Bitcoin Market Analysis (September 6, 2022)

[Yesterday's resumption] Yesterday, the United States was on holiday on Labor Day, so there was no news, but the People's Bank of China did take action, that is, it lowered the foreign exchange deposit reserve ratio of financial institutions from 8% to 6%. 2 percentage points is not much. It is about more than 20 billion US dollars. Although the amount is not large, it can be seen that the attitude of maintaining the stability of the exchange rate. This is also the second downward adjustment. The first time was on May 15 this year, when the RMB also experienced a round of sharp decline, and then the downward trend of the RMB changed briefly.

If the exchange rate continues to be oversold, the market will have a feeding effect, which will dampen market sentiment, so the task of the central bank is also to stabilize expectations. If the reserve ratio is not lowered urgently, the exchange rate will continue to depreciate. Of course, with all these actions, I think the central bank is just slowing down the pace of devaluation, not sticking to 7 or a certain price.

Binance officially announced that in order to improve users' liquidity and capital utilization efficiency, Binance will automatically convert users' existing USDC, USDP, TUSD stablecoin balances and new deposits into BUSD at a ratio of 1:1. I think this approach is still very smart. First, binance solves the liquidity problem and makes the liquidity of stablecoins better. Second, it is reasonable to let BUSD rise, which can be regarded as further support for BUSD. Third, it can be said to suppress USDC, because USDC’s freezing of addresses a while ago made many people in the industry disgusted. According to recent data, USDC has been run on more than 3 billion US dollars.

However, CircleCEO is more in favor of this statement: he agrees and cites the view that, as with FTX and Coinbase, removing most stablecoin pairs is a good thing, liquidity does not have to be distributed among multiple stablecoins, Make the work of market makers easier and the overall market liquidity higher. This is good for USDC (as well as TUSD and other stablecoins), still being able to deposit/withdraw USDC seamlessly into Binance. In the long run, the liquidity of non-USDT currency pairs will increase. The operation efficiency of Tether will be relatively low, and there will be minting/redemption costs. After all, minting/destroying is a T+1 process, unlike USDC/BUSD/TUSD, which is almost instant, USDT will continue to lose Advantage. This is not USDC "delisting", but another big step for Tether to lose its edge to the US-based stablecoin.

NFT mortgage lending protocol BendDAO tweeted that according to the BIP#10 implementation plan, the liquidation threshold will be adjusted to 80% at 20:00 Beijing time on September 6, and a new vote will be launched to decide whether to adjust the liquidation threshold to 75%. The auction period (24 hours) will not be adjusted due to the failure of BIP#10-2 to be voted. Note: The BIP#10-2 vote on whether to change the auction cycle to 12 hours has not passed. According to BIP#10, there will be no further voting on whether to change to 4 hours. The BendDAO community released a new proposal, BIP#10, which aims to adjust the liquidation threshold and the implementation plan for the auction cycle. The liquidation threshold was adjusted from 90% to 85% on August 30. When the liquidation threshold reaches 80% (effective September 6), a new vote will be initiated to decide whether to adjust the liquidation threshold to 75% and 70%.

CoinShares weekly report shows that digital asset investment products saw net inflows of $9.2 million last week, although the main inflow was shorting bitcoin investment products. Outflows from bitcoin investment products totaled $11 million, the fourth consecutive week of outflows. A record $18 million inflow into short bitcoin investment products brought total AUM to an all-time high of $158 million. The trading volume of digital asset investment products last week was $915 million, similar to last week and hitting a multi-year low.

In a research note, Citi said that ETH has outperformed BTC in recent months, likely due to expectations of a merger upgrade on the Ethereum blockchain. According to the report, ETH has gained 43% since the “post-Luna crisis” in mid-June, while Bitcoin has fallen 1.4% over the same period. The most comparable event, according to the report, was the launch of the Beacon Chain in 2020, a “defining moment in the transition to PoS,” during which ETH saw strong growth.

On-chain data from Santiment shows that the current supply of bitcoin on crypto exchanges is about 1.74 million, the lowest level since November 2018. This figure has dropped significantly over the past 30 months. Santiment emphasized that in March 2020, the number of bitcoins held on exchanges was about 2.9 million, and that figure has since decreased by more than 40%. “Amid all the volatility since the start of 2020, the amount of bitcoin withdrawn from exchanges continues to increase. Long-term holders make up a larger share of its total supply in the cryptocurrency’s 2022 downtrend, It's very common."

[Bitcoin market analysis] There is not much to analyze the current trend of Bitcoin, because the daily fluctuations are limited, and the signals that can reflect the market are also relatively limited. Interested students can refer to the analysis we gave yesterday. So far, Nothing has changed yet.

At the 4-hour level, continuous shock adjustment, repeated testing of the bottom support position, the current 4-hour level has been effectively supported 4 times, but the disk surface is still unclear.

[Risk Reminder] Digital assets fluctuate greatly and the risks are extremely high. Please participate with caution, put an end to the full-cow stud, and refuse loan leverage.