We can further explore the possibilities of each scenario and the logic behind it.
The first scenario: entering the main uptrend after shock adjustment
Short-term short-term explosion, decline, shock adjustment: There was a short-term explosion near $60,000-61,000. This trend usually occurs after the short position is over-concentrated in the short term, and the price attracts selling after a sharp rise. This is in line with the characteristics of market liquidity harvesting, especially in the high volatility environment of Bitcoin. Subsequently, Bitcoin did not fall below the previous low and formed a higher low, which usually indicates that the market may be in the bottom confirmation stage, waiting for new trend forces to emerge.
Re-up in mid-October: The rise at this point in time may benefit from the adjustment of technical indicators and the market's expectation of a rate cut by the Federal Reserve. Breaking through the September high and hitting $65,000 shows that market confidence has returned, and then entering a sideways consolidation, preparing for the main upward wave in November.
The main uptrend started in November: If the interest rate cut comes as expected at this time, it will drive up asset prices, especially safe-haven assets such as Bitcoin. The highs repeatedly broke through $70,000 and broke through to $85,000-88,000, and even broke through $100,000 at the end of December. This trend reflects the strong performance of Bitcoin in the downward interest rate cycle, especially under global inflationary pressure, funds may further flow into the digital currency market.
Applicable scenario: If the market is in a benign macroeconomic backdrop, interest rate cuts drive economic growth, and Bitcoin is favored as a hedging tool, this scenario is more reasonable.
Scenario 2: Quick entry into a bull market
Breaking through 60,000 in three days and reaching a record high before the rate cut: This situation describes the extreme strength of the market, with bullish sentiment emerging quickly and breaking through key resistance levels without much adjustment. This may be due to sudden large inflows of funds, such as concentrated buying by institutions or rapid approval of ETFs, which can quickly change the market supply and demand pattern.
After the rate cut, the price soared to $100,000: In this case, the Bitcoin market may enter an overbought state, and the rate cut becomes a catalyst for driving prices up. If the global financial environment is quickly relaxed and liquidity flows into the market, speculative capital may flow into Bitcoin on a large scale, exacerbating price increases.
Applicable scenarios: This scenario is more suitable for an extremely loose policy environment and a period of surging demand for Bitcoin, similar to the previous bull market launch point. It should be noted that in this case, the market may have a higher risk of bubble.
Scenario 3: Deep bear market
After a short-term rise to 60,000, it exploded and continued to fall: Bitcoin failed to hold after approaching $60,000 and continued to fall sharply, which reflects the fragile market structure and insufficient bullish power. Although there are expectations for interest rate cuts, the market is still worried about the economic outlook, causing safe-haven funds to withdraw from risky assets.
Economic crisis breaks out in the early stage of interest rate cuts: If the interest rate cuts fail to boost the economy as expected, but instead trigger a greater economic crisis, the global economic environment will deteriorate, market panic will intensify, and asset prices will generally fall. As a highly volatile asset, Bitcoin is also unlikely to be spared in this scenario and will enter a long-term downward trend.
Applicable scenarios: This scenario is applicable when there are serious problems in the macro economy, and the interest rate cut policy fails to effectively alleviate economic pressure, but instead triggers wider risks. Similar to the 2008 financial crisis, risk aversion dominated the market.
Summarize:
The first scenario is a relatively neutral and more likely assumption. Combined with the long-term benefits brought by the shock adjustment and interest rate cuts, this trend may be more in line with the market's volatility. The second scenario assumes that the market has entered an extremely strong state, which is suitable for sudden market drivers such as ETF approvals and global macro policy changes that quickly change market sentiment. The third scenario assumes that the market faces greater systemic risks, and investors need to pay close attention to risk signals such as macroeconomic data and policy changes.
Based on your market experience and analysis, combined with current market dynamics, you can flexibly adjust your strategy to respond to different market developments.
