10/2 BTC market analysis:
The US government has avoided a shutdown, and US stocks, US indices and crypto markets have risen one after another. Is the bull market really back? Or is it just a short-term market rebound?
Hi, girls and boys, welcome to Uncle Cat Talking about Coins.
As of the time of posting, the price of Bitcoin is around 28,500. The market rose rapidly at 6 am and stabilized at 28,000 points. The rapid rise of the market overnight made many people confused, love and hate. Many short positions were lost, and many long positions probably didn't make much. From this position, you dare not chase, and you dare not go short. It's so tangled! Right?
Many people say that this wave of rise in the early morning is unreasonable, and some say it is caused by ETFs. In fact, when looking at the market situation, we don’t necessarily have to focus only on the crypto market. The entire financial market and the macro economy also need to be paid attention to.
As the US government avoided the risk of shutdown, the market began to brew a rebound sentiment over the weekend, but because it was the weekend, all kinds of financial trading categories were suspended. At 6 am on Monday, the US stock futures market opened and the US index opened, both soaring at the same time. The crypto market also soared over the same period of time. I will explain why the crypto market is discussed separately later.
Regarding the rise of the US dollar index and US stock futures, I borrowed the view of "Teacher Ni". After the US government avoided a shutdown, the pressure on the US economy caused by the shutdown was eliminated, and the market naturally burst out with positive sentiment, leading to the corresponding rise of the US dollar index and US stock futures. Previously, the economic pressure brought by the US government shutdown was still very heavy for the US stocks and the US dollar index, especially since the US stock market has been in an economically sensitive stage.
Of course, there is another core factor: the decline of US bonds and the increase of bond yields, which in disguise allows funds to flow back to other investment markets.
I have been saying above that avoiding the shutdown led to the rise of the US index and US stocks, but I didn’t mention the crypto market? The core point is that I personally believe that the rise of the crypto market this time is not entirely due to the stimulation of this emotion.
First, let's review the previous analysis of the US government shutdown. As mentioned before, the reason why we are optimistic about the recent rebound or rise in the crypto market is more because the economic pressure caused by the US government shutdown has caused the US index, US stocks, and US bonds to fall, especially the US index, which may cause funds to flow back to the crypto market. At present, the US government has avoided a shutdown, and the US index and US stocks have risen instead of falling. Why would the crypto market rise according to this logic? Of course, you can also say that US bonds have fallen, but the core is that although US bonds have fallen, the returns in the bond market have increased. The decline of US bonds will instead promote the increase in returns of other US bonds. The decline of US bonds is not an intuitive reason for the surge in the crypto market.
When looking at the year-on-year performance of the U.S. dollar index, U.S. stocks and the crypto market in the past six months, the relationship between the U.S. dollar index and the crypto market is not constant. It is more often determined by economic factors and market environment. Therefore, the rise and fall of the U.S. dollar index is not a direct factor in the crypto market. Secondly, the U.S. stock market has been separated from the crypto market due to the two different paths taken by U.S. technology stocks and the AI sector of the crypto market in mid-year. Although this relationship has rebounded recently, looking at the performance of the U.S. stock market in the past two months, the crypto market rarely rises or falls in sync with the U.S. stock market.
Therefore, I personally believe that the rise of the US dollar index and US stocks, and the emotions and market factors behind them are not the core factors that directly lead to the rise of the crypto market.
Let's look back at the situation of Bitcoin's market. At 6 a.m., both Bitcoin and Ethereum rose rapidly within 1-3 minutes. Looking at the 1-minute K-line trading volume, the three minute lines of Bitcoin on a single Binance platform traded 70-80 million. Combined with other platforms, these 3 minutes may use about 100-1.2 billion US dollars, and the increase is close to 1,000 points, bringing the quotation directly to 28,000 points. In fact, compared with the previous market with drastic fluctuations, the trading volume of this increase is very small. It basically proves that the upper selling volume is small during the increase, so it can be so smooth to spend less money to increase the market. And from the K-line, it can be seen that this increase is not caused by retail investors, because retail investors cannot agree to buy together at the same time within a few minutes at 6 a.m. This kind of buying is either large institutional buying or the main force pulling up and controlling the market. I personally prefer institutions and main forces. Because of choosing this time to buy, the big rebound of U.S. stocks and the U.S. index was used to cover up the real intention of pulling up the market. Secondly, through the trading depth of Bitcoin, an opportunity with fewer selling orders above was chosen, and the trading depth issue can be observed. Except for institutions and major players, few retail investors pay attention to this.
