Turning point of the CEX and DEX war, market uncertainty and opportunities, examples of long-term, medium-term, and short-term indicators

Source: Talking About Li and Outside

Although Binance Alpha 2.0 went live on the 18th of this month, I didn't update my experience right away because I have had no interest in trading MemeCoins recently. However, a couple of days ago (March 24), after updating the app, I casually bought a small amount of a coin in the Alpha zone to try it out, and the operation was indeed very smooth, essentially allowing direct purchase of DEX tokens within Binance (CEX).

Perhaps because the operation was too smooth, the coin I bought lost almost 30% in less than a day, but since it was a small test, I won't take this loss seriously. What I mainly want to say here is that from a developmental perspective, Binance Alpha seems to completely blur the lines between CEX and DEX, while also allowing some on-chain tokens to directly gain liquidity from Binance, enabling ordinary users (newbies) to easily acquire some on-chain assets without having to consider slippage, GAS, bridging, and other issues. This is indeed a form of progress.

1. The Turning Point in the CEX and DEX War

Since the launch of Binance Alpha 2.0, which has only been about a week, its trading volume has approached 94,900 transactions, with a trading volume exceeding $113 million. In the current overall gloomy market sentiment, it can be said that it has performed quite well, as shown in the figure below.

Many people were previously discussing the future war between CEX and DEX, but from this, we can easily foresee that perhaps in the future, there will no longer be a so-called competition between CEX and DEX, but rather, whoever can seamlessly integrate the two will become the ultimate winner.

Of course, we are only looking at the issue from a developmental perspective. If you look at it solely from the current liquidity perspective, you could also argue that Binance is just thinking of ways to squeeze the market dry.

2. Market Uncertainty and Opportunities

As we mentioned in the previous article (March 24), apart from the hot topics created by CZ (MemeCoins, wallet new listing activities) that some people are actively participating in, it seems that the market has fallen into a kind of persistent silence, as everyone seems to be waiting for a bigger black swan or a more significant positive news (such as a Federal Reserve rate cut, changes in Trump's tariff policy, etc.).

However, at the same time, there is an interesting point that many projects (token prices) have actually been slowly rising since around March 15. We can easily see this by looking at the corresponding daily trends. For example, Pendle, which I am following, has risen about 50% in the past two weeks (from $1.9 to $2.9), but not many people are discussing it.

A few days ago, while browsing group messages, I also noticed someone mentioned this issue, saying: "I found that the bottoms of altcoins are rising again." As shown in the figure below.

Of course, what I want to express here is not that a big wave is coming back or that the so-called altcoin season is approaching. Discussing whether a bull market or altcoin season is coming will often lead to criticism and could be misleading. What I mainly want to convey is a thought process: if you are still paying attention to this market, then whether in the short term, medium term, or long term, you need to find your own perspective to conduct necessary in-depth understanding. This way, you will have a greater chance of discovering potential opportunities that others might miss, and such opportunities often arise when most people are pessimistic or desperate. Conversely, when most people can see opportunities, or when everyone is vying for such opportunities, you should consider exiting.

Let me give you another simple example. For instance, you can recall or look at your study notes or trading notes. What were you doing in September last year (2024)? What different aspects of the market were you paying attention to? What specific actions did you take at that time?

If you can't remember anything, it might be worth reviewing our series of articles from the same period last year and reading them again. You might gain some new insights. As shown in the figure below.

In summary, it is still the viewpoint from our previous articles: there will always be various opportunities in this market. We shouldn't get too caught up in the so-called bull or bear markets. A bull market does not mean you will definitely make money, and a bear market does not mean you will definitely lose money. The market essentially consists of three structures (upward, downward, sideways). We just need to align with our risk preferences, grasp the rhythm of different periods, and find our own opportunities.

Every investor hopes to make money, but if everyone is making money, where does the money come from? Simply put, the reason you can make money in the market is that others are losing money. If we categorize investors (individual investors), they can roughly be divided into three types:

Ordinary Investors: Most people will compensate for their lack of learning or understanding in this field by making mistakes (such as trading losses, being scammed, etc.).

Blind Investors: These people often repeat mistakes thoughtlessly without seeking improvement and always place their hopes of making money directly on others.

Smart Investors: They can learn from their own mistakes/experiences and even from others' mistakes/experiences to continuously optimize and improve their trading strategies.

Based on this classification of investor groups, the main flow of money becomes clear: it will flow from blind investors to ordinary investors, and then continue to smart investors.

Many people believe that making money in the crypto field is as easy as breathing, simply because they only see that 0.1% of people making big profits, but these individuals are difficult to replicate. In fact, trading (investing) is a long-term process. As we mentioned before, we can only adjust our mindset, lower our guard, and personally engage in learning and experiencing. When you continuously gain new perspectives, many previously perplexing questions may be directly resolved. With this accumulation, when market fluctuations occur, our minds will have the stability to persist. This is essentially akin to practicing basic skills in daily learning or muscle training, and on this basis, we may discover potential opportunities earlier or more easily than others.

