After Bitcoin hit a high of around 91,800 yesterday, it has now fallen back to a low of 86,700, falling another 5,000 points. After Ethereum hit a high of 3,242, it fell back to 3,020, a drop of 220 points. The market has entered a phase of adjustment. In the past 24 hours, more than 170,000 people’s positions have been liquidated, exceeding 500 million US dollars. The bulls have lost more than 300 million US dollars again, plus more than 500 million US dollars a day in the past two days. It is a definite Bitcoin bull market. The large amount of liquidation of the bulls reflects the overheated growth of market sentiment, and appropriate corrections and cleansing are also normal.
Many copycat stocks have basically returned to their previous starting points in this wave. Perhaps this is how risks and returns coexist. If you want to obtain long-term returns of ten times or even a hundred times in the future, you will need to endure countless pullbacks!
It is too early to say that the top has appeared. The development of the market is not completed in one day. It takes at least three months for the top of each stage to form. Last year's rise started in October and ended in March. The expected hype of the big pie ETF is the first stage of the market. After the hype, there will be a big correction. This big correction is expected to happen after Trump takes office. So I personally expect the staged top of the first wave of speculation to occur around mid-January! After the retracement, there will be a more crazy rise, so don't waste the early stage of the bull market. The retracement gives you the opportunity to get on board!
Ethereum focuses on the bottom-fishing opportunities in the range of 2800-3000, and Bitcoin focuses on the support situation near 85000! It takes time for the main force to ship out, so the market will not end so quickly, just boldly take it back!
How crazy will this round of Bitcoin market be?
1. ETH and other large-cap tokens have not yet reached new highs:
There are currently two L1 (first layer) projects with the largest ecosystems on the market: Ethereum and Solana. Once they rise, altcoins will follow, but right now, neither of them has broken through their previous all-time highs.
ETH is 30% below its 2021 high. SOL is down 16% from its new high.
Historically, large-cap coins tend to hit new highs after BTC stabilizes. For example, in the 2020-2021 cycle, BTC hit a new high in the fourth quarter of 2020, while altcoins hit new highs in the first quarter of 2021.
At this point, BTC may still have 100%-120% upside in this cycle, but altcoins have much greater potential gains.
So, when will altcoins start to rise across the board?
Until the Fed signals an end to "quantitative tightening", the altcoin rally will not fully open. The Fed has been reducing its balance sheet since mid-2022, which has been bearish for altcoins. I think the Fed may signal an end to QT at the next FOMC meeting (December), which may mark the beginning of the altcoin rally.
There is currently no sign of a "top":
Some bears believe that the current high open interest (OI) and positive funding rates indicate that the market is leverage-driven, which usually happens at the end of a bull market. But as usual, they are wrong. Here’s why:
- Bitcoin ETF bought 40,000 BTC in just 4 days, equivalent to 3 months of mining supply.
- BTC’s funding rate when it crossed $80,000 was at its lowest level in a long time.
These facts clearly show that the current demand for BTC is real and not driven by the contract market.
In addition to on-chain data, what other signals might indicate a market top? Here are a few possible signs:
1. Google searches for “cheapest altcoins” hit a new high.
2. Crypto companies start buying non-crypto assets (such as sports clubs).
3. Mainstream media such as CNN or CNBC interview some random KOLs.
4. Big stars with more than 100 million fans launch their own Meme coins or NFT projects.
5. Crypto companies begin applying for IPOs.
What should we do now?
It’s clear that BTC and the crypto markets have a long way to go from a cycle top.
The best strategy at the moment is to gradually build positions when altcoins experience a 25%-35% pullback. This kind of pullback is very common during the bull market. Avoid FOMO and do not trade with leverage in any case, because it is very likely that you will lose everything.
According to our judgment, in this round of bull market, altcoins may experience multiple pullbacks of more than 30% before they will usher in a top outbreak, so please keep some long-term positions.
The bull market has just begun, so why do some people say it’s over? A short-term correction is for a better rise. If there is no correction, it will be detrimental to the rise.
Bitcoin retreated last night, and in this wave of retreat, the meme performance was still eye-catching, but the copycats suffered, and many of them returned to the starting point. After the meme market ends, funds will shift to a wave of valuable copycats, but the range will be limited, so everyone should choose the right target!
The meme is also not suitable for long periods of time, unless it is listed on binance with a strong narrative, otherwise don’t fall in love and be a scumbag trader!
Bitcoin is retreating at the 4-hour level, with support below around 86,000. For the broader market, there is no need to panic. As long as this position is not broken, the bull market is still safe!
