BTC
Since the market started last night, the performance has been relatively weak. We reminded on Weibo not to rush into bottom-fishing. Although the Federal Reserve cut interest rates by 25 basis points overnight, the expectations for rate cuts next year have decreased, leading to declines in both the US stock market and cryptocurrencies. This morning, the overall trend was downward until close to noon when the decline eased, and a rebound occurred in the afternoon, which is still ongoing.
From the market liquidation data, the liquidation reached about 700 million dollars within 24 hours, which is relatively high. This is one of the reasons we suggested a slight bottom-fishing at noon since the likelihood of further declines afterward will decrease significantly.
Of course, up to now, we can see that the rebound is relatively weak. However, the US stock market may have some influence on cryptocurrencies. We need to pay close attention to the performance of the US stock market at 9:30 PM tonight. If the performance is good, we can consider adding to our positions at lower levels; otherwise, we may consider reducing our positions.
From the K-line chart, the price has now shifted to the lower Bollinger Band region, with a downward trend. Therefore, if the situation cannot be reversed in the next two days (staying above 104000), then the future strategy should still adopt a conservative approach (observe more, act less, and do less bottom-fishing).
ETH
The rebound of ETH is relatively weaker. Although we still have a bullish outlook for ETH to hold above 4000 points in the long term, for now, it needs to stay above 3850 to potentially reverse the situation. To maintain the previous upward trend, the ETH price needs to reach above 3950, which we believe may be difficult to achieve in the short term. Additionally, the short-term shorting risk is relatively higher. Today, bottom-fishing funds may consider taking profits at the 3850 level, and the strategy remains to observe more and act less.
Will the expectations of rate cuts next year affect the bull market?
The Federal Reserve's last meeting of the year has concluded, bringing the market not surprise but shock. Many people now see the market sentiment with some skepticism about next year's bull market. Today, we will mainly analyze this and interpret how the market should move next year.
First of all, we believe that the interest rate cut strategy will have little impact on next year's bull market. Although it may cause panic in the market leading to price declines in the short term, the crypto bull market has not truly emerged independently. People still tend to be influenced by US policy news rather than the intrinsic purchasing power and speculative topics of cryptocurrencies. The main reason is that new retail funds have not yet entered; currently, the funds coming in are mainly institutional funds purchasing Bitcoin through ETFs.
The most obvious sign of new retail investors entering the market is the increase in OTC deposits and the prosperity of altcoins. Currently, altcoins have not strictly prospered; even when rising, many are still mainstream coins and DeFi tokens. This is also a reason for the market's conservativeness. The failure of new VC coins to rise is because they see that there is little demand for them in the market. Only retail funds can drive speculation in high-risk assets, while institutional funds are constrained by risk strategies and can only buy Bitcoin, Ethereum, or grayscale funds.
We have previously analyzed that altcoins will inevitably heat up during a bull market. This view is still valid, but the real effective time is not now.
Secondly, we will discuss the policy factors. During a booming bull market, policies are relatively difficult to influence market sentiment and prices, although they may have short-term effects. For example, after the 94 ban in 2017, cryptocurrency hit new highs, and at the end of 2017, the market was flooded with fake news that was originally bearish, but the prices did not decrease at all. Similarly, in 2020, when the Democratic Party came to power after the US election, it was initially considered bearish for crypto, but the bull market still unfolded in 2021. The end of the bull market at the end of 2021 was due to the collapse of LUNA and FTX, not due to policy factors.
In other words, a true bull market is actually driven by internal factors of cryptocurrency rather than external factors. Although external factors can also play a promoting role, such as the US election and previous interest rate cuts, it ultimately returns to the development of the crypto industry itself. Only by realizing this can one understand the situation of next year's bull market and have confidence in future trends.
That's all for today. Thank you all for your attention.
