Roundtable Discussion: Data Interpretation of the "American" Complex in the Cryptocurrency Market

Author: Hedy Bi, OKG Research

"The uncontrolled, uncontrollable mob is merely a mad voice, not the voice of the people," President Kennedy said the day after Martin Luther King Jr. was assassinated in Memphis. A gunshot across the ocean last weekend not only boosted Trump's approval ratings (according to Polymarket data) but also warmed up the Bitcoin market.

But this should not be a signal for the crypto market. Ethereum co-founder Vitalik Buterin also published an article today opposing political voting choices based on "support for crypto."

In contemplating the impact of the U.S. on the crypto market, this will be one of the key focus areas for the research institute's industry analysis this year. Back in May, OKG Research had suggested that the rivalry between the two U.S. parties would affect the performance of the crypto market, as it represents whether the U.S. financial market recognizes virtual assets and promotes broader compliance or even supports the further development of virtual assets and related industries.

Moreover, with the opening of the Bitcoin spot ETF channel in the U.S. and the entry of financial institutions, we cannot deny that "U.S." related factors are increasingly impacting the crypto market. In a previous article I wrote, “Data Interpretation of Crypto Market Repositioning: The Transformation Pain Under Global Liquidity Dilemma”, I analyzed for readers the current repositioning of the crypto market and Bitcoin, indicating that the crypto market has gradually transformed from a niche safe-haven market to a field highly sensitive to economic dynamics. Bitcoin has evolved from "digital gold" to an "amplifier" for U.S. stock markets like Nasdaq.

The "American" sentiment in the crypto market is not limited to financial or political aspects; it is a multidimensional and complex issue. However, we can still grasp the pulse of this market through a type of data—on-chain data. With the maturation of blockchain technology and the development of on-chain analysis tools like OKLink, we can break the "information cocoon" in the crypto market. On-chain data, with its immutable and traceable characteristics, provides unprecedented transparency for the market. Against this backdrop, I invite Ai Yi and Phyrex, special analysts of the "Data Interpretation of Web3 Truth Record" series co-produced by OKG Research and PANews, to jointly explore the "American" sentiment in the crypto market, using data to present a real on-chain world.

A Damocles sword over the crypto market: The Federal Reserve's monetary policy decisions based on the U.S. economy, and the situation regarding U.S. cryptocurrency spot ETFs and election factors cannot be ignored.

Ultimately, the "American" sentiment in the crypto market boils down to the U.S. economy. The three of us have always agreed that this is the underlying logic. The Federal Reserve's monetary policy decisions based on the U.S. economy undoubtedly hang like a Damocles sword over the cryptocurrency market, with the timing of interest rate cuts and their correlation with economic conditions being the focal point of market attention. Phyrex added that especially the decision to cut interest rates can directly affect market liquidity and investors' risk appetite, thereby significantly impacting the cryptocurrency market.

The Federal Reserve's monetary policy is determined based on the current state of the U.S. economy, which is reflected by several important indicators. Here, I recommend three macro indicators: monthly unemployment rate, CPI, and PPI.

Phyrex further explained that in the long term, we need to focus on non-farm payroll data, CPI, and core PCE as the main indicators. Ai Yi shared that in addition to these three indicators, she personally also looks at other indicators including weekly initial jobless claims, monthly unemployment rate, core PCE (Personal Consumption Expenditures Price Index), and the University of Michigan Consumer Sentiment Index, all of which are important bases for the Federal Reserve's interest rate policy, and noted that the actual performance of these data compared to market expectations often triggers significant market volatility.

Additionally, I believe there are overall capital inflow and outflow situations, such as the inflow and outflow of BTC spot ETFs, as well as the impact of the U.S. elections on the crypto market. Phyrex and Ai Yi also stated that the Republican Party's positive attitude towards the cryptocurrency market and fluctuations in Trump's approval ratings are political factors that cannot be ignored, as this support injects additional optimism into the market. Besides monetary policy, Ai Yi also emphasized the importance of intuitive indicators such as CME open interest, the inflow and outflow of BTC ETFs, and Coinbase Bitcoin premiums, which can directly reflect the investment willingness and sentiment changes of the American public towards Bitcoin and other cryptocurrencies.

