Sister Yi was ultimately right; if you are not optimistic about this market, decisively go short. This wave of waterfall wash has made profits.
At 3 a.m. this morning, the Federal Reserve cut interest rates by 25 basis points as scheduled, bringing rates down to the 4.25%-4.5% range. After a brief release of positive sentiment, the median of the dot plot rose to 3.9%. This anonymous prediction implies that the probability of interest rate cuts in 2025 will likely be around two times. Thus, the short-term market crash is not due to the poor performance of interest rate cuts, but rather due to upcoming expectations that have caused the collapse.
The Dow has recorded the largest consecutive trading day decline in 50 years, and the Bitcoin-dominated crypto market has followed with a flash crash. The U.S. dollar index has shot up suddenly. Additionally, it seems our central bank is also in great distress, just signaling to unleash liquidity; now the Americans have paused interest rate cuts—how will they manage?
One must admit that the Americans really understand the market, reducing interest rates without hesitation. From September to December this year, they gave us very high expectations, with both the U.S. stock market and the crypto sector exploding; a sudden pause button gave a rather poor future expectation to the market. Interest rates dropped, inflation stabilized, unemployment rates eased, but the sweet-coated bombs showcased to everyone did not let them benefit, achieving multiple goals.
Powell said: Currently, it is not allowed to own Bitcoin, nor does he wish to change the law. Today, there is a significant divergence in the crypto market due to this statement. Uncle San will first state the conclusion: if the expectation for interest rate cuts due to the future of the dot plot declines, along with Powell's negative comments on Bitcoin leading to the argument that the bull market is over, such KOLs can just be directly blocked.
Firstly, is the dot plot accurate? Not necessarily. The dot plot is an anonymous interest rate forecast made by Federal Reserve officials, with one person representing one point. This forecast data is merely a market tool for the Federal Reserve to achieve established goals without allowing everyone to reap predetermined profits. Even if they want to pump liquidity, not everyone has the qualification to earn that money.
Secondly, what Old Bao said, I don't know if everyone has noticed, Powell said he does not wish to change the law, rather than being unable to change the law. So, are Powell's words useful? Uncle San believes they are even less useful than the dot plot. Trump will take office in a month, and at that time Powell will also retire; during his lifetime, Old Bao will only have one month left as the Federal Reserve's spokesperson. Even if he is still in office now, the U.S. has already had three states legislating Bitcoin as a strategic reserve!
So, the termination of the bull market currently has no macro basis. Everyone is familiar with Trump, a very famous pro-stimulus figure, a friendly person in the crypto market. Although his goals of reducing inflation and creating a strong dollar are somewhat contradictory to interest rate cuts, if the pessimistic sentiment in the risk market rebounds sharply after Trump takes office, stimulated by his loose policies, then the Federal Reserve's actions during the day can be considered a de facto approval for Trump. How can such a president not be extremely popular?
Regarding the future of the risk market and the current state of the crypto market, Uncle San makes a rather irresponsible prediction here: the short-term dip in the market is a fake fall in a bull market continuation; it will not last at new lows, but there will definitely be a golden pit created while everyone is in panic. The first quarter of the year after Trump takes office will see changes in the Federal Reserve's dot plot, and the interest rate will not hover around 3.9% in 2025 but will demonstrate a downward trend in data in the first quarter.
After the Federal Reserve cut rates by 25 basis points, the Bank of Japan paused further rate hikes for a few days, maintaining the current rate stability, and the largest substantial short-selling in the market has not materialized. The market did not provide a significant rebound trend; the core reason remains the repeated disappointment of bullish funds leading to short-term bullish fatigue. It can be seen that it will be very challenging for Bitcoin to continue to rise violently in the short term; I lean towards giving opportunities to altcoins led by Ethereum after market adjustments.
In the trading market, besides indicators like the Nine Gods Index and the Fear & Greed Index, there is also a noise index. The larger the noise index, the greater the profit space in the market; conversely, the smaller the noise index, the smaller the profit space. The crypto market has always been in a range with a super large noise index; whether in bull or bear markets, the divergences are very significant, which is why the crypto market has produced the most super-rich in the past decade.
Uncle San believes we are generally lucky, always maneuvering in this market with the greatest potential risks. Uncle San also knows there are many who are unfortunate, addicted to leverage and unable to extricate themselves, infatuated with worthless coins; many who turn their fortunes around are not themselves. Regardless, long-term partners who follow Uncle San, without leverage, embracing some mainstream control of risks, and lowering the market's expected returns, surely have more hope than those swept away by the market.
BTC: Bitcoin's recent retracement exceeded 10,000 points, reaching the largest single-day drop in a while. Based on past experience, the market's retracement will not directly end in one go; there will still be opportunities to create a golden pit in the short term. In terms of operation, Bitcoin as a core asset has no operational space above $80,000; the consideration of fluctuations of a thousand points can easily lead to unnecessary missed holdings. In terms of macro data, Bitcoin spot ETF saw a net inflow of $272 million yesterday, and the capital outlook has not changed. Overall, this data needs to be monitored in the next couple of days for more precise market feedback. Currently, Coinglass shows that all long leverage for Bitcoin is exhausted, and there is a chance for a rebound in the hourly market; the upper liquidation pressure point is around 10,500 points. The mid-long-term market has already undergone a cleansing process; if there is another short-term stop-loss trend, it will form.
ETH: Ethereum's exceptionally exaggerated long-short ratio returned to normal after a large bullish line in the morning; currently, it is rebounding with Bitcoin at the hourly level. In terms of trend, it has not yet broken out of an independent market; observe Bitcoin's stagnation; if the short-term stagnation and increase in leverage are not significant, Ethereum is likely to take the lead.
The altcoin market is bloody; short-term bullish overall is weak, with some coins directly breaking through daily trend support levels. Many partners inquired yesterday about the situation of tokens like Pnut and Act; currently, the personal cost of both is down about 20%, with a slight daily pullback and average positions. The meme series has recently experienced rapid capital outflows, and AI has also directly led the decline. The only good news in the market should be that the AI on the Base chain has started to rebound during the day; short-term attention should be on continuity and market linkage effects. Other altcoins can keep an eye on previous five-fold series, and if they are still above 50% profit from costs, they can find opportunities to chase directly before the macro environment stops declining.
This year's market has given us the most lessons, including position allocation, stop-loss settings, sector arrangement, and expectation management, etc. If one wants to survive in this market for the long term, necessary summarization is crucial. Uncle San has always said to hold half of mainstream assets and not more than eight coins in total; even without setting stop-loss, the retracement from yesterday to now would not exceed 10%, and just these two points surpass 85% of retail investors. Good habits can start at any time; the market's money cannot be exhausted, but a wave of short selling and reckless operations can indeed lead to complete loss.
Other altcoins, discuss in the comment section.
The Fear & Greed Index is 75 today.
Finally, stay away from leverage and hoard spot assets!