10/3 BTC market analysis:

The Federal Reserve's desire to raise interest rates has increased again, and the market is once again facing downward pressure! The further interest rate hike and maintenance of high interest rates are ostensibly for the 2% inflation target, but in fact are to consolidate the dollar's global ability to attract money! Where will the crypto market go after yesterday's inducement to buy more?

Hi, ladies and boys, welcome to Uncle Cat's Coin Talk. I wish you all a happy holiday and be carefree!

As of the time of writing, Bitcoin is priced at around 27,600. After the sharp rise in the early hours of yesterday morning, the market was unable to maintain its high of 28,000 for a short time before it fell in response to Bob's roundtable meeting.

I also mentioned in yesterday's market analysis that although the early morning rise was apparently driven by the sentiment of US stock options and the US dollar index, I personally suspect that it was actually the main force taking the opportunity to pull the market and drive the entry trading sentiment of the Asian market. After 6 a.m. yesterday, in the Asian trading hours, it was obvious that there was a significant increase in transactions and price increases at the beginning. Yesterday, my point of view was to lure more Asian markets to enter the market. Looking back today, it basically conforms to my point of view. First of all, after yesterday's increase, the trading volume gradually decreased. The initial rise of US stocks in the evening did not effectively drive the rise of the crypto market. On the contrary, after Lao Bao's public roundtable meeting, the price of Bitcoin fell, and the early morning European and American trading hours did not bring effective trading volume. Overall, after the rise at 6 a.m. yesterday, most of the traders who entered the market were traders from the Asian market. What happened to these traders in the end? Basically, they are either trapped or they sold their stocks directly last night. The punishment after the impulse is still painful.

Last night, after the public roundtable meeting of Bao, Fed official Meister publicly stated that the Fed is very likely to raise interest rates again, of course, the purpose is to achieve the "illusory" inflation of 2%. Why is it illusory? I will explain later. At the same time, Meister also said that it is necessary to be cautious about raising interest rates or maintaining high interest rates in the future, because the slowdown in economic growth in the village, the continuation of the strike in the US auto industry, and the labor productivity problems in the core manufacturing industry in the United States are all troubling the US government. The economic problems caused by blindly increasing interest rates or maintaining high interest rates cannot be ignored.

Here we need to pay attention to a core issue. The US dollar index continues to rise. Today it has reached 107 and then slightly corrected.

To answer the above question, why is 2% inflation illusory? Because inflation was proposed in 2012, and it was also proposed during the rapid economic recovery of the United States after the financial crisis in 2008. Although this is a long-term goal, it has become possible to gradually achieve it in recent years. By continuously raising interest rates and suppressing inflation, although there are complaints in the United States, it seems that the Fed’s motivation to suppress inflation has not been shaken. In other words, as long as the economy does not have too many problems, interest rate hikes are inevitable.

But is the continuous interest rate hike really for the so-called 2% inflation? After all, can the benefits that 2% inflation bring to the US economy really outweigh the short-term damage? In fact, it is not. As we said above, the continuous rise of the US dollar index seems to have revealed the purpose of the Fed's continuous interest rate hikes.

From the perspective of the global macro-economy, the world is in a state of tension, and each family has its own problems. The whole of Europe is facing the bitter fruit of energy problems, and the economic recession cannot be ignored. In our village, the second largest economy, the economy has also been temporarily suspended due to real estate problems. In this case, many people except the United States understand a problem. Relying on the hegemony of the US dollar is no longer the only way, and de-dollarization is imperative. The United States has also seen this trend clearly. At the same time, as the world's largest economy, the United States has not had a good time in recent years. The government deficit, high military spending, and continuous technological progress have also shown a bottleneck. The war wealth that it is good at has also been deadlocked due to the long-term battle between the big Russia and the small Ukraine. The hegemony of the US dollar is indeed gradually declining.

