Happy New Year everyone! In the past, many newcomers to the crypto space have asked me how to judge whether the upcoming market is 'bullish' or 'bearish' based on news.
In fact, the analysis generally focuses on three main aspects.
Policy and regulatory news
The regulatory policies of countries around the world towards cryptocurrencies have a huge impact on their prices. If a country implements positive policies to support the development of cryptocurrencies and incorporates them into a compliant regulatory framework, it is a major positive for the cryptocurrency market. For example, Japan early on recognized Bitcoin and other cryptocurrencies as a means of payment and established corresponding regulatory laws, significantly enhancing the recognition and trading activity of Bitcoin in the Japanese market, leading to an overall price increase.
Specifically, we can refer to news from Japan in 2016 (the amendment to the Payment Services Act) that incorporated digital currency into the payment system; I won't list them all here. Conversely, if a major country announces a ban on cryptocurrency trading or mining, it would have a significant negative impact. For instance, when our country previously introduced a series of policies to regulate cryptocurrency mining and trading activities, many cryptocurrency prices saw a noticeable decline after the announcement, and the overall market sentiment quickly cooled down. The classic example is the recent 'Powell's speech at the Federal Reserve.'
In just a few words, how many 'retail investors' have fallen.
Of course, such direct expressions of attitude are rare. More often, we see interest rate cuts or declining employment rates; in such cases, it requires special analysis to see whether it helps or hinders capital inflow into the crypto market. I won't go into detail here; if any friends want to hear more, they can follow 'Web3 Little Monster,' which selects a few examples to help analyze and understand.
Major industry events
Major upgrades or new features of mainstream cryptocurrencies are often seen as positive news. For example, Ethereum's successful transition from a proof-of-work (PoW) mechanism to a proof-of-stake (PoS) mechanism (the 'Merge' event) is widely regarded by the market as a way to enhance the efficiency of the Ethereum network and reduce energy consumption, attracting more funds and user attention, which drove the price of Ethereum higher during that period.
When negative industry events occur, such as thefts from cryptocurrency exchanges or exposure of technical vulnerabilities, it can lead to negative impacts. For example, when a well-known cryptocurrency exchange was hacked, resulting in the theft of a large amount of user assets, it triggered panic in the market, decreasing investor trust in the entire cryptocurrency market, and various cryptocurrencies saw varying degrees of price drops.
Recently, the most talked-about issue is the hacking incident at Dexx, which resulted in nearly $20 million of user assets disappearing.
Macroeconomic situation
When global economic inflation expectations are high, some investors may treat cryptocurrencies as a kind of inflation-hedging asset similar to gold. In such cases, it is bullish for the cryptocurrency market. For instance, when some countries experience excessive currency issuance and rising inflation, the demand for mainstream cryptocurrencies like Bitcoin may increase, leading to price rises.
However, if the global economy falls into recession, market risk appetite declines, and investors prefer to hold cash and other safe assets while selling cryptocurrencies, that would be a bearish situation. For example, during the 2008 financial crisis and the subsequent economic recession (of course, cryptocurrencies were not as developed as they are now), if it were to happen now, cryptocurrencies would likely see significant price drops along with market panic and capital outflows. How much do you plan to earn in this bull market? The recently planned strategic trades are about to start, expecting returns of 2-3 times!! Leave 999 to get on board!!
