Last time we discussed the possibility of the last drop and when it might happen. So, if there is a last drop, how do we determine the time period of this wave of rise and the possible changes in indicators and sentiment?
First, we can consider it from the perspective of market sentiment. In the early stages of a bull market, the market is often in a state of caution and wait-and-see, and investors are skeptical about market changes. However, as market sentiment gradually heats up, investors' willingness to buy gradually increases, which is usually accompanied by an increase in trading volume and an increase in investor confidence. When these sentiment indicators reach a certain critical point, it may indicate the arrival of a bull market.
Secondly, we can also pay attention to some key time points. In the market cycle, there are some important time nodes, such as the beginning and end of the quarter, the release of important economic data, etc. These time nodes tend to have a greater impact on the market, because investors will re-evaluate and arrange market trends at these moments. Therefore, around these time points, we need to pay attention to market changes and possible trend shifts.
In addition, we can also pay attention to the changes in some technical indicators. For example, we can observe whether the market has a bottom divergence, whether MACD has a golden cross, and other indicators. The emergence of these technical indicators often indicates that the market may have a reversal signal.
In the most optimistic scenario, the uptrend of BTC needs to be based on the occurrence of the following three events:
BTC spot ETF is approved: This will provide a wider investment channel for BTC, increase its liquidity and market acceptance. There are three assumptions, which are passed in January 2024, March 2024, and November or December 2024. The US election may affect some policy trends and the investment environment, so the passage of ETFs during this period may have a positive impact on the BTC market.
The unemployment rate in the United States is higher than 8%: The unemployment rate is an important indicator of economic conditions. If the unemployment rate is high, it means that the economy may be under downward pressure, which may prompt the Federal Reserve to adopt loose monetary policies, such as interest rate cuts. Loose monetary policies may reduce the cost of funds and increase market liquidity, which will have a positive impact on risky assets including BTC.
Fed rate cuts: In the above scenario, we have two assumptions, namely, the Fed cuts interest rates in April 2024 and June 2024. Rate cuts may reduce borrowing costs and increase investor demand for risky assets, thereby driving up BTC prices.
The trend of the crypto market in 2024 may show great differentiation and volatility.
The big differentiation refers to the obvious performance differences between projects of different types and ecosystems. With the influx of high-net-worth clients and institutional funds, they are more inclined to choose compliant, safe and genuine products, while retail investors are more willing to hype projects with small market capitalization and concepts. This differentiation may cause air coins with large market capitalization to be coldly received, while some small-cap altcoins and ecological projects with innovative concepts may be sought after.
Large fluctuations may mean that the rise of the crypto market will not be smooth sailing. At the current market value level, if the ETF is not approved, market confidence may be hit. In addition, even if the ETF is approved, high-net-worth clients and institutional investors may take a wait-and-see attitude in the face of such a large increase in prices.
Regarding the positive factor of halving, its influence has indeed been gradually weakening. The increase before each round of halving is gradually decreasing, and the increase in the crypto market has partially overdrawn the expectations of halving.
In an optimistic scenario, if the Bitcoin spot ETF is approved in January 2024, and the U.S. unemployment rate rises and the Federal Reserve begins to cut interest rates in April, these factors may jointly push the Bitcoin price to a peak in March 2024. However, due to the impact of the halving cycle and the general election, the price may fall back after reaching the peak, but by the end of 2024 to 2025, Bitcoin is still expected to usher in rapid growth.
In the pessimistic scenario, if the Bitcoin spot ETF fails to be approved twice, the possibility of passing it again in 2024 will be very small. This will have a blow to market sentiment, especially on the eve of the halving cycle. If the United States has entered a recession cycle, market sentiment may be even worse. However, even in this case, the Bitcoin price is still expected to receive strong support at $26,000. Because before BlackRock applied for the spot ETF, the currency market experienced multiple blows from the SEC and CFTC without substantially falling below this support level.
In summary, if the Bitcoin spot ETF is approved, the US unemployment rate rises, and the Federal Reserve cuts interest rates, the Bitcoin price is expected to peak in March 2024 and then fall back. However, if the ETF fails to pass and the economy goes into recession, Bitcoin will face challenges, but the support of $26,000 is strong and the price still has the potential to rise. Regardless of the market situation, investors need to carefully assess the risks and develop a suitable investment strategy.
