From the beginning of the year to now, Bitcoin has risen sharply in a strong bull market, with prices reaching a high of 99,588 USD. Although it failed to break through the highly watched 100,000 USD mark, the increase during this phase has demonstrated widespread market recognition of Bitcoin. However, as Bitcoin consolidates at high levels, the market enters a critical wait-and-see period, and its siphoning effect is posing challenges and opportunities for the altcoin market.
Driving force of Bitcoin's bull market
Significant increase in institutional adoption:
The active participation of large institutions is the main driving force behind the rise in Bitcoin prices. Continued accumulation by asset management companies and enterprises has significantly enhanced market trust and demand for Bitcoin. Particularly, the launch of Bitcoin futures ETFs has provided institutional investors with more avenues for participation.
Widespread participation of retail investors:
The scarcity and safe-haven attributes of Bitcoin as 'digital gold' have attracted a large amount of retail funds. The sentiment of retail investors has driven this wave of increase and helped Bitcoin break through several key resistance levels.
Favorable macroeconomic environment:
Global inflation concerns and currency depreciation make investors more inclined to view Bitcoin as a tool to hedge against traditional financial risks. This macro-driven factor has become an important pillar for the rise in Bitcoin prices.
Although Bitcoin's bull market performance is remarkable, the market has encountered significant selling pressure around 99,588 USD, with specific reasons including:
Strong technical resistance:
100,000 USD as a psychological barrier has attracted a large number of sell orders and long profit-taking orders. On Binance's contract liquidation heat map, it is clear to see that the liquidation volume in the 98,000 and 100,000 USD regions has peaked.
Large traders are using strategies like 'baiting shorts' in the 99,000-99,500 USD range, causing short-term fluctuations in the market. Meanwhile, long-term holders are taking profits at high levels, which also limits Bitcoin's further upward space. Strong institutional demand for Bitcoin supports prices between 95,000-97,000 USD, while technical indicators such as MACD and RSI suggest that Bitcoin may continue to consolidate before attempting a breakout.
Currently, Bitcoin is constrained by strong resistance at 97,000 and 97,500 USD. When the price rebounds to the 96,500-97,000 range, short positions can be considered, targeting a pullback to the support area at 94,500 USD. If it stabilizes after falling to support, low-position long positions can be considered.
Altcoin investment strategies
Monitor changes in dominance: Continuously monitor the changes in Bitcoin's dominance to determine whether market funds are rotating into altcoins.
Choose quality projects: Prioritize investments in altcoins with practical application scenarios and innovation capabilities to reduce potential risks.
Flexibly manage positions: Diversify investments and strictly implement risk control strategies to avoid significant losses due to market fluctuations.
As December approaches, expectations for the Federal Reserve to lower interest rates again will further boost market sentiment. However, the complexity of the Middle East and Russo-Ukrainian situation may still trigger risk-averse sentiment, which could have a significant impact on the overall market.