Yihai Lunzi writes each analysis article with a responsible, focused, and sincere attitude, featuring distinct characteristics without being pretentious or exaggerated!
Daily market interpretation, I am cryptocurrency analyst Yihai Lunzi!
Once again, it’s the weekend. BTC is maintaining slight fluctuations as expected. The second extreme has passed for more than two weeks, and BTC has only risen by 2%, slightly recovering some of the losses from the first quarter. Meanwhile, ETH remains weak, continuing to see a 13% decline in the second quarter. Excluding the bear markets of 2018 and 2022, if a decline is observed in the first quarter, the second quarter usually ends with an increase. Currently, the market lacks retail investors' participation and needs a new round of catalysts. BTC's realized market cap has refreshed its historical high, surpassing $872 billion, indicating that the entire market has continuously absorbed a large amount of funds over the past few months. However, despite the realized market cap hitting a new high, the monthly growth rate has decreased to 0.9%. Although there is still net capital inflow, the pace of market increment has clearly slowed down, and investor risk appetite is becoming more conservative. This means we are currently in a net absorption cycle, but new capital inflows are gradually decreasing. This state can be viewed as the market entering the initial stage of risk aversion, which also aligns with BTC’s sideways movement. Looking back at the previous two bull markets, the significant expansion of realized market cap coincided with BTC's rise. During that time, market sentiment soared rapidly, with new funds continuously flowing in, pushing prices and realized market cap up in sync. After the small bull peak in the first half of 2024, although BTC continues to maintain high-level fluctuations, the willingness of new capital to enter has started to weaken, and the current phase is also similar.
Previously, it was mentioned that the realized market cap of BTC is distributed according to the UTXO holding age distribution chart. The realized market cap calculates the total market value by the price at which each unspent transaction output was last moved, which differs from traditional market capitalization calculations and more accurately reflects the actual price total of all BTC transferred or bought on-chain. The proportion of the one-week to one-month age range can reflect the concentration of short-term market chips. If a large amount of BTC is moved again in a very short time, it often indicates that market sentiment is highly excited, the concentration of chips increases, and the risk of selling pressure also rises accordingly. From the trend trajectory, two complete upward cycles of overheating and correction can be clearly identified. The first appeared at the beginning of 2024 at the small bull peak, where the one-week to one-month holding ratio rapidly soared to a high level, with a large influx of new funds that not only absorbed the sell-off from long-term holders but also pushed BTC to a higher position. This was followed by more than half a year of consolidation. With Trump's successful election, BTC saw a second wave of climax, and currently, some bubbles have been washed out, with BTC prices continuing to decline. Since losing the 200-day moving average, BTC has basically been in a sideways trend. The impact before and after the tariffs is quite evident, but this process was also relatively short-lived, and we almost saw BTC enter a bear market.
With the fluctuations in the US Treasury market, Trump has suspended tariffs for 90 days, while our trade war with the US continues to escalate. However, yesterday Trump stated that he is in dialogue with us, hinting that a certain agreement might be reached regarding the tariff war. But we all know Trump could reverse his statements at any time. Regardless of the favorable or unfavorable developments, BTC has stabilized at $76,000, and the 365-day moving average has not yet completely broken down. The short and long-term technical moving averages have begun to intersect or overlap, similar to the consolidation from August to October last year. However, the market will eventually provide a clear direction, and during this time everyone needs to remain patient. Currently, the proportion of short-term funds is rapidly declining, but long-term holders are still accumulating more chips. Old Yi is looking forward to the third wave of chip distribution, which also means BTC will break new highs. As for the altcoins that everyone is concerned about, Old Yi still holds the same view: focus on value investment; the rest you already have a clear answer in your heart! Looking at it this way, BTC doesn’t seem so complicated. As long as the global money supply continues to expand, BTC will keep rising.
Looking back at the past two weeks of BTC spot ETF, overall funds have shown a net outflow state. For most of the recent time, we have seen net outflows, similar to the situation during last year's consolidation period. If a new round of increases is to be realized, the spot ETF also needs to see incremental funds flowing in. This includes the need for American cryptocurrency platforms to see a positive premium. This premium indicator can simply be understood as the buy orders from American investors being very active, with BTC's price on American platforms usually being higher than on CZ's platform, which is known as the positive premium on American platforms. After the first quarter of this year, we saw the pace of premium recovery again, seemingly indicating that funds primarily from American investors are once again becoming the core driving force for market rebound. The kimchi premium index measures the difference between BTC prices in the Korean market compared to the global market average price. It shows a different trend of continuous recovery compared to the premium reflected by American platforms. Even when BTC prices reached new highs, the kimchi premium remained weak, indicating that Korean investors prefer altcoins. From Old Yi's perspective, this is a gathering of retail investors, and the market pays more attention to the movements of American institutional funds. This also answers a question from a fan; the focus can be adjusted from some places to the above areas.
To summarize the current situation, the fluctuating market has been confirmed. $83,500 is currently seen as a short-term support level, while the upper pressure level is at $86,500. Everyone can move around this range without major issues. Before new news emerges, the market will stabilize in this range. If BTC can climb above the 200-day moving average, market sentiment will lean towards a more optimistic direction. However, Old Yi believes that the real turning point of the trend is still breaking through $93,000, which is the breakeven point for short-term holders. If BTC subsequently breaks above the 200-day moving average and stabilizes above the cost line for short-term holders for a period, after recouping their costs, they will also reduce profit-taking actions, and the market is expected to enter a more sustainable upward channel. In Old Yi's view, the current situation is precisely the healthy brewing stage before a new round of increases, or this stage is a necessary path before a bull market. It’s like the market is telling us to prepare in advance to avoid missing the arrival of the bull market. Old Yi believes this time won't be too far away. But that said, it doesn't mean telling everyone that the current phase is just a straightforward upward path. Staying in the market at this stage is the wisest choice. There is still room for downward movement; although there is some support from the accumulation of chips below, from the perspective of the market makers, support is seen as their profit. Therefore, the long-term trend has indeed become clear, while the short-term risks are still guiding everyone to attack. What needs to be done now is to manage positions well, ensure you remain in the market before the bull market, and align with market makers in the short term. Old Yi will keep everyone updated based on real-time situations, and friends with ideas can communicate with Old Yi in advance!
Yihai Lunzi: The success of investment depends not only on choosing good targets but also on when to buy and sell. Protecting the principal and properly allocating assets is essential for steady progress in the ocean of investment. Life is like a long river flowing into the sea; what determines victory or defeat is never the gains and losses at a single checkpoint or the profits and losses at a particular time and place, but the vastness gathered from numerous streams!
The article is purely personal opinion and does not constitute any trading advice. The cryptocurrency market has risks; investment should be cautious!