But we have to admit that the dollar's dominance is indeed solid. Under the global financial tension, the dollar index continues to rise, which is a proof. Risk aversion in too many regions has led most people to choose to hold dollars for risk aversion. In this case, the dollar index continues to rise. If interest rates are raised again or maintained at a high rate, the dollar's ability to attract money will be stronger. Raising interest rates will suppress all currencies in the world except the United States. Pushing the dollar index higher will induce global funds to flow to the United States, consolidate the dollar's hegemony, and solve the problem of US funding shortages. It seems that most of the problems facing the US government can be solved by raising interest rates.

Of course, the increase in the US dollar index brought about by the interest rate hike is a killer, but the United States itself needs to bear certain bitter fruits. After all, this is a double-edged sword. The high interest rates brought about by the continuous interest rate hikes have made the entire US stock market fragile and sensitive. At the same time, the banking industry in the US economy has also shown hidden dangerous elements after the thunderstorm this year. The high borrowing costs of the people, the low productivity of American workers, and other problems are all things that the United States has to slowly eat. However, in the long run, the problems in the economy can be gradually alleviated and managed, and the short-term benefits brought about by the interest rate hike, especially when the beneficiaries are the US government and capital, what do you think the United States will choose? Is it considering the current profits? Or considering the numerous economic problems! ? I believe everyone has the answer in their hearts.

Now that we understand the true intentions of the United States, where will the crypto market go in the future?

In fact, after the US government shutdown was resolved, the only thing the crypto market had to face was the interest rate hike. The panic of interest rate hikes enveloped the entire financial market.

Although we cannot determine when the bull market will start, we can use the process of elimination to understand whether the market will continue to fall.

The rise in market prices is nothing more than people and money. There are more traders, more trading volume, and more funds entering the market. At present, due to the interest rate hike, the entire investment market is in a state of tension. Obviously, there are fewer trading volumes and traders, not to mention trading funds in this case. Here is a correction. Many leeks believe that the main force will directly pull up the market one day, and the so-called bull market will start unknowingly. But what I want to say is that this so-called unknowing is really only the leeks' unknowing, because many retail investors are blocked from information and often miss the market at the beginning of the market. But in the case of a poor environment, why do the main forces pull the market? Come out to do charity? Pull up and let the retail investors trapped above ship out for arbitrage? Obviously impossible. This is a basic logic. Therefore, by excluding several necessary factors for the market to rise, we can basically judge that the market will still go down.

The Ethereum ETF, which was heavily hyped last week, has not brought much heat to the market so far, as I said last week. After this heat, the US government shutdown was resolved, and the market no longer has obvious positive sentiment. If the high-activity trading continues in the evening and early morning, I might regard the entire holiday as a rebound cycle, but at present, this rebound cycle may be short-lived and has ended. In the absence of positive sentiment in the market, the natural shock decline may continue. Although the daily K-line has escaped the downward channel, it is only a matter of time before it returns.

According to the data monitored by Mr. Ni, more than 70% of Bitcoin long-term holdings are still untouched, that is to say, less than 30% of Bitcoin is active in the market, not counting the short-term holders who have been buying in recently. As early as last month, I mentioned a point of view that the next round of bull market will start, and the entry of top financial institutions must hold a large number of chips and the right to issue stablecoins. With a large number of chips still untouched, the continued shock and wash-out decline may continue.

Trading strategy:

As for the contract, if there are no negative factors that cause the market to continue to fall, there will still be a small rebound, so if the general trend is bearish, it is a good choice to hang short at a high position. Whether the opening of the US stock market tonight can bring a rebound is crucial, and whether the European and American trading zones will pick up in the early morning is also crucial.

In terms of spot, many altcoins have risen recently due to the rebound of the market. Many people may have built positions in many currencies, but my personal suggestion is to clear them out after taking profits. In the case of a bearish trend, the biggest worry of altcoins is that they will rise for a few days and then return to the pre-liberation period. Now is not a good time to build positions on a large scale. It is also very important to choose the currencies to store in a bear market. Sometimes choice is more important than hard work, and this sentence is also suitable for the currency circle.

Finally, thank you for following Uncle Mao’s Coin Talk. I wish you all a happy holiday.
#BTC $BTC