Affected by the sharp drop in the U.S. stock market, bitcoin has also retraced to $95,000, and Ethereum has retraced to $3,300.
Some are asking, why did the market suddenly drop?
This market pullback is mainly due to the impact of the U.S. stock market.
Yesterday, the Nasdaq index fell sharply, which also dragged down the cryptocurrency market.
As soon as U.S. institutions and investors start working, market liquidity begins to gradually recover.
Next, the cryptocurrency market may begin to correlate with the U.S. stock market, so we need to pay more attention to the trends in the U.S. stock market.
The reason for the drop in the U.S. stock market is that the U.S. released some very strong economic data, causing market expectations for a rate cut by the Federal Reserve before July to weaken.
Yesterday, the JOLTs job vacancy data and the ISM non-manufacturing PMI data released by the U.S. stock market were both very strong, and the 10-year U.S. Treasury yield reached a new high in 20 years.
An increase in job vacancies means that the unemployment rate may decline, and more job opportunities will arise. The PMI data exceeding expectations also indicates that the economy is improving.
The strong performance of these data suggests that the Federal Reserve will not change the pace of interest rate cuts, and it may only cut rates twice this year or even less.
This means that market liquidity will be restricted, and there won't be as much new capital flowing into the U.S. stock and cryptocurrency markets.
This has caused a certain degree of panic among investors in both the U.S. stock and cryptocurrency markets.
This directly led to a sharp drop in the U.S. stock market, and the cryptocurrency market also experienced a spike and liquidation of contracts.
In the past 24 hours, the amount of liquidations in the market reached $696 million, with $631 million in long positions liquidated and $64.2 million in short positions, mainly due to long positions being liquidated.
Currently, it seems that the support for bitcoin is still relatively strong, with a large number of chips concentrated around $95,000.
I think the overall upward trend is still there; this time it was just dragged down by the U.S. stock market.
I remain relatively optimistic about the market performance in the first quarter of this year, as the market is still waiting for Trump to fulfill his promises after taking office.
As long as the promises are not fulfilled, the market's expectations for an increase are still present.
It is worth noting that MicroStrategy has increased its holdings by 1,070 bitcoins.
They now hold a total of 447,470 BTC, worth up to $44.3 billion.
Yesterday, BlackRock's Bitcoin spot ETF also bought 6,078 bitcoins, while miners only mined 450 new bitcoins.
In December, the buying volume of the Bitcoin spot ETF was almost three times that of miners' production.
This indicates that the bitcoins mined by miners are simply not enough to meet market demand, leading to a serious imbalance in supply and demand. In the long run, it will be difficult for bitcoin not to rise.
Additionally, El Salvador announced yesterday that it intends to buy more bitcoins as strategic reserves.
Smart wallet addresses have also been continuously buying bitcoins.
Smart money holding more than 100 bitcoins experienced some fluctuations in December due to Powell's hawkish remarks, causing some short-term divergences.
Those with more than 100 bitcoins, although shaken by Powell's hawkish remarks in December, have recently become optimistic about the market and started buying aggressively.
In the upcoming January, good news continues, as FTX's cash compensation could bring an incremental capital of $16 billion to the market.
On January 20, Trump will take office, and a series of cryptocurrency bills are being advanced, especially the Bitcoin Strategic Reserve Act.
If future sovereign funds from various countries start buying bitcoins, the supply-demand relationship will drive the price of bitcoin to continue rising, and reaching $1 million will just be a matter of time.
So, overall, profits are made from declines, while risks arise from increases.
The total supply of bitcoins is only 21 million, of which 3.7 million may have been permanently lost. In the future, ordinary investors may only be able to buy 6 million bitcoins.
In terms of operational strategy, large positions can focus on buying the dip in bitcoin, while small positions can pay attention to some leading altcoin projects.