The US has passed the spot ETF, and the market is calling for a new era. I agree with this. From a long-term perspective, BTC has already entered a bull market. However, from a medium-term perspective, it will experience a downward trend in the next few months.
Question 1: What causes the top?
1) There is a lot of profitable funds, which is the premise, which means that there is a relatively large selling pressure in the market. After nearly 3 and a half months of market conditions, most of the coins in the market have risen. The increase is large, such as Inscription, with dozens of times everywhere, the medium-sized market value has increased by 10 times, and the large market value has basically increased by 2~3 times.
2) The funds for exiting the market are exhausted and the main funds have begun to withdraw
In December, we have experienced the climax of inscription, the explosion of sol, the depin market, layer2, and the rotation of the Polkadot ecosystem. It can be clearly seen that the strength of the rise will continue to decrease. And when the later sectors rise, the previously rising sectors will begin to fall. This is because the funds for the next buying are exhausted, and most of the market is in a state of full position or leverage, so it is necessary to sell a coin to buy a new coin.
These two phenomena clearly show that the purchasing power of funds is constantly declining. From the perspective of funds, a market will go through three stages: 1) The funds that missed out on opportunities gradually leave the market; 2) The funds that left the market are exhausted, and the funds in the market gamble; 3) The profitable funds are realized, and the main funds withdraw. This means that in fact, the money left on the gambling table is getting smaller and smaller.
3) Retail investors are generally bullish
Now, there are no KOLs on Twitter who are bearish. The most common argument is to adjust to 42,000 and then continue to rise. In major groups, people are basically bullish. Generally, positions are heavy. A cruel fact that everyone knows is that the leeks are the last wave to take over. This means that when the leeks who take over have heavy positions, there will be no more funds to take over.
Simply put, there is a sharp divergence between bullish sentiment and actual funding conditions.
Question 2: Questions about BTC spot ETF
1) BTC spot ETF is a substantial positive in the long run, which can bring more funds to buy BTC. In the short term, it is a positive news. It will stimulate the price of BTC in the short term. However, we must be clear that the approval of ETF does not mean that a large amount of off-market funds can be purchased immediately. Not to mention that it takes a period of time to officially trade after passing ETF. Spot ETF is just a purchase channel, although this channel connects a large number of powerful funds. These are battle-hardened funds. They think that whether to buy or not depends on whether there is a suitable position and a suitable price. So after being able to purchase in compliance, they still need to see whether the position of BTC is worth entering. Therefore, I think ETF is a bit like Grayscale's gBTC in 20 years. They are boosters of the bull market, but they are not the reason for starting the bull market.
2) This round of market was initiated by ETF. If you think back to three months ago, no one in the market would have thought that BTC would rise to 48,000. This height is not much different from the highest point of the 21-year bull market. Because it is far away from the expected 25-year bull market, and from the perspective of the external financial market, the Federal Reserve is in a cycle of raising interest rates. So it is obvious that some people with inside information and analysts with accurate judgment saw the passage of ETF and promoted this wave of market. In this case, when the ETF is passed as expected, it is time for them to take profits.
Question 3: Mid-term trend interpretation and trading strategies
In this mid-term trend of decline, what position will it adjust to? This is not easy to say. BTC may adjust by about 20%~30%, and a lot of funds that missed out on opportunities will enter the market. However, the situation of altcoins may not be so good, and the correction will definitely be more severe. Especially for those with a particularly large increase, it is normal to have a deep correction. And if the external market is not good, for example, there is a big plunge in the US stock market, then the correction of BTC will be much higher. The possibility of another 312 is not ruled out.
Trading straregy
1. For positions, it depends on your risk preference. You can keep 2 to 6 layers. People with higher risk preference can keep more.
2. If you have a heavy position now, you can sell it in the next few days to reduce the position. It is especially important not to choose to sell when you make a profit and keep when you lose money. This is very wrong. You can consider
1) If you want to hold a position for a long time, you can keep more
2) It has fallen sharply since the 1st. It is recommended to sell the coin that rebounded due to good news. Because the main funds have been shipped, there are many locked-in shares, and it is often difficult for this kind of coin to reach a new high.
3) Recently popular
