Financial markets fell on Thursday. The U.S. Producer Price Index (PPI) rose 2.4% year-on-year in October, slightly higher than the expected 2.3%. U.S. Federal Reserve Chairman Powell struck a hawkish tone, dampening market expectations for a rate cut in December, and pouring cold water on the post-election celebrations as they faded. The crypto market fell across the board, especially Bitcoin, which fell sharply and seemed to have lost its recent upward momentum, falling below $87,000 at one point.

Lao Bao's speech poured cold water

In a recent speech, Powell made it clear that despite the strong performance of the US economy, the Fed will not rush to lower interest rates. The healthy state of the economy is encouraging, but it does not mean that the Fed will quickly turn to loose policies. In particular, the US Producer Price Index (PPI) continues to perform strongly, indicating that inflationary pressures still exist, which forces the Fed to maintain a tight monetary policy for some time to come.

The market interpreted Powell's remarks as more hawkish, implying that "the U.S. economy is strong and there is no need to rush to cut interest rates."

Against this backdrop, the Fed's policy direction remains uncertain, especially in the face of changes in the global economy and domestic labor market. Although the current economic growth is solid, the threat of high inflation has not completely subsided, and Powell called for caution and to avoid premature monetary easing. This hawkish stance has exacerbated market uneasiness about future interest rate trends, especially the debate over whether interest rates will continue to be cut in December, and market expectations for further rate cuts have quickly risen.

Bitcoin has plummeted in the short term, market sentiment has cooled, when will the altcoin market come?

In just half an hour after Powell's speech, the price of Bitcoin fell sharply from US$91,846 to US$88,289, and then continued to fall to a low of US$86,700, a drop of more than US$5,000, marking the first major correction after setting a record high. At the same time, almost the entire crypto market fell into a plunge.

In the current market, the king of altcoins, ETH, has not yet recovered strongly, the number of projects is seriously overloaded, and various memes are flying around, attracting most of people's attention.

So, if we speculate theoretically, when will the altcoin market come?

Our current expectation is that we have to wait for Bitcoin to stabilize first, whether BTC directly breaks through $100,000 or $150,000. Only after BTC stabilizes, the altcoin market can start. During this period, the market will still be a bull market feast for Meme, and it may be accompanied by the popularity and spread of various overnight rich stories, and attract more and more retail investors to pay attention to and join this field, such as the recent PNUT and ATC.

As mentioned earlier, the altcoin season of this cycle will probably have to wait until the first quarter of 2025. The main consideration for this time is the underlying issue of market liquidity, because the Federal Reserve has been shrinking its balance sheet since mid-2022, which is actually bearish for crypto assets.

Until the Fed signals an end to “quantitative tightening,” the altcoin rally will not fully open. The Fed has been reducing its balance sheet since mid-2022, which has been bearish for altcoins.

In other words, unless the Federal Reserve sends a signal to stop QT, the copycat season cannot be launched on a large scale.

The possible good news at the moment is that the Federal Reserve is likely to signal the end of QT at the FOMC meeting next month (December), which may mark the beginning of the altcoin season. Therefore, it can be optimistically expected that the altcoin season may arrive in the first quarter of next year (2025).

In short, although the prices of many altcoins are still weak, the market has calmed down as Bao is hawkish, but it is undeniable that the bull market continues. This is also a good time to embrace the current popular concept altcoins. You must believe in the rhythm of the sector rotation, but you must also maintain a good attitude, reject FOMO, and try to pay more attention to the top projects in the popular tracks.

What should we do now?

Based on some current situations, the crypto market has not yet reached the peak of this bull market cycle.

The best strategy at the moment is to gradually build a position when altcoins experience a 25%-35% pullback. This kind of pullback is very common during the bull market. Avoid FOMO and do not trade with leverage in any case, because it is very likely that you will lose everything.

According to our judgment, in this round of bull market, altcoins may experience multiple pullbacks of more than 30% before they will usher in a top outbreak, so please keep some long-term positions.

The bull market has just begun, so why do some people say it’s over? A short-term correction is for a better rise. If there is no correction, it will be detrimental to the rise.

Bitcoin retreated last night, and in this wave of retreat, the meme performance was still eye-catching, but the copycats suffered, and many of them returned to the starting point. After the meme market ends, funds will shift to a wave of valuable copycats, but the range will be limited, so everyone should choose the right target!

The meme is also not suitable for long periods of time, unless it is listed on binance with a strong narrative, otherwise don’t fall in love and be a scumbag trader!

Bitcoin is retreating at the 4-hour level, with support below around 86,000. For the broader market, there is no need to panic. As long as this position is not broken, the bull market is still safe!

at last

Bull markets are often the best opportunity to make money, because the market is upward most of the time during this period, but bull markets do not always rise continuously. We may still face some pullbacks, for example, even a correction of more than 30% cannot be ruled out in the future, but don't be afraid, the more you need to stay calm at this time, please continue to strictly control your positions, just focus on your goals, and strictly abide by your trading discipline. The late stage of a bull market is often the most dangerous stage for most retail investors, and many people end up losing money at this stage. At the same time, you should try to avoid leverage operations, and don't touch them if you don't understand them. I wish you all good luck.