10x Research: Narrative liquidity keeps traders highly positioned near market tops, key lies in capital flow indicators

Jinse Finance reported that 10x Research posted on X platform, stating that liquidity is once again shifting, while most bitcoin and altcoin traders are focusing on the wrong indicators. Many commentators claim that simply holding altcoins for the long term will ultimately lead to excess wealth, often believing there is little need for fundamental analysis or understanding. These eye-catching narratives easily resonate with retail investors, prompting them to remain fully invested even when market conditions deteriorate. When the liquidity cycle eventually turns, it is often these investors who hold positions at the wrong stage of the cycle. Although the concept of "liquidity" is frequently discussed, much of the commentary refers only to abstract, hypothetical liquidity, which has little to do with actual funds flowing into the crypto market. The distinction between perceived liquidity and measurable capital inflows is crucial. In the most recent and previous cycles, reliance on narrative-driven liquidity concepts has led many traders to maintain high positions near market tops; conversely, monitoring real capital flows could have signaled a reduction in positions. In fact, it is the latter—liquidity indicators based on capital flows—that truly determine outcomes. However, many traders ignore these indicators, resulting in capital misallocation when the liquidity landscape changes.