLL indicator: When the price touches the lower Bollinger Band and shows signs of rebound, it can be a buying signal.
• There are many types of technical indicators with rich applications, and each indicator is a deep study in itself. As an investor, choosing suitable indicators is sufficient.
• In addition, in terms of data indicators, we need to understand: trading volume, active addresses and new address counts, on-chain transaction volume, and main large orders' trends.

Second, at the profit-taking and stop-loss stage, the following indicators can be considered:

• Fibonacci retracement: Fibonacci retracement levels, such as 38.2%, 50%, 61.8%, can be used to set profit-taking and stop-loss points.
• EMA: Price falling below key moving averages, such as the 120-day or 250-day moving average, can serve as a stop-loss signal.
• RSI: When RSI is above 70, it is usually considered overbought, which is a signal to consider profit-taking.
• Additionally, when using data indicators for profit-taking and stop-loss, it is also important to understand the trend of trading volume and large transfers, as well as a decrease in network activity: a significant decrease in on-chain transactions and active addresses may indicate reduced market interest, which is a signal to consider stop-loss. Of course, relevant regulatory policies or unfavorable news are important references for our investments. Lastly, we also have one piece of advice, which is to manage risks well: set clear profit-taking and stop-loss points, smooth the purchase price through phased position building to reduce the risk of a single position; and regularly review and adjust with thought and gain.

OKX Strategy Team: We believe that users can refer to the following five key indicators:

First, overall cryptocurrency market capitalization, which is an important indicator for measuring market size and development trends. Changes in market capitalization can reflect the overall health of the market and investor confidence. When the overall market capitalization continues to grow, it usually indicates an upward trend in the market, and vice versa.

Second, overall market trading volume, which reflects the market's activity level. High trading volume usually indicates high market sentiment, possibly accompanied by significant price fluctuations. By analyzing changes in trading volume, users can judge the strength of market trends, identify market peaks and troughs.

Third, BTC/ETH market dominance, which is an important indicator for understanding market structure. When BTC or ETH market dominance increases, it may indicate that more market funds are concentrated in these two major cryptocurrencies, which is usually seen as a signal of market risk aversion. Conversely, a decrease in market dominance may indicate that investors are exploring more altcoin opportunities.

Fourth, ETF inflows and outflows, which can reflect institutional investors' market attitudes. A large inflow of funds into ETFs usually indicates that institutional investors are optimistic about the market outlook, while outflows may indicate a weakening of institutional confidence in the market. Analyzing the fund movements of ETFs can help users judge the medium to long-term market trends.

Fifth, economic calendar, which includes key economic events and data releases, such as GDP data, inflation rates, interest rate decisions, etc. These macroeconomic factors have a significant impact on the cryptocurrency market. For example, an increase in interest rates may lead to funds flowing out of high-risk assets, while increased economic uncertainty may prompt investors to seek cryptocurrencies as a safe-haven asset. Paying attention to the economic calendar helps users anticipate changes in macro trends.

3. Timing is Key to Winning: Which Data Helps Capture the Best Opportunities?

AICoin Research Institute: This issue mainly depends on the investment goals and the ability to withstand risk drawdowns. Here is a brief analysis of some arbitrage indicators suitable for large capital reference:

• Focus on arbitrage opportunities in the market, such as the basis between futures and spot, cross-exchange spreads, and funding rate arbitrage in the futures market.
• Pay attention to on-chain and off-chain arbitrage opportunities.
• Monitor market depth and position data for the corresponding assets to judge whether they can accommodate large capital arbitrage.
• Pay attention to the stability of exchanges, such as large platforms like OKX, which can better accommodate large capital arbitrage operations.

Currently, AICoin provides analysis and alerts for multiple data dimensions mentioned above for arbitrageurs, hoping to provide effective references for the trading community.

OKX Strategy Team: From our observations, the asset allocation of large capital users is more diversified. For this group, commonly used tools include dollar-cost averaging strategies, portfolio arbitrage, and large order splitting. The dollar-cost averaging strategy, through periodic purchases, reduces the overall holding cost during price declines, and can take profit when prices rebound, and this cycle continues, constantly arbitraging.

Portfolio arbitrage is a strategy that helps users hedge and arbitrage to reduce trading risks. This strategy can involve simultaneous transactions of different or similar currencies/markets, automatically and promptly profiting from market fluctuations and price differences between various trading instruments. The portfolio arbitrage strategy can effectively help reduce potential loss risks in dealing with future market uncertainties.

Large order splitting is also a convenient trading strategy provided to large traders. This strategy helps users split large orders into smaller ones and place them in batches. Through intelligent settings, the strategy minimizes the impact of large orders on the market while maintaining a relatively high average execution price, thereby greatly reducing the trading costs for large traders.

Conclusion

The above is the first issue of the "Insight into Data" column launched by OKX, focusing on the perception of market changes and how to establish scientific trading strategies. It addresses core issues encountered in trading. It is hoped that this will provide a systematic data methodology for the trading community to better grasp the market pulse and make wise trading decisions. In future articles, we will continue to explore more practical data usage/analysis methods, providing references for traders with different investment preferences.

Risk Warning and Disclaimer

This article is for reference only. It represents the author's views and not the position of OKX. 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 may experience significant fluctuations. You should carefully consider whether trading or holding digital assets is suitable for your financial situation. For your specific circumstances, please consult your legal/tax/investment professionals. You are responsible for understanding and complying with applicable local laws and regulations.

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