Insight into Data 01 AICoin OKX How to Quickly Perceive the Crypto Market and Build Data Methodology

Insight into Data 01 AICoin OKX How to Quickly Perceive the Crypto Market and Build Data Methodology

Insight into Data 01 AICoin OKX How to Quickly Perceive the Crypto Market and Build Data Methodology

In the cryptocurrency market, data has always been a key factor for people to make trading decisions. How do we cut through the data fog and discover 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 joined mainstream data platforms such as AICoin and Coinglass to start the exploration of systematic data methodologies based on common user needs, hoping to provide the market with reference learning.

The following is the content of the first issue, jointly developed by the OKX strategy team and the AICoin Research Institute, focusing on understanding market changes and constructing a “data” methodology, hoping to be helpful to you.

OKX Strategy Team: The OKX strategy team is composed of a group of experienced professionals, dedicated to promoting 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 dedicated to market data analysis, professional K-line, signal strategy tools, asset management monitoring, and news information.

Content Directory
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Perceiving market changes at the first time, what data dimensions must be constantly monitored?
What indicators can help users better grasp changes in macro trends?
Timing is the key to victory, which data helps capture the best timing?
For large funds, what data is needed to build a scientific and robust trading strategy?
Conclusion
Risk Warning and Disclaimer
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 are the most indicative of current market sentiment. Price trends are usually measured through technical indicators, commonly including MA, EMA, MACD, RSI, and various custom indicators developed by technical analysts.

Second, trading volume, mainly total trading volume and large transactions. Total trading volume can effectively measure market activity. Large transactions mainly look at the trading situation of large holders, such as the buying and selling of whales, which may foreshadow significant market fluctuations. We have also monitored and analyzed several important types of data and made them open for user analysis and early warning, including main large orders based on CEX order book and transaction data, large transaction behavior, and chip distribution.

Third, fund flow. This mainly includes net inflow/outflow 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 ETF funds flow in large amounts, it indicates that the market is still an incremental market. We have also recorded and shared such data for the reference of the masses. In addition, it is necessary to pay attention to the fund flow of exchanges, understand the buying and selling pressure in the market, and refer to the large amount of access data of the exchange and the balance of the exchange wallet address.

Fourth, observing market sentiment and social media dynamics. Looking at market sentiment indicators, such as the Fear & Greed Index. We particularly 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 short-term and medium-term market trends. As a leading CEX, the open trading big data of OKX is very important for the market.

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

Fifth, on-chain transaction data, including transaction volume, active address numbers, etc., can help us understand the activity of on-chain activities. It is recommended to pay attention to the changes in the addresses of smart money and the changes in project tokens in the focus of community KOL. For tokens with POW mechanisms such as Bitcoin, changes in hash rate and mining difficulty can reflect the confidence of miners and network security. The most critical points are two: the halving period and the impact of miner shutdown prices and coin prices.

Sixth, macroeconomic data and policies, including economic indicators such as US non-farm data, CPI, etc., are helpful for us to understand the overall trend of the economy. 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 paying attention to at least the following 4 dimensions of data:

First, price trends. Price changes are the most direct market change signals. Users need to pay attention to the short-term and long-term trends of prices and use technical indicators such as moving averages (MA), the relative strength index (RSI), and the 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 changes of price movements, identify overbought or oversold conditions, usually RSI values above 70 indicate overbought, and values below 30 indicate oversold;
Moving average convergence divergence (MACD): can judge the change of price trend through the difference between short-term and long-term moving averages.

Second, market volatility, which is an important indicator of market changes. It can assist in judging market stability and potential investment risks. Volatility is usually measured by standard deviation or the VIX index, or by comprehensive fear and greed indices, which can more comprehensively evaluate market sentiment and potential volatility.

Third, fund flow and trading distribution, comprehensively analyzing fund flow and trading distribution can quickly understand the overall fund movement and cost distribution of the market, and then more accurately judge market sentiment, price fluctuations, and key support and resistance levels.

Among them, fund flow is an important indicator for judging market sentiment and trends. By monitoring the inflow and outflow of funds, investors can understand the overall trend of funds in the market, and then understand the market trend. Inflow funds are orders traded at the ask price or higher, and outflow funds are orders traded at the bid price or lower. Net inflow of funds equals inflow minus outflow. The size of single inflow funds is sorted by transaction amount and can be divided into large orders, big orders, medium orders, and small orders for easy viewing.

The trading distribution displays the number of transactions at different price levels, reflecting the trading distribution of investors. By analyzing the trading distribution data, we can understand the profit or loss situation of investors. By comparing the current price, we can distinguish between profit areas and loss areas. Key data includes profit ratio, average cost, resistance level, support level, 90% and 70% transaction intervals, and overlapping of transaction intervals. A high degree of overlap indicates a concentration of funds in the trading position, with smaller price fluctuations. Following these data can more accurately judge market trends and price changes.

