Yesterday, the Bitcoin market in the crypto sector experienced a thrilling 'spike' event. This globally watched digital asset broke through the historical high of 104,000 USD yesterday and suddenly plummeted to 91,000 USD around 6:30 AM Beijing time on December 6, before quickly rebounding back above 97,000 USD within a few minutes. This massive fluctuation directly ignited the market, causing nearly 210,000 investors to be liquidated, with a liquidation amount reaching 1 billion USD, primarily among long positions. Surprisingly, this violent fluctuation did not affect other mainstream altcoins.
Profit-taking pressure and macro risks intertwine: Why did Bitcoin drop?
At the glorious moment when Bitcoin breaks through 100,000 USD, the selling pressure from long-term holders (LTH) follows. These Bitcoin veterans have already achieved an average return of four times when selling their assets. This is typical behavior in a bull market; I believe the profit-taking of long-term holders is not unexpected, but rather a natural cycle of the market. However, this behavior currently cannot influence market sentiment or confidence in the future of the cryptocurrency market.
However, relying solely on profit-taking pressure is not enough to explain such drastic fluctuations. I have repeatedly mentioned in previous articles that there is significant technical and psychological resistance near the 100,000 USD mark for Bitcoin. Coupled with the current uncertainty in the macroeconomic environment and investor concerns about regulatory policies, there will surely be a big spike around December, but at the same time, this spike will release the pressure of extreme speculators accumulated in the market. Theoretically, this spike will actually lead to a healthier upward trend overall.
Non-farm data becomes the market focus
At the moment of significant fluctuations in Bitcoin prices, we turn our attention to the upcoming US non-farm payroll data to be released on December 6 at 6:30 AM Eastern Time. The market generally holds high expectations for this data, believing its performance may exceed expectations. Personally, I believe that if this data is strong, the Federal Reserve may postpone its rate cut plans, leading to a stronger dollar and thereby suppressing the prices of risk assets including Bitcoin.
Nevertheless, the market remains optimistic about the Federal Reserve's rate cut in December. According to data from the Chicago Mercantile Exchange, the market believes that the probability of a 25 basis point rate cut by the Federal Reserve has exceeded 70%. Based on my experience, lower interest rates generally mean a more accommodative monetary environment, which is a potential positive for risk assets like Bitcoin.
Institutional funds and policy sentiment: The pillars of Bitcoin's rise
In addition to the potential benefits of monetary policy, the continuous positioning of institutional investors also provides solid support for Bitcoin prices. The long-term capital from institutional investors is steadily flowing in, and this accumulation effect significantly drives the upward momentum of Bitcoin. Furthermore, the recent friendly attitude of the Trump administration towards cryptocurrencies has further boosted market sentiment. Many investors see Bitcoin as an important tool to hedge against macroeconomic uncertainty, a trend that may become increasingly evident in the future.
Looking ahead: Bitcoin's new targets
As the market gradually digests the impact of short-term fluctuations, the next target for Bitcoin has become the focus. 110,000 USD will be an important psychological level for Bitcoin. According to Deribit data, many call option contracts expiring in January 2025 are concentrated at this price level, indicating that investors remain confident in Bitcoin's performance in the coming months.
In this complex global economic environment, Bitcoin continues to showcase its unique risk-resistant characteristics. The current pullback does not signify an end; rather, it may accumulate energy for the next explosion. History is always accompanied by twists and turns, and this moment may just find Bitcoin at the starting point of a new historical journey.
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