1. The enthusiasm brought by the ETF application is gradually fading. Will the short-term trend of Bitcoin be up or down?
As of the time of posting, the BTC price is around 29240. After experiencing the enthusiasm last night, the market has returned to a small range of fluctuations. The enthusiasm for the rise last night came from the US House of Representatives' vote on the new encryption bill, but unfortunately, the new bill did not pass and the market fell back.
In fact, the failure of the new legislation is due to the failure of the two rights organizations in the United States to reach a reasonable division of interests. The House of Representatives is led by the Republicans. If the new bill is passed, the US crypto regulator will become the CFTC. The Senate is led by the Democrats, and their power extension is the SEC. Both groups want to take over the regulatory power of cryptocurrencies. However, in the crypto world, the Republican policy will be relatively mild, but any bill requires a joint resolution of both houses, and a single resolution cannot get a decisive result. Yesterday, many people over-interpreted this resolution without understanding the division of power in the United States, which was also the cause of FOMO in some markets.
Judging from the current market situation, there are very few positive factors and not many negative factors either. Everything is in the process of waiting for the results. The enthusiasm brought by the ETF application is gradually fading. The cooling of market enthusiasm makes it easier for the main players to control the market fluctuations. If the volatile trend continues, the market will be like a millstone, slowly grinding away everyone's trading interest.
Last week, I said that the Bollinger Bands have narrowed again. According to the previous data, a short-term change should happen this week, but there are still not many signs. I personally think that if there is a short-term trend change, it will mainly be downward. Long positions should pay attention to risk aversion.
The trend direction is mainly oscillating, with a range of 500-600 points. Of course, with the tightening of the Bollinger Bands, the oscillation may be broken at some point in time. If it is not broken tonight, we may have to wait until the weekend night.
Recently, you can play with copycat stocks, but don’t chase them at high prices. There will be a pull when there is good news, and there will be a pull when there is news. There is no continuity. Chasing high prices may get you stuck at the top of the mountain at any time.
There is no need to worry about stop losses when investing in several tokens for the long term. We have talked about this issue before. This layout method looks for opportunities to cover positions when prices fall. This is also the position building method we set at the beginning.
2. After the Fed raised interest rates in July, many Wall Street institutions were waiting for the "gold pit" to buy at the bottom
The most fundamental reason for the end of the bull market in the crypto market in 2021 is that the Federal Reserve’s interest rate hikes and balance sheet reduction have caused more funds to leave the market. The collapse of FTX in 2022 and stricter supervision have blocked the entry channels for market makers and the crypto market.
Therefore, the market is very concerned about when the interest rate hike cycle will end and when the policy will warm up (including the implementation of the crypto bill and the passage of ETFs). Among them, the monetary policy that affects the capital side has the greatest impact on the market: when will the interest rate hike stop? When will the interest rate cut come?
After the Fed raised interest rates in July, the market had two phases:
The first stage is to suspend interest rate hikes and maintain high interest rates. This stage will most likely last at least until the end of the year. From historical data, a suspension of interest rate hikes is often beneficial to the risk market, and the probability of risk market rising is very high. The crypto market is part of the risk market and will most likely warm up. However, under such high interest rates, the magnitude may not be large, so there is no need to hold too high hopes.
The second stage is the start of the interest rate cut stage. This stage is more interesting because the market will fluctuate greatly and there may even be a golden pit. From historical data, the early risk market is more likely to fall in the interest rate cut cycle. This is also easy to understand. Institutions want to enter the market and kill some leveraged funds for bottom fishing. Therefore, many times, large Wall Street institutions will wait for this "golden pit" to bottom fish.
With the rate hike in July, the Federal Reserve raised the interest rate to 5.5%. Some institutional investors believe that such a high interest rate greatly increases the possibility of an economic recession in 2024. This recession will cause a market crash and a "gold pit". At that time, the Federal Reserve may have to accelerate its interest rate cut plan due to the economic recession.
Theoretically, with continued interest rate hikes and capital withdrawals, it is difficult for the capital market to continue to rise. Maintaining high interest rates will have a huge impact on the economy. After all, the cost of capital has become very expensive, and the economic pressure will inevitably be transmitted to the US stock market. The continued rise of US stocks may also be brewing risks?
3. Bitcoin has been in a bull market for ten years. If you master these points, you can also continue to be bullish
Since its creation in 2009, Bitcoin has undergone three halvings:
The first Bitcoin halving occurred on November 28, 2012, when the Bitcoin mining reward was halved from 50 bitcoins to 25 bitcoins.
The second halving occurred on July 9, 2016, when the Bitcoin mining reward was halved from 25 bitcoins to 12.5 bitcoins.
The third Bitcoin halving occurred on May 11, 2020, when the Bitcoin mining reward was halved from 12.5 bitcoins to 6.25 bitcoins.
After three halvings, the cryptocurrency world has ushered in three major bull markets. Bitcoin has also undergone transformations time and time again, and its price has put many people out of reach. With the gradual expansion of consensus, there is no ceiling for future value and price.
So how can we ordinary people seize these "wealth opportunities"?
1. Know how to grasp the trend of the industry
In fact, everyone is very smart, and there are experts in the cryptocurrency circle everywhere. There are many who make millions or even tens of millions from tens of thousands, but without exception, they all know how to grasp the trend.
The short-term has its own trend, the medium-term has its own trend, and the long-term has its own trend. You must clearly position yourself and not just follow the crowd.
If you see short-term profits today, you do short-term trading. Tomorrow, when you see others making huge profits in the medium-term, you change to medium-term trading. This way, you will lose the watermelon and pick up sesame seeds, and you will never make big money.
2. Cyclical trends
For example, the cryptocurrency market is ushering in a bull market with the halving of Bitcoin every four years, so how should this battle be fought?
When should you buy with big money, when should you reduce your position to reduce risk, and when should you be patient and wait?
A battle requires: a sense of rhythm. Four years are just for this wave of wealth. It cannot be taken lightly.
But most people have no sense of rhythm, especially when they encounter a wave of wealth in a bull market, their sense of rhythm is very poor.
When it is time to buy at the bottom, you dare not buy at the bottom. When you should pay attention to the risks, you frantically sell assets at the bottom. Especially when the market hits the bottom and starts to rise, you hesitate. When the market starts to rise wildly, you remember that the bull market is coming and you have to get on the train quickly. If you lose your sense of rhythm, even if you buy at a good position, you will not get a good result.
3. Global Perspective
What is the overall view! Many people only pay attention to their own small piece of land, the coins, funds, rise or fall in their hands, and only think about their current "pocket".
However, the cryptocurrency world is integrated into the global financial system, and each of us who trades in the cryptocurrency world is just a member of this huge battle.
It is not enough to just think through your own affairs. You also need to think through all the people, things, and objects around you. When choosing where you should put yourself, you can play your greatest advantage and use the power and resources of others to get the results you need.
Only by reaching such a level of thinking and height can you find your own "fertile soil" in the complex cryptocurrency market, take root, sprout, and grow lushly. This is the overall view.
The three points mentioned above make a big difference. Laymen and newcomers are fundamentally different. Laymen only want to change their predicament and make a fortune; while insiders see the huge potential wealth opportunities in the industry.
Therefore, the 80/20 rule applies to every industry. Today’s prosperity is nothing. We need to see the fate in 3-5 years, whether we will be rich or poor.
At the moment, we can say with certainty that the bull market is getting closer and closer. No matter whether the Americans continue to raise interest rates or not, they cannot stop the arrival of the big trend.
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