Source: Talking about Li and other things
In the days after the Federal Reserve's interest rate meeting (Beijing time, December 19), as the market experienced a phased correction, many people began to panic. In addition, some KOLs also seized the traffic while the iron was hot, saying that the market would go to US$80,000 or even lower. Therefore, some friends once again chose to get off the bus and handed over their chips under such circumstances.
In recent articles, we generally recommend that everyone try their best to manage their positions and stay calm and rational. For example, in the topic article about the market a few days ago (December 22), we sorted out 4 bullish factors and 3 bearish factors, and mentioned in the article: The probability of Bitcoin falling below US$90,000 this month should not be high, unless there is any new black swan event or major negative news event.
In the past few days (from December 19 to December 26), Bitcoin's volatility was around 13%. We don't know how many people were thrown off the bus during this fluctuation.
To briefly review the recent articles on market topics by Talking Li, we have already organized quite a few perspectives, including:
- In the article on December 24, five aspects of macro factors were organized.
- In the article on December 22, seven price factors based on macro and data layers were organized.
- In the article on December 20, six price factors based on intuitive perceptions were organized.
The reason for organizing these dimensions is, firstly, to allow myself to re-organize relevant data, and secondly, to hope to provide everyone with a more macro directional understanding. Based on this, continuously form and improve your thoughts according to your position situation; otherwise, it may be easy to be influenced by various KOLs or analysts' viewpoints, leading to frequent operations that result in losses or panic selling that directly gets you thrown off the bus. We still say that short-term market movements cannot be predicted; do not always listen to others’ opinions and arbitrarily change your position operations. If you cannot strictly execute your trading strategy, then the best operation these days is to do nothing.
When the public is generally bearish, the market often rises. We will only see Bitcoin reach $110,000, or even higher, when the public does not anticipate it. The market can be ruthless and counterintuitive. In this process, only a small number of lucky individuals, highly skilled professionals, or those with enough patience will be able to wait for the day of blooming.
In less than 6 days, it will be 2025, and the market continues to change in real-time 24/7. Currently, $92,500 - $100,500 seems to be a good short-term psychological price range for this week, unless some new black swan event occurs in the next few days that breaks this range. If you are looking forward to new market movements, wait until the first quarter of next year to assess the situation; it might be better to rest well these days.
However, Talking Li does not plan to take a break, as we still have several execution plans in these last days of the year:
Firstly, we plan to officially launch the fourth e-book (Blockchain Methodology) on December 30 (second volume, about 280,000 words), and we are currently busy summarizing and organizing content.
Secondly, we plan to release a 'Talking Li Year-End Summary Album for 2024' on December 31, and the images are currently being designed.
Having talked about the plans, let's continue with the series of topics from the past few days and take a simple look at what other perspectives can assist in judging the overall direction of the market:
1. US Dollar Index (DXY)
The US Dollar Index (you can also focus on the Japanese Yen Index, etc.) is one of the macro indicators we pay attention to. In previous articles of Talking Li, we mentioned that generally, a rate cut by the Federal Reserve will lead to a weaker dollar index, which usually benefits risk assets such as stocks, gold, and Bitcoin. In other words, if the dollar weakens, it will make risk assets like Bitcoin more attractive to investors, potentially leading to a new round of price increases for Bitcoin.
Currently, it seems that the dollar has once again approached a relative short-term high point, and there is a certain probability (85–90%) of a reversal occurring. From historical data, Bitcoin and the dollar index often exhibit an inverse relationship, i.e., a weakening dollar often leads to an increase in BTC's purchasing power. As shown in the figure below.
Of course, considering that it is currently the end of the year and taking into account various other factors such as taxes, this inverse relationship may not always be so significant. But the basic logic remains unchanged: as long as the US dollar does not weaken, high-risk assets like Bitcoin are likely to experience stagnant or declining conditions, unless events that can directly impact market sentiment occur (such as this year's ETF approvals or institutions like MicroStrategy constantly buying) and drive short-term market rallies.
2. Seasonality
Although different people may have different views on matters like searching for a sword in a boat, from certain situations or perspectives, historical data is often an intuitive and comprehensive reflection of the market and human nature, so we can appropriately pay attention to the performance of seasonality.
From statistical data, we can see that since 2015, when Bitcoin rises in November, it often also rises in the following December. As shown in the figure below.
So let’s make a simple assumption: if this seasonality continues to repeat this year, based on the average performance of about 12% increase in December in previous years, Bitcoin's theoretical closing price this December would be around $107,500. This means that unless some new black swan event occurs in the next few days that causes Bitcoin to crash, the overall trend will not change. Of course, this seasonality dimension is not rigorous enough, as history cannot 100% accurately represent the present and the future; we can just treat it as a simple reference.
3. Global Money Supply (M2)
Compared to the aforementioned DXY, the data reflected by M2 may appear more macro. From the current M2 situation, since September of this year, the global money supply has begun to shrink, with year-on-year growth slowing, indicating certain downward pressure. As shown in the figure below.
Moreover, we can also find that high-risk assets like Bitcoin respond strongly to changes in liquidity, but since this data indicator has a certain lag (i.e., Bitcoin's response to M2 changes typically lags by about 2–3 months), we can only use liquidity contraction as one of the auxiliary judgment indicators for trend changes.
Currently speculating, in the first quarter of 2025 (roughly starting in February or March next year), we may experience some new market changes (note that this refers only to changes, and the specific extent cannot be determined), but during this period, we may continue to face a period of adjustment (approximately 5–8 weeks), and it cannot be ruled out that Bitcoin may attempt to challenge new ATHs (such as around $110,000) several times during the adjustment period. This position is also our originally planned second operation; if reached, we will sell 10% of our holdings. This is not a recommendation for any operation, DYOR.
Of course, this is only based on the single historical data dimension of M2. We may also need to consider other factors comprehensively, such as a shift in the Federal Reserve's monetary policy or large-scale adoption by institutions, which may also prompt Bitcoin to decouple from M2 to some extent.
In summary, it’s still that saying: the short-term market cannot be accurately predicted. If you hope to quickly profit through short-term operations, you need to combine various factors you consider effective (such as macro expectations, policy expectations, indicators, news, etc.) to execute your risk strategy. However, if considering from a longer time frame (ignoring the intermediate volatility), today’s Bitcoin is still the cheapest.
At the end of the article, let's take a look at the current distribution of Bitcoin wallet addresses and see which range you are currently in:
- There are 50.17 million addresses holding 0–0.1 BTC
- There are 4.31 million addresses holding 0.1–10 BTC
- There are 150.13 thousand addresses holding 10–1,000 BTC
- There are 2,050 addresses holding more than 1,000 BTC
What we really need to do is only one thing: set a phased long-term goal for ourselves and strive to become the people in the last two groups of data in the above chart.
