Today, I read through the BTC report released by @bitfinex. The full text is 36 pages long and details their views on the short-term (BTC performance in September), medium-term (impact of elections and interest rate cuts) and long-term prospects.
I have excerpted some valuable points, with my own personal opinions in brackets:
1. Interest rate impact: The report emphasizes that the upcoming interest rate decision in the United States will have a significant impact on Bitcoin's short-term volatility and long-term trajectory. With the Federal Reserve likely to cut interest rates by 25 or 50 basis points, the report points out that Bitcoin may experience a moderate decline, or a correction after a sharp rise in the short term. (Is it similar to the exercise version of $BTC rising first and then falling after Master Bao's dovish stance at the end of August?)
2. Historical volatility: Historical data shows that September is usually a month with high volatility for Bitcoin, with an average return of -4.78% and a typical peak-to-trough drop of about 24.6%. This trend is expected to continue this year and is affected by the "sell news" reaction to interest rate cuts.
Bitfinex even made a prediction for the BTC decline in September: cautiously expecting a 15-20% drop in Bitcoin prices after this month's rate cut, with a BTC bottom of $40-50,000. This is not an arbitrary number, but is based on the fact that cycle peaks (in percentage returns) fall by about 60-70% per cycle, and average bull market adjustments also decrease. But this logic can easily be negated if macroeconomic conditions change. This is an uncertain period for traders.
(A 60-70% drop in the cycle peak is easy to be misunderstood. In fact, this refers to the reduction in the maximum increase in each market cycle relative to the previous cycle. For example, if the peak increase in the previous cycle was 1000%, then in the current cycle, this increase may only reach 300-400%, which is a decrease of 60-70%. Therefore, as the market matures and grows in size, the price increase of Bitcoin has decreased compared to the early market cycles, and the decline is also unlikely to reach the super-large plunge in the previous cycle. 40,000-50,000 is the iron bottom predicted by Bitfinex)
3. Correlation with traditional assets: Bitcoin's price movements are increasingly correlated with traditional risk assets (such as the S&P 500), indicating that global macroeconomic conditions will continue to have an important impact on its market behavior.
(As I said before, in the urbanization process of the cryptocurrency circle, Bitcoin has already entered the city, and the impact of native factors such as the mining halving cycle will become smaller and smaller. Various mines such as Mentougou, FTX compensation, and government confiscation are also being cleared up. Bitcoin is striding towards the concept of "digital gold". It is also becoming more and more different from other cryptocurrencies)
4. Global Economic Conditions: The report also focuses on the global economic situation, including the policies of the European Central Bank (ECB), the Bank of Japan (BOJ), and the People's Bank of China (PBOC). These policies may have a chain reaction on the cryptocurrency market. Political and regulatory involvement within the cryptocurrency industry is increasing. In particular, the strategy announced by former US President Donald Trump to make the United States a global cryptocurrency leader may have a significant impact on the market, especially his proposed "Strategic Bitcoin Reserve" plan.
(Whether Trump's election success will determine whether the development of the global cryptocurrency industry can be accelerated)
5. Market sentiment and future outlook: Despite expected volatility, the report remains generally bullish on Bitcoin’s long-term prospects, premised on the actions of the Federal Reserve and the stability of the global economy.
Summary in one sentence:
Be careful of the price retracement (large fluctuation) caused by the implementation of the interest rate cut in September, which may fall to 40,000-50,000 at most. This will also be the bottom space of the price in this cycle, and the impact of the interest rate cut sell the news operation may continue this year. However, in the long run, as the money continues to be released, Bitcoin will definitely rise, so hold on!