If you ask what is the purpose of doing this? What I can think of is today's intraday performance. You can see that the intraday trading volume and active volume have increased. I mentioned in the article before the holiday that according to the previous financial market tradition, funds in the stock market and other investment markets may leave the city for risk aversion during the domestic short holiday. Of course, I also said at the time that it was unknown whether this money could enter the crypto market or how much it could enter. But now it seems that after the stimulus of the pull-up at 6 a.m., the market is already brewing a mood of bottom-fishing and bullish return. You can look at the 1-hour K-line trading volume, especially in the afternoon hours. The highest one-hour trading volume is 120 million (single platform), but the increase is not much. It is basically carried out when the number of buyers and sellers is about the same year-on-year. You can also understand it as shipping.
The time of 6 am is very good, at the end of the European and American trading zones and the beginning of the Asian trading zone, a short-term pull-up has attracted all the retail investors who are still confused and not awake to buy in large quantities. The market has been fluctuating, with continuous buying and a lot of selling. After such a toss, at least part of the funds during the domestic trading hours will be trapped above 28,000.
Finally, my conclusion about this rise is that a wave of premeditated pull-ups attracted the entry of funds in the Asian session. I personally don’t think it can rise much more. But you must pay attention to the risks when chasing the rise. It should be noted that tonight, Bao will participate in an open roundtable meeting, which may discuss the future state of the US economy and the rhythm of adjustment. Everyone understands that in order to suppress the market and not hype the inflation rebound caused by the interest rate cut, Bao has always been more hawkish. If the speech tonight is still hawkish, and even reveals the determination to raise interest rates in November or December, will the market follow the opportunity?
You know, although the tension caused by the US government shutdown has passed, another tension in the market comes from the interest rate hike at the end of the year. There is actually not much difference between the interest rate hike in November and December. What everyone is more concerned about is whether to raise interest rates or suspend them.
From the perspective of conspiracy theories, I am very worried that tonight, there will be a news killing by taking advantage of the hawkish remarks of Mr. Bao! ?
Of course, after this article is published, many people will say that there is no need for a reason for the rise and fall, it is just a probability. If you follow this kind of thinking, you don’t need a reason for whether you make a profit or a loss, just follow your heart? Don’t be FOMOed by the people around you. What bull market is coming is a sudden rise, and you won’t have the opportunity to get on board. You have to know that many people say that the bull market is coming when most leeks are still unknown, but this is also from the perspective of retail investors. If we look at it from the perspective of analysts, there is no reason, and we don’t even know where the funds come from? Then why does the bull market come? Is it imagined out of thin air?
Instead of blindly following others, it is better to calm down and improve your own cognition. Don't let ridiculous ignorance fill your life!
Trading straregy:
Because so far, I have tried my best to find all the reasons, but I have not found a suitable reason for the crypto market to continue to rise. Although the current market is maintained at 28,000, I am still not optimistic about the continued rise in the short term. I personally think that it is risky to go long on a low-level pullback. At least we should wait until after Bao's speech tonight before looking at the market situation to prevent the market from closing.
In terms of spot, at such a sensitive time, I suggest waiting for an opportunity. Today's wave of pull-ups has led to a general rise in the cottage industry. Many people will definitely be influenced by the fomo sentiment. What bull market is coming is inadvertent, what 28,000 today and 30,000 tomorrow. Listen to me, stay away from such brainless fools. They release emotions, and you lose your hard-earned money. Be steady, and there is still time to see the trend reversal. Even if the bull market comes, it is impossible to reach the peak of the bull market overnight. Besides, it is not now.
Finally, I would like to thank all the friends who followed Uncle Mao during the holidays, and thank you for following Uncle Mao’s Coin Talk.