Bitcoin experienced a sharp drop at five o'clock this morning, falling by more than 8%, even falling to $24,000 at one point, but then the price rebounded to above $26,000.

In fact, there is no need to panic. Although your position will feel damaged in the short term, we must be clear that what we need to do most is to hoard coins! The more it falls, the more greedy you become. Withstand short-term fluctuations and hold on to your coins to reap a lot in the next bull market. Remember the greedy moment I mentioned before? If you don’t slowly lay out your bottom position now, what are you waiting for?

Why did it fall so sharply?

First, some people believe that the crash was caused by the shrinking spot trading market and the increase in the derivatives market. The decrease in spot trading volume has led to a decrease in market supply, while the increase in the derivatives market has brought more speculators and leveraged transactions. This change in market structure may lead to increased price volatility, thus triggering the crash of Bitcoin.

Secondly, the rise in global interest rates is also considered to be one of the factors that led to the decline of Bitcoin. In particular, the rise in U.S. Treasury bond interest rates has made risky assets in traditional markets more attractive, and investors have transferred funds from cryptocurrencies such as Bitcoin, which has triggered a sell-off in Bitcoin.

In addition, institutional investors’ pessimism about the current market is also one of the reasons for the plunge in Bitcoin. Although some people think that now is a good time to buy at the bottom, institutional investors tend to pay more attention to long-term trends and stability, and they may choose to wait and see or wait for a better time to enter the market.

Buying the dip now?

Institutions generally do not take over for retail investors at this price, and many institutions have not yet obtained relevant approval. As a retail investor, there is no need to rush, as long as you hold the chips in your hands, you can buy at the bottom with peace of mind.

The market high point this year has been formed, and the probability of the market reaching a new high in the future is getting lower and lower. $30,000 is already a relatively high expectation. This correction has just begun, and there may be a deeper correction in the future. We can temporarily give up our expectations for long positions and wait for the market to stabilize before entering the market in batches.

The cryptocurrency market is now in a deep bear market

In recent days, the cumulative decline of altcoins has basically exceeded 40%, and trading volume has also decreased significantly. In a bear market, this situation is actually very normal.

The current cryptocurrency market is not attractive to external funds. The previous wave of rebound was entirely driven by the BlackRock spot ETF. However, it is difficult for spot ETFs to trigger another rally in the short term. According to previous internal meetings of BlackRock and Invesco with employees, optimistic estimates may take 4-6 months.

This also means that the market may not appear until the end of this year or the beginning of next year, so this expectation cannot be realized in the short term. There is no reason for external capital to continue to stay in the cryptocurrency market. In contrast, due to the super concept of artificial intelligence, the US stock market can barely attract some funds from US Treasury bonds, so it performs well. However, the cryptocurrency market does not have similar appeal, and the result is that funds are absorbed from both ends, which is why I am bearish on the rise of the cryptocurrency market in the short term.