In yesterday’s market, Bitcoin officially broke below the 83,000 level, with its low already nearing 80,000. Some people are starting to think Lao Cui’s analysis was right. A reminder: we still haven’t reached the point where you should short blindly, and rebounds along the way remain strong. If you want to short, you should still make sure to enter and exit within the same day. For example, in a 3,000-point move, a prudent approach would be to take only 1,000–1,500 points of profit—the less, the better. There’s also some mildly positive short-term news in October: interest rates may not be raised. This could affect price movements over the next 1–3 days. In particular, during October’s rate-setting meeting, a wave of short positions could be liquidated, after which prices may resume their downward trend. At this stage, almost all the major news coming out is bearish. Shorting should be fine, as long as you manage your risk and don’t get too greedy. Brent crude broke above $104 per barrel, up more than 4%, while WTI crude rose 3.93% to $91.747 per barrel.

Crude oil prices continue to break through key levels, and the options available to the U.S. are now limited. Since the rate-hiking cycle is a fixed premise, the best thing we can hope for is that it passes as quickly as possible. The indicator that will tell us it has passed is the price of crude oil, which is currently unlikely to fall. The conflict between Russia and Ukraine, along with tensions between the U.S. and Iran, have already caused overall production to decline. Returning to previous levels will realistically take years. So, for now, we should respond to what is coming by favoring short positions. Fed official Musalem said that interest rates should be raised over the next 6 to 9 months to bring inflation down. This is the best forecast we have. If the U.S. can resolve this problem during the rate-hiking cycle, the cycle may be limited to less than a year. Otherwise, it could last longer—perhaps 2 to 3 years. Don’t harbor any wishful thinking: the rate-hiking cycle will batter every sector, with gold, energy, and essential goods being the exceptions.

The survivorship bias effect is extremely stark. Because the CNY-to-USD exchange rate has held up relatively well, people think foreign trade is still doing reasonably well. Just imagine the exchange-rate fluctuations in countries such as Japan, South Korea, and Vietnam, as well as in Europe: it’s extremely difficult to do business in foreign trade. Based on current exchange rates, even if you make a profit, your income could look completely different tomorrow—and you could even end up with a loss. To gauge when the rate-hiking cycle is over, keep an eye on crude oil prices and their direct connection to the U.S.-Iran conflict. If hostilities can be brought to a halt, there will be one rate hike within three months, and after that the U.S. won’t choose to raise rates again. The rate hikes happening now are a last resort. If the U.S. had room not to raise rates, it would choose that instead. During this period, you can all go short. When should we prepare for the bull market? There are two indicators: the end of the rate-hiking cycle, or the passage of the bill.

Lao Cui’s summary: Based on Bitcoin’s current price, the start of the rate-hiking cycle is bound to put it under pressure. Don’t try to guess where the new low will be—there’s no point. Whether you’re bullish or bearish, especially if you’re thinking of going long, don’t make a move during this cycle. If you try to buy the dip, you could be stuck for 6 to 12 months before you break even. If you’re short, you just need to overcome your own greed. The position Lao Cui currently holds is still the short opened earlier at the 85,000 level—a tiny position, mainly to test whether my thinking is right. Many people’s thinking is a little off. As I’ve said before, the clear signal confirming that a bear market has arrived is a bearish candle that changes the trend, with a drop of at least 3,000 to 5,000 points. At the current price, that would mean reaching the 78,000 level. Then people who are long will ask Lao Cui, “Can we go long at 78,000?” They’re willing to give up 3,000 to 5,000 points of profit on a short just to bet on a trend-reversing bounce, which would yield no more than 2,000 points. You need to change that way of thinking. To put it plainly, even if that scenario plays out, the market will still favor shorts afterward. It will be very difficult for the bulls to mount a meaningful counterattack over the next six months. In this market, remember: don’t go long. Altcoins are the exception, of course. Many altcoins don’t follow the broader market. If you have inside information, you can take a punt; if you don’t, even looking at them is a mistake. That’s all for today. If you still have questions about getting unstuck or positioning, just ask Lao Cui directly!