On-chain data mainly reflects users' anticipatory expectations in the cryptocurrency market rather than directly reflecting the impact of U.S. economic events.

In a previous TS session with Phyrex at PANews, I mentioned that the overall crypto market mainly looks at "the expectation of expectations." When we observe on-chain data, the logic reflected by the data is more about "anticipatory expectations." Phyrex illustrated that if the market expects the Republican Party to win, it will drive overall liquidity up and anticipate that the Federal Reserve may cut interest rates in September, further increasing liquidity. These expectations will ultimately be reflected in on-chain data. Ai Yi pointed out that on-chain data does not directly reflect the immediate impact of U.S. economic events on trading volume and frequency, as the timing of the announcement of U.S. economic event results is fixed, and market feedback is rapid, especially within centralized exchange platforms.

In summary, the path of impact of U.S. economic events on the crypto market is that the expectations of these events influence market sentiment and capital flow, thereby indirectly affecting the cryptocurrency market, with the transmission mechanism first occurring in centralized exchanges before reaching on-chain assets.

The indicators of "capital flow" and "BTC's chip distribution" in on-chain data are important metrics for judging the future direction of the crypto market.

"Capital flow" in on-chain data has always been an indicator we focus on, mainly including large transactions, whale address distribution, and capital inflow and outflow. The first two can be easily seen in on-chain data tools. Regarding capital flow, I will look at the market inflow based on the market capitalization expansion of USDT and the inflow situation of BTC spot ETFs. For outflows, large transactions can help us make good judgments.

Source: OKLink

For outflows, Ai Yi discussed "selling expectations." Since the U.S. government is one of the largest holders of Bitcoin, the direction and flow of whales in on-chain assets are our main focus. Just last week, we tracked the selling situation marked as "German address" and "U.S. address."

Phyrex proposed a new perspective on BTC chip distribution that is worth analyzing in depth. This round of the crypto market cycle is different from previous ones: earlier cycles were driven by the native innovations of the crypto market, while this time it is led by Bitcoin spot ETFs. Additionally, Bitcoin currently accounts for about 50% of the entire market. Therefore, Bitcoin has become a key data point we need to focus on.

Here, he also introduced the URPD indicator, which is the BTC chip distribution chart, clearly showing where the investors participating in the turnover are concentrated.

The on-chain data that breaks the "information cocoon" for the first time is as important as an "electrocardiogram."

From a cyclical perspective, on-chain data serves as a benchmark. In the short term, on-chain data, especially large transactions, are the reasons for volatility.

If we look back at finance, it relies on information asymmetry to make profits, as it is essentially an intermediary. However, on-chain data is considered the first significant breakthrough in breaking the "information cocoon" barriers and access limitations. People from all over the world can access any transaction record on the blockchain, including the parties involved and the amounts, making this low-cost and efficient information acquisition possible with just a learning curve for using tools and finding suitable ones, such as the OKLink multi-chain browser. After obtaining the information, analyzing the value behind the data is the most crucial step.

Source: OKLink

In terms of on-chain data analysis, Phyrex emphasized the accuracy of on-chain data in assessing cyclical changes in the market, especially in long-term and large-cycle analyses. Ai Yi pointed out that on-chain data can also reflect the activity in the crypto market in real-time, including trading volume, open interest, and the number of active addresses across multiple dimensions. This information for investors is like the "electrocardiogram" of the crypto market, assisting them in making accurate market judgments, with its impact and response speed even surpassing any traditional financial industry.

I believe that from a broader cyclical perspective, on-chain data serves as a benchmark. In the short term, on-chain data, especially large transactions, are the causes of volatility. The precise and direct rapid response of on-chain data will also amplify the impact of these fluctuations on market sentiment, thereby influencing investor behavior.

Finally, I asked Phyrex and Ai Yi, if they could only give one indicator to look at the crypto market, what would it be. Both provided answers of URPD and Token price, respectively. Here, I want to reiterate that with the repositioning of the crypto market, no one can escape the Kondratiev wave.