U.S. stocks fell as disappointing earnings reports from Meta and Microsoft disappointed investors, with all four major indices declining. Bitcoin was affected as well, briefly dropping below $70,000.
First, the probability of the Fed cutting rates by 25 basis points in November is 94.5%.
After the PCE data was released on Thursday (31st), the lack of worsening inflation provided support for the Fed to cut rates in November. The market now believes there is a 94.5% chance that the Fed will cut rates by 25 basis points in November, with a 5.5% chance of keeping rates unchanged, and a zero chance of a 50 basis point cut.
Today, Bitcoin briefly fell below $70,000.
Bitcoin started to decline after 19:00 last night, with a minimum pullback support around $69,000 at 04:45 this morning, resulting in a 24-hour drop of 3.12%. Meanwhile, Ethereum pulled back around $2,460! Bitcoin is pulling back after breaking through. Ethereum is still within the fluctuating range! As long as it does not break down effectively, there are no major issues. Just wait for stabilization to enter.
Currently, the market is showing a clear pullback, but the open positions seem not to have been significantly reduced. The highest open positions have dropped from $43.6 billion to $42.3 billion, and this pullback is not weak, having wiped out $1.3 billion in positions. However, compared to the levels of $39 billion at the beginning of the year and $37 billion in July, it is still higher by $3 to $5 billion. Based solely on open positions, the possible scenarios going forward are:
1. Bullish trend: The price remains in a range of $68k to $73k for a while, washing out at least $3 billion in positions, and then starts a new upward trend, aiming to break the ATH.
2. Bearish trend: Prices continue to fluctuate, but open positions have not significantly declined, remaining around or increasing above $40 billion, leading to heavy long positions and triggering a continuous decline until open positions stabilize below $38 billion. Although the futures market dominates, if spot demand/supply is too strong, it will still impact part of the price trend. The previously indicated 'high position risk' between $71k and $72k has been significantly alleviated, but the risk of further pullback still exists, especially with the uncertainty of non-farm data on Friday.
In summary, from the perspective of open positions, the profit bulls still account for the long-term majority, while the profit bears are a short-term minority. If you are bullish, you can try to make a short-term rebound. If you are bearish, you might consider waiting for a weak rebound to build long-term short positions, with stop-loss at previous highs. The mention of long-term short positions is due to the fact that some people have started to bet on Harris winning, which will limit the degree of monetary policy easing compared to a Trump victory.
At the same time, the yen exchange rate has rebounded somewhat, but no trend has formed yet, so further waiting is needed. As for short-term long positions, there's no need to explain; there’s nothing wrong with going long on a pullback in a bullish trend. The only thing to be cautious about is whether the trend will reverse, but since it's short-term, there's not much risk—just a small stop-loss for a gamble; given that everyone has different views on non-farm data, election results, and interest rate decisions, it's normal for the market to have divergences. Both going long and short are fine as long as position risk is managed well.
So hold steady, hold steady, hold steady! The U.S. election is approaching. The tactic of chaotic punches killing the master is back!
For Trump and Harris, either winning is actually beneficial for the cryptocurrency market, a profitable business. Who wouldn't support it! Those who have read my previous articles probably won't be anxious (scaling positions, rolling positions, liquidation! Bitcoin's violent surge, where does the money come from? How to increase your position? What, Sun has lost a lot?) It's normal to have a slight pullback after such a big rise, completing a major 1:1 extension target.
USDT explosion?
Last night, Tether announced its third-quarter financial report, which is still quite explosive. This is one of the reasons why many core group members asked me if USDT would collapse, and I firmly believe it will not.
In the third quarter, Tether's profits exceeded $2.5 billion. Let's take a look at the chart first:
In the third quarter, the amount of U.S. Treasury bonds directly and indirectly held increased, totaling over $102 billion. To be more straightforward, a large portion of USDT's backing comes from U.S. bonds, and Tether's main profits are also derived from the returns of these bonds.
As long as Tether does not make foolish moves, it will not fail. The only thing that could cause Tether to collapse is a failure of U.S. bonds. If U.S. bonds collapse, then the dollar and the entire world would collapse, and no one would care about Tether anymore, haha! Worrying about Tether collapsing is like worrying that quantum computing will destroy BTC and the financial system. While it is possible, it won't happen in our lifetime...
Additionally, as of the third quarter, Tether held a total of 75,353.56 BTC, a number that has not only not increased compared to the second quarter but has actually decreased by 187.71 BTC. PS: I wonder how many partners remember that Tether said in the first quarter of 2023 that it would use 15% of its quarterly profits to purchase Bitcoin, but by the third quarter of 2024, not only has it not increased its BTC, but it has decreased, which is a breach of trust.