Fourth, fundamental data. For the cryptocurrency market, fundamental data includes the technical progress of projects, tokenomics, partnerships, regulatory dynamics, etc.

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

First, total market value. The total market value of cryptocurrencies reflects the size and health of the entire cryptocurrency market. The growth of the total market value usually indicates the overall development of the market and an increase in participants.

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

Third, on-chain activity data, mainly referring to active addresses, transaction volume, and amount. In addition, for Bitcoin, the hash rate of Bitcoin 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, fund liquidity and trading volume, including the trading volume of cryptocurrency exchanges in different periods and the inflow and outflow of funds from exchanges. Tracking the inflow and outflow of cryptocurrencies to exchanges, a large influx of funds into exchanges may indicate increased selling pressure, and vice versa.

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

Sixth, market sentiment index, mainly looking at the Fear & Greed Index and OKX’s trading big data indicators.

Seventh, decentralized finance (DeFi) data, the total locked value of DeFi protocols can to some extent reflect the size and growth trend of the DeFi market.

Eighth, derivative market data, the key is the open interest of futures and options markets, which can reflect the expectations and risk exposure of market participants. There is also the funding rate, such as the funding rate in the futures market, which can indicate the balance of power between long and short positions. Rates and spreads are important tools for guiding large funds to arbitrage, and the correlation between the funding rate and the coin price is important.

