Bitcoin has currently dropped from a high of $99,558 to around $91,000, a correction of nearly 9,000 points, about 10%.
Recently, the contract long positions have been quite unfortunate.
Blowing up leveraged long positions is beneficial for a subsequent rise after the correction. This correction is expected to be short, lasting from a week to about half a month. It is highly likely to reverse in a V shape.
Market News
1. Eric Balchunas, a senior ETF analyst at Bloomberg, stated that it is not institutions or Bitcoin spot ETFs that caused the decline in Bitcoin prices; data shows that it is long-term holders causing the price drop.
This callback occurred after Bitcoin set a record for the largest monthly candlestick in history, first breaking $99,000 on November 22. Some analysts still expect Bitcoin to break $100,000 and set a new record before the end of this month.
Cryptocurrency trader and technical analyst Kvle du Plessis stated, 'Long-term Bitcoin investors sold 128,000 Bitcoins, but the US spot ETF absorbed 90% of the selling pressure.'
Strong institutional demand is driving Bitcoin up, pushing it towards the $100,000 milestone.
2. Data tracked by Glassnode shows that as Bitcoin's price approaches $100,000, the 14 million BTC held by long-term holders have all entered profit status, triggering an acceleration in selling activity, leading to a decrease of over 200,000 BTC since the historical high was breached.
Long-term holders start to take profits when prices are strong and demand is sufficient to absorb them. During this process, ETFs play a key role, absorbing more than 90% of the selling pressure from long-term holders.
However, as unrealized profits reach more extreme levels, more long-term holders are expected to accelerate their selling, and in the short term, this selling has exceeded the influx from ETFs.
However, as a large number of Bitcoins are still held by long-term holders, many long-term holders may be waiting for higher prices before releasing more Bitcoins back into the circulating market.
3. David Morrison, a senior market analyst at Trade Nation, stated that while '$100,000' is a nice round number, it feels like this figure has become a high threshold, even a barrier, for Bitcoin investors to profit further.
If Bitcoin starts to decline from now, it may reflect everything the market presents, especially if long-term holders decide to cash out early.
However, David Morrison also pointed out that Bitcoin's upward momentum is likely to gather enough energy to push the price above the $100,000 mark. Once this resistance level is breached, it could trigger another push for Bitcoin.
Some are confused, isn't holding long-term a firm belief in BTC? I want to say that conviction also has a price; there is no such thing as holding without selling.
Once the price is right, it will definitely be sold. For example, selling can completely and fundamentally change your current life. For instance, after selling, you could achieve financial freedom.
Regarding the price correction of coins
I started posting on November 13 (10,000 points up in 2 days, crazy Bitcoin, can we still chase?!)! This was my first hint that there might be a correction in the short term, and I listed a set of data to analyze for my friends.
I mentioned several important indicators of market overheating.
1. USDT Lending Annualized
By querying the annualized USDT lending rate in OKEx, we found that the annualized rate has currently reached 43%. If this rate can be sustained, one can simply exchange RMB for USDT and wait for a risk-free 43% annualized return. Why bother trading other coins?
2. RSI Daily Line Reaches 94
This number is close to the maximum value of 100, indicating a serious overbought phenomenon in the market. Historically, about 90% of the time, the price of coins will start to correct shortly after reaching this point.
3. The Fear and Greed Index has also reached 80%. It tells you to 'buy in fear and sell in greed', 'buy when no one cares, sell when the crowd is in a frenzy.'
In a post on November 16 (Late night plunge! Is it time to sell Bitcoin as it starts to correct?), I hinted for the second time that a correction was coming. I mentioned that with Bitcoin reaching the height of $93,000, seasoned investors understood this was a hurdle, a short-term peak.
On November 19, I posted again (The tightening spell is on, BTC can't move?) for the third time warning of an impending correction. I pointed out that historically, when the FGI (Fear and Greed Index) reaches extreme greed, it cannot sustain either.
The most recent was on November 24, when I posted (BTC, when will the crash correction come?) stating that the entire network is waiting for a crash correction, and the fear and greed index had reached a frightening 94. While a crash might not be inevitable, a correction of around 10,000 points is certainly coming. The price of coins never just keeps rising or keeps falling indefinitely.
I have repeatedly reminded, if you are trading short-term contracts, you should prepare to exit early. If you are a long-term investor, and your position is not full, you should prepare your bullets and wait to increase your position.
For us long-term investors, the last thing we want to see is a rise, especially a crazy surge. This is something that short-term mindsets will never understand.
Even short-term risk warnings are not excuses for us long-term holders to short-sell; they will only become reasons for us to increase our positions.
When investing, one must have a grand perspective to firmly and steadily take each step in the cycle, and only then will there be more opportunities to gain. One must not lose sight of the big picture and engage in speculative shortcuts, as this may lead to losing track of oneself during the journey.
Every step we take in micro-operations is also built on the macro understanding of the larger cycle. Only by continuously improving our understanding can we resist being harvested by others and complete the transformation of harvesting those with lower knowledge, becoming one of the few who profit in the market.
Life is vast, only passion remains unchanged. Calm down, do not rush, take what you can get, and wait for what you cannot. Opportunities are always there.
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