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Bitcoin Market Analysis: Weekly Pressure, Correction Risks Emerge
Today is Monday, and Bitcoin is about to close the weekly line. From a technical perspective, the weekly trend is very important for observing the overall trend. Currently, this week's K-line is a bearish candle, and the price is close to the bottom position of the week before last.
In fact, since December 23, I have been reminding everyone through my three-line trading system that Bitcoin may face a correction due to downward pressure. So, if you have been following my content, you should already be prepared.
Market changes depend not only on trading systems but also on a comprehensive analysis of fundamentals, data, and market sentiment. So, if you don't have strong technical analysis skills, how can you anticipate these risks?
Next, I will share four key methods based on this correction to teach you how to identify market risk signals in advance.
1. Pay attention to fundamental changes
Fundamental factors are the basis for judging market trends. One of the core reasons for this Bitcoin correction is the adjustment of the Federal Reserve's monetary policy.
In the video on December 23, I mentioned that the Federal Reserve's meeting is a key node for the December market. Although this rate cut of 25 basis points met market expectations, the signals released by the meeting exceeded expectations: the Federal Reserve slowed down its rate-cutting pace for 2025.
Why does this affect Bitcoin? As everyone knows, loose monetary policies usually push up risk assets like Bitcoin, while a slowdown in the pace of rate cuts means the market's liquidity expansion expectations weaken. In addition, rising bond yields attract some funds to flow out of the crypto market, leading to pressure on Bitcoin's price.
2. Track Data Indicators
Changes in data are one of the important references. One key indicator I often use is the Crypto Greed and Fear Index.
From November to December, this index once soared above 90, entering the 'extreme greed' zone. Excessive greed often indicates that the market is overheated, and speculative funds may withdraw at any time. Historical data also shows that when the index reaches extreme zones, the probability of market corrections significantly increases.
This drop in Bitcoin is largely related to overheated market sentiment. By observing these data indicators, you can also anticipate market top signals ahead of time.
3. Beware of overheating retail sentiment
Changes in market sentiment, especially retail sentiment, are often important signals of risk.
When Bitcoin's price continues to rise, the discussion heat on social media and crypto chat groups reaches its peak. In recent days, have you noticed an increasing number of discussions about 'getting rich quick' in WeChat groups and Telegram? It's also common to see newcomers entering and showing off their profits.
But remember one thing: **the market will never allow the majority to profit.** When retail sentiment is overly optimistic and the number of losers decreases, it often means a wave of risk is about to arrive.
4. Celebrity Effect: A 'Danger Signal' in the Later Stages of a Bull Market
As an old investor who experienced the bull markets of 2017 and 2021, I have noticed an interesting phenomenon: in the latter half of a bull market, celebrities always flood into the crypto market.
In 2017, celebrities issued coins, in 2021, celebrities issued NFTs, and this year, celebrities are clustering to issue Memecoins. Although the traffic brought by these celebrities can temporarily boost popularity, the funds often flow to non-mainstream coins, weakening the buying power of mainstream assets like Bitcoin.
Therefore, when you see the celebrity effect frequently appearing, you should also be wary of the underlying market risks.
Summary: How to respond to market corrections?
By paying attention to fundamentals, data, retail sentiment, and celebrity effects, even if you don't understand technical analysis, you can still anticipate some market risks in advance.
Of course, this Bitcoin correction is just a short-term risk and does not mean that the bull market has ended. I personally have cleared part of my positions and am waiting for the market to complete its risk release before re-entering. If there are new entry signals in the future, I will share them with you as soon as possible through video!
That's all for today's analysis, I hope it helps you. If you find the content valuable, don't forget to like, share, and subscribe to my channel. See you next time!