These comprehensive and professional data and indicators are essential for investors and traders to make informed decisions and optimize their trading strategies in the cryptocurrency market.Funds balance market price differences and provide liquidity to the market through arbitrage.
The ninth key indicators for the United States’ economic data and indicators are the CPI and non-farm data. The value of these two indicators lies in guiding the Federal Reserve’s interest rate policy and predicting the direction of total market capital inflows and outflows.
OKX Strategy Team: We believe that users can refer to the following five key indicators:
First, the overall market capitalization of cryptocurrencies 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, the overall market trading volume reflects the activity level of the market. High trading volume usually means that market sentiment is high, which may be accompanied by significant price fluctuations. Users can judge the strength of market trends and identify market peaks and valleys by analyzing changes in trading volume.
Third, the BTC/ETH market capitalization ratio is an important indicator for understanding market structure. When the market capitalization ratio of BTC or ETH increases, it may indicate that more market funds are concentrated in these two major cryptocurrencies, which is usually seen as a signal of market hedging. Conversely, a decrease in market capitalization ratio may indicate that investors are exploring more altcoin opportunities.
Fourth, ETF fund inflow and outflow reflect the market sentiment of institutional investors. A large influx of funds into ETFs usually indicates that institutional investors are optimistic about the market outlook, while fund outflows may indicate a weakening of institutional confidence in the market. Analyzing the flow of funds in ETFs can help users judge the medium- to long-term trends in the market.
Fifth, the economic calendar includes key economic events and data releases, such as GDP data, inflation rates, and interest rate decisions. These macroeconomic factors have a significant impact on the cryptocurrency market. For example, an increase in interest rates may lead to capital outflows from high-risk assets, while increased economic uncertainty may prompt investors to seek cryptocurrencies as a hedge. Paying attention to the economic calendar helps users anticipate changes in macro trends.
AICoin Research Institute: This issue can be analyzed in several stages.
First, in 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) moving averages can indicate buying opportunities, such as “golden cross” (short-term average crossing above long-term average).
RSI indicator: RSI below 30 is usually considered oversold and may present a good buying opportunity.
BOLL indicator: When the price touches the lower Bollinger Band with signs of a rebound, it can be used as a buying signal.
There are many types of technical indicators with rich applications. Choosing the right indicators for investors is crucial.
In addition, in terms of data indicators, we need to understand: trading volume, active addresses and the number of new addresses, on-chain transaction volume, and the trend of major large orders.
Second, in 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 averages, can serve as stop-loss signals.
RSI: When RSI is above 70, it is usually considered overbought and may be a signal to consider taking profits.
In addition, when setting profit-taking and stop-loss points based on data indicators, it is also important to consider trading volume and the trend of large transfers, as well as a decrease in network activity: a significant decrease in on-chain transactions and active addresses may indicate a decrease in market interest and serve as a signal to consider stop-loss. Of course, regulatory policies or unfavorable news are also important references for our investments. Finally, we also recommend implementing risk control measures, such as setting clear profit-taking and stop-loss points, smoothing the purchase price through phased position building to reduce the risk of individual positions, and conducting regular reviews and adjustments.
OKX Strategy Team: We believe that holding preferences, basis, and technical indicators have strong reference value.
Specifically, holding preferences (Long Short Ratio) reflect the long and short ratio of market participants. A high long ratio usually indicates optimistic market sentiment, and investors tend to buy, while a high short ratio indicates pessimistic market sentiment, and investors tend to sell. By analyzing holding preferences, users can judge the main trend and sentiment of the current market, and choose the appropriate timing for position building.
Basis refers to the difference between futures contract prices and spot prices. The basis can be positive (futures price higher than spot price) or negative (futures price lower than spot price). The basis reflects market participants’ expectations for future price changes. If the basis is positive, it usually indicates that the market expects future prices to rise (contango); if the basis is negative, it usually indicates that the market expects future prices to fall (backwardation). The basis can be used to monitor market sentiment and formulate arbitrage strategies. For example, a rapid increase in the basis may indicate a bullish market sentiment, while a rapid decrease in the basis may indicate a bearish market sentiment.
Technical indicators such as overbought/oversold are used to determine whether the market is in an overbought or oversold state using technical indicators such as the relative strength index (RSI) and stochastic oscillator. When RSI is above 70, the market may be overbought, and prices may experience a correction; when RSI is below 30, the market may be oversold, and prices may rebound. These technical indicators help users choose the timing for position building during extreme market sentiment.
Finally, there are profit/risk tools that help users visualize and manage the potential returns and risks of each trade. Users can set profit-taking and stop-loss points and calculate the risk-to-reward ratio for each trade to formulate reasonable exit strategies.
AICoin Research Institute: The answer to this question mainly depends on the financial goals and the ability to withstand risk and drawdown. Here is a brief analysis of some arbitrage indicators that are suitable for large capital references:
Pay attention to price differences in the futures, spot, and futures markets.
Pay attention to price differences and timeliness opportunities for the same underlying asset across different exchanges.
Pay attention to arbitrage opportunities in contract funding rates.
Pay attention to arbitrage opportunities between on-chain and off-chain.
Pay attention to market depth, open interest data, etc. of corresponding underlying assets to determine whether they can accommodate large capital arbitrage.
Pay attention to the stability of exchanges. Larger platforms like OKX can better accommodate large capital arbitrage operations.
Currently, AICoin provides analysis and alerts based on multiple data dimensions mentioned above, hoping to provide effective references for the trader community.
OKX Strategy Team: From our observation, the asset allocation of large capital users is more diversified. For this type of users, commonly used tools include dollar-cost averaging strategies, portfolio arbitrage, and large order splitting. Dollar-cost averaging strategy reduces the overall holding cost by regularly buying during price declines and selling during price rebounds. Portfolio arbitrage reduces trading risks by hedging arbitrage across different or similar currencies/markets, taking advantage of market oscillations and price differences between different trading varieties to realize automatic and timely profits. Large order splitting is a convenient trading strategy provided to large-volume traders. It helps users split large orders into small orders and place them in batches. The strategy minimizes the impact of large orders on the market and maintains a relatively higher average execution price, thereby greatly reducing the trading costs for large-volume traders. These strategies, combined with their respective characteristics, can help large capital users achieve diversified allocation more efficiently and achieve stable investment goals.
Dollar-cost averaging strategy (multi-currency portfolio, regular purchases) is a strategy that reduces the overall holding cost by periodically purchasing during price declines. By gradually buying at low prices during a downtrend and selling at a profit during an uptrend, the strategy can be repeated in a cycle to continuously achieve arbitrage.
Portfolio arbitrage is a strategy that helps users hedge and reduce trading risks. This strategy can choose to trade different or similar currencies/markets simultaneously. By taking advantage of market fluctuations and price differences between different trading varieties, it can automatically and timely help users realize profits. Portfolio arbitrage strategy can effectively help users reduce potential losses in response to future market uncertainties.
Large order splitting is also a convenient trading strategy provided to large-volume traders. This strategy helps users split large orders into small orders and place them in batches. By intelligently setting orders through the strategy, it minimizes the impact of large orders on the market and maintains a relatively higher average execution price, thereby greatly reducing the trading costs for large-volume traders.
The above is the first issue of the “Insight Data” column launched by OKX, focusing on the perception of market changes and how to establish scientific trading strategies. It aims to provide systematic data methodologies for the trader community to better grasp market trends and make wise trading decisions. In future articles, we will continue to explore more practical data usage/analysis methods to provide references for traders with different investment preferences.
This article is for reference only. The views expressed in this article represent the author’s opinions and do not represent the position of OKX. This article does not intend to provide (i) investment advice or investment recommendations; (ii) solicitation or offer 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. Please be responsible for understanding and complying with applicable local laws and regulations.
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