At the same time, it is precisely because of the uncertainty in the market that new opportunities arise. Everyone knows that the sun will definitely rise in the east tomorrow, so there are no money-making opportunities in that (no one would bet on which direction the sun will rise tomorrow). But if I tell you (this is just an example and assumption) that Bitcoin has a 75% chance of seeing a price starting with 9 in the coming weeks and a 25% chance of continuing to see a price starting with 7, then there is indeed an opportunity here. In such situations of uncertainty, what will you do?

As for what you will do, I don't know, and I can't provide specific trading guidance. Many big names will tell you that Bitcoin will drop below $50,000, while many others will say that Bitcoin will rise above $200,000… but does this really matter to you? Are you betting on tomorrow or the next ten years in the crypto field?

Never think you are smarter than the market. No one can know exactly what will happen next. Our reasonable approach should be to maintain an open attitude towards all possible situations, plan our trades by assigning different probabilities, and actively pay attention to the triggering factors that change those probabilities. We should prepare plans or schemes in advance (at least two plans: Plan A + Plan B, including how to participate, what to participate in, when to participate, and when to exit).

Here, I can only give one piece of advice: you can use a certain proportion of your position to take short-term risks, such as pursuing some higher-risk altcoin or MemeCoin opportunities, but all your short-term operations, including your larger positions, should ultimately point to a long-term goal, which is to accumulate more Bitcoin (rather than altcoins).

From a broader macro perspective, we are currently likely still in a bull market cycle structure.

From a medium-term timeframe, Bitcoin seems to be attempting to break through the local range formed by the local top (but Bitcoin is still in a downward channel of the medium-term trend; let's see if it can break through the $92,000 level this week or next). Some altcoins have also begun to show signs of recovery (but this may not necessarily be driven by fundamentals; it could be a price recovery due to a new wave of short squeezes). Of course, it may also fail to break through, and we need to continue observing and waiting.

From a short-term market sentiment perspective, we are indeed in a "bear market" atmosphere (since the local high of this cycle, many altcoins have fallen more than 70%).

The strategies adopted from these different perspectives should also vary. For example, I personally tend to look at issues from a macro perspective, so I have been holding a large position in Bitcoin without moving it, and I just need to maintain enough patience. If you wish to take action based on a medium-term framework or short-term sentiment, then you should keep your mind clear, avoid falling into passivity (for example, by implementing strict take-profit/stop-loss trading plans and necessary hedging strategies), and actively seek what you want to see (rather than what others often recommend to you or the news that software pushes to you daily). Once you discover a potential opportunity (something you believe is likely to happen), execute it immediately.

3. Some Practical Price Reference Indicators

As for some reference indicators, there are currently many available. Previous articles from Talking About Li and Outside have shared several practical indicator tools. Here, we will briefly list a few (using Bitcoin indicators as an example):

- Large Capital Flows on Exchanges (as shown below)

Currently, there has been a large outflow of Bitcoin. On March 26, 33,500 Bitcoins were transferred from exchanges to cold wallets, which may (this is just a speculation) indicate that the activity frequency of large holders or institutions is increasing, and they are accumulating from the secondary market.

- ETF Fund Inflows/Outflows (as shown below)

Since March 17, Bitcoin ETF funds have started to show a net inflow state again. Although the inflow has slowed down in recent days, it still maintains a positive inflow. The inflow of ETF funds often has a positive impact on short-term market sentiment, and the increase in total ETF holdings can also serve as a long-term support for Bitcoin prices.

- Short-term/Long-term Holder Status (as shown below)

Here, we are looking at the status of short-term holders. Currently, the average holding cost for short-term investors (or speculators) is around $93,500, which is at a relatively historical high and also above the current market price of $87,300 (as of the time of writing this article). In conjunction with the trend, the number of short-term speculators is also gradually decreasing. These individuals may be experiencing being stuck in positions or the psychological pressure of cutting losses. The short-term buying power seems to be somewhat insufficient, but the upside is that as short-term speculators exit, the market will gradually become healthier.

- Chip Distribution Structure (as shown below)

From the current distribution of chip concentration, several important ranges have formed, such as: the historical accumulation zone around $65,000 (the support band indicated by the red line in the figure above), the new chip density zone around $97,000, and the current chip range of $80,000 to $90,000. Further, as we mentioned earlier, we should first look at whether it can break through the range around $92,000. If it breaks through effectively, then it may enter a new range above.

Due to space limitations, we will only briefly list these indicators. Interested friends can obtain more indicator tools through the Talking About Li and Outside toolbox. As shown in the figure below.

In summary, trading is not about luck; it is a discipline and a system. Think about what your ultimate goal is, then keep persevering, and never take risks that exceed what you can afford to lose in any trade.