Author: TheresiaBlock, Source: Vwin Ventures
I often hear: macroeconomics is not profitable. This discrimination often comes from fundamental analysts who make a conclusion after a certain point in time, but the market splits, and people turn around and sigh at the macro analysts who were slapped in the face.
Why does this happen?
The essence is the mismatch between macro expectations and time and space-the market forecast of the large cycle cannot be used for the entry and exit of the small cycle. The trend of half a year predicts the trend of the next year based on past facts, assumptions and prejudices. Black swan events such as financial crises and epidemics are neither predictable nor avoidable.
1.Does the currency circle also need macroeconomics?
Two data: The Fed's dot chart was released at the end of the 21-year bull market, reaching the peak of the previous cycle; the Fed's dot chart was released in March, and the price of Bitcoin fell below $70,000.
Now, due to the lack of new narratives, the market has given the right to speak to the external macroeconomics and has begun to widely discuss liquidity issues. We found that after the entry of Bitcoin ETF, we had to pay attention to this powerful buyer. From the perspective of trading, the difficulty of trading is indeed increasing. The changes in the market capital structure and the addition of new professional institutional funds have caused the market to often react to macro expectations in advance, causing prices to deviate from the fundamentals of the industry.
This change has led to confusion in trading, but our foothold is often that the macro and reality gradually converge over time, finding the resonance between fundamentals and macro margins, so that our output bias has a higher chance of winning.
2. Simplification of macroeconomic analysis
Macroeconomics seems to be unfathomable, complex and difficult to get into, but it can be simplified into four aspects:
1. Rhythm
2. Fundamentals
3. Correlation analysis
4. Event logic
1. Rhythm:Including economic data (unemployment rate) and inflation data (CPI). The Federal Reserve regularly releases data every month and uses it to formulate monetary policy, so it is called rhythm. For example: CPI gradually declined in the first half of the year, and non-agricultural employment decreased, indicating that inflation was controlled to a certain extent. At the same time, it may enter a weak economic period. The Federal Reserve’s schedule of cutting interest rates twice this year is likely to be fulfilled.
2. Fundamentals: First, the actual application scenarios on the chain (number of active addresses, number of new addresses, gas fees). High activity and reasonable transaction costs usually indicate healthy market dynamics and provide a basis for a bull market. ; Second, the purchasing power of funds (over-the-counter Bitcoin ETF channel, on-site stablecoin channel). The inflow of funds is the direct driving force for the rise of the zero-sum game market. ; Third, the behavior of market players (long hands, short hands, exchanges, miners), which often show different states at different stages of the cycle. For example, each round of bull market is accompanied by the distribution of long hands and the acceptance of short hands, and the opening of a new round of main rising waves will encounter mining accidents, and the mining industry pattern needs to be reshuffled.
3. Correlation: US stocks, US bonds, and the US dollar index. The Nasdaq Index (IXIC), which is a risk asset with the same nature as Bitcoin, is positively correlated with Bitcoin; U.S. Treasuries, as a market water-absorbing tool, are in a substitute relationship with Bitcoin and are negatively correlated; the U.S. dollar is the underlying leverage, and the strengthening of the U.S. dollar index will passively increase the amount of margin, increase the repayment cost of debt, and may lead to financial pressure and default risk.
4. Event logic: Put it last, but it is often the most important. Fragmented events need to wait for the influence of market a posteriori events and supplement them with different weights, such as driving 10 billion off-site funds into the market - the ETF event is the fuel for the bull market in the first half of the year, but small-scale security vulnerabilities and hacking incidents may only attract attention in a local area and have limited impact on the overall market.
Three, macro hysteresis
The analysis of the above macro indicators/events often comes from hindsight, and there may even be path dependence. Statistical analysis based on high winning rates often has hysteresis. I have also been exploring this issue with people in the industry. Can we find an advance amount to get ahead?
It's difficult.
Because when the market forms a consistent expectation, a prince in has been formed. If the market does not form a consistency, it means that the influencing factor has been chosen incorrectly. From the trading level, it is often to follow the trend, and it is difficult to place a heavy bet on a trend reversal order. Everyone eats the fish body rather than the fish head.
What research can do is to judge whether the market deviates from the actual impact, whether it is overpriced, find opportunities in the deviation between reality and currency prices, and join the market's correction power. The past is the cornerstone of the future, and the present is the direction of the future. Research is to verify and falsify in the prediction of the future again and again, and transmit to the transformation, collapse, and reshaping of the research system and research framework.
Fourth,Reflections on the current market under the macro background
The US economy is strong, and the monetary environment remains at a high interest rate level under the expectation of interest rate cuts. Non-agricultural employment data has not loosened yet, and CPI is gradually approaching the target of 2%, but it is still above 3%. The fundamentals of cryptocurrencies are weak. More than half of Ethereum has been diverted to the second layer, and the second layer is 1.5% of Ethereum's GES fee consumption. In simple terms, 50% of demand only brings 1.5% of revenue. New addresses and active addresses also fell to the lowest point of the year as prices fell. Since Bitcoin fell into consolidation, the bull market has fallen into a strange stillness, and various market players are reluctant to hand over their chips in the hope of better prices. But now short-handed and miners are showing signs of fleeing.
In terms of correlation, both U.S. stocks and U.S. indexes have strengthened. In the case of T-bill over-issuance, the market prefers U.S. stocks between stocks and coins. The crypto market has transfused Nasdaq. Nvidia's first-half increase was nearly 150%, three times the increase of Bitcoin. In the context of recycling liquidity, the preference for AI concept stocks is stronger than that for highly volatile cryptocurrencies. In the absence of new narratives in cryptocurrencies in the short term, the competitive benefits of stocks and coins are stronger than the spillover benefits.
With the large-scale release of high-FDV VC coins in the second half of the year, the market needs new purchasing power, or needs to be adjusted to release purchasing power:
Script 1: Gameplay/system innovation, the strong narrative of breaking the circle effect drives the inflow of off-site funds, and the market share of Bitcoin rises to a new level.
Script 2: Bitcoin price fluctuates below the level of US$56,000 (falling below three cost lines): short-term holder cost line, miner shutdown price, and ETF long-term holder cost price. In the short term, the market is cleared by price reduction to accumulate stablecoins and purchasing power on the market. Within three months, due to the positive events, investment was ignited, the bull market was restarted, and the second peak of 21 years was reproduced. However, if the time is too long, it is easy to break the confidence of the circle, resulting in the inability of the reversal force of the bull market to suppress pessimistic expectations, and the market will fall into a bear market.
V.Written at the end
The current market has no way to retreat, and everyone is talking more about "macro". It requires going beyond short-term fluctuations and gaining insight into deeper trends and structural changes. But it needs to be understood that the complexity of macro analysis means that no single indicator or event can completely determine the direction of the market, and it also has its own limitations, but understanding the macro is not only to judge the market, but also to find direction in uncertainty.
XingChi
