In last night's market turmoil, Fed Chairman Powell's speech once again became a key catalyst. Nevertheless, Bitcoin (BTC) still performed relatively strongly. Powell's speech did not change the market's expectations for the interest rate hike cycle, but it did have a significant impact on overall sentiment, especially with a more drastic reaction in global risk assets. However, despite BTC temporarily pulling back under the shock of such news, it did not show a clear downward trend, instead appearing relatively resilient.
Currently, BTC's performance can be summarized as 'strong consolidation, weak rebound.' We see that after BTC retraced to above 100,000, the short-term rebound strength is relatively weak, showing a high-level fluctuation trend. This 'weak' fluctuation is reflected in small price volatility, continuously oscillating in the range of 100,000 to 110,000, lacking clear breakout signals. Therefore, in short-term operations, a slightly bearish mindset can be maintained, and it is recommended to try short positions in the resistance range of 102,000 to 103,200, paying attention to 'quick in and out,' and not holding positions for too long, especially in the current context of complex market sentiment.
From a short-term trend perspective, if BTC breaks through the resistance area of 103,200, it may bring a wave of rebound, but it does not mean that the trend has reversed. The rebound may be relatively limited, more of a market sentiment correction rather than a large-scale trend change. Overall, it is advisable to remain on the sidelines and closely monitor further changes in market sentiment.
Many may ask what the relationship is between the Nasdaq index and BTC. Last night's market turbulence, especially the panic decline of the Nasdaq, actually had a direct impact on BTC. On the surface, BTC seems to have little direct connection with the dollar index, but from the perspective of market linkage, BTC is priced in dollars, and all dollar-denominated risk assets globally are affected by the fluctuations of the dollar's strength.
When the risk sentiment in the global market heats up, the sharp drop in the Nasdaq often affects the performance of other assets, especially high-risk asset classes like cryptocurrencies. Therefore, although Powell's speech directly impacts the Federal Reserve's policy expectations, from a technical perspective, BTC's pullback is actually triggered by the linkage effect of global risk assets, rather than just the direct consequence of Powell's remarks. This mindset needs to be maintained in subsequent operations, especially in situations with high macroeconomic and stock market volatility, where BTC's trend may become more complex.
From a macroeconomic perspective, I have previously mentioned that the Federal Reserve's room for interest rate cuts in 2024 is relatively limited, and it may even pause interest rate cuts. Against this backdrop, the strong return of the dollar is a high-probability event. Last night's speech by Powell further confirmed this, hinting at expectations that the Fed may pause interest rate cuts, which undoubtedly supports the rise of the dollar.
Expectations for the dollar have gradually become clear, and I have emphasized that the market always revolves around expectations. When expectations are fulfilled, the market often reverses. For the dollar, although it may experience some fluctuations in the short term, in the long run, the dollar still has significant upside potential, especially heading towards the target near 105, and it may even exceed this point.
In the investment market, especially in the cryptocurrency field, we need to have a kind of 'anti-human' thinking. Market trends often diverge from public expectations; once expectations are fully realized, the trend often reverses. Market assets like Bitcoin and the dollar, all the rises and falls are driven by changes in expectations. Therefore, we need to remain vigilant, observing the subtle changes in market sentiment and judging whether the underlying expectations have been fully reflected.
