On the evening of July 24, the cryptocurrency market experienced a long-awaited nighttime crash. The initial cause of this violent fluctuation was closely related to the cliff-like drop in the US stock market. The panic quickly spread to the global financial market, including our A-shares, and the entire market was in a bloodbath. There are many different opinions on the cause of this sharp drop in the market, but the result has already appeared, and it is meaningless to discuss right and wrong.
In the face of such a turbulent market, what we really need to think about is the future market trend: will it rise or fall? This article will share some personal views from the technical and news perspectives. Investment is about evidence and experience. Perhaps these views seem like speculation, but as long as they can help us achieve our expected goals, they are valuable.
Technical Analysis
Bitcoin began to fall from March 13 to July 5, hitting a low of $53,500, which was the largest drop between 2023 and 2024 and the longest one. During this period, panic sentiment reached a record low, with the panic index falling to 23, and the number of long orders liquidated remained high. Altcoins were not spared, falling sharply to near record lows, and many investors were deeply trapped.
Despite this, there have been many positive news, but the market has repeatedly encountered negative news, such as Bitcoin halving, Ethereum Cancun upgrade and ETF approval, etc. These facts have caused the market to doubt whether the big bull market will come.
Observing the market trend over the past year and a half through the weekly chart, the top 100 currencies by market value did not show the trend of constantly breaking previous lows like in 2022, but instead the highs and lows gradually rose. In particular, the rebound after hitting the bottom on July 5 was quite rapid, and the trend was very similar to that of Bitcoin and Ethereum. When the weekly levels of the top 100 currencies by market value are synchronized, it means that the real big trend is coming.
News Analysis
Recently, Mt. Gox, the German government, and Grayscale Fund have all been selling Bitcoin and ETH, especially when the market crashed in early July. Logically, these sales would have caused the market to crash, but in fact, the market rose. This is due to the continuous buying of institutions such as BlackRock, which sold and bought at the same time, and ultimately the price rose.
This shows that there is a certain game between institutions, which can also be understood as they are both partners and counterparties at different stages, which is an inevitable phenomenon in the financial market. The decline last night does not mean that the market is completely over, but rather shows that large funds are operating with their left hand in and right hand out, intending to clean up the market and wash out the contracts and undetermined speculators.
BTC, high-level correction, if it can hold at 62378-63000, it will continue to go bullish. The upper resistance is: 70,000 to 71,000. If it can break through this resistance, it will challenge the previous high: 73881.
If it fails to hold, then we will have to look at the next level of support: 58218.
Summary and Outlook
Combining the above analysis and past experience, we can summarize it with Buffett's words: "I am greedy when others are fearful". The current decline is not large, but the fear is more profound, which shows that the market has formed inertia, and good news turns into bad news, and bad news will inevitably fall. This is similar to the psychology during the transition from a bull market to a bear market. As long as there is a pullback, it is an opportunity to increase positions.
The current market is no different from that in 2022, just reversed. It is generally believed that there will be no big bull market in 2024, or that the bull market will not come so early, but the facts are often against human nature, and everything needs time to verify.
The darkness before dawn is always the most suffocating, because people have been shrouded in darkness for too long, and their inertia has become deeply rooted. When most people give up, even if they see the sun, they will feel that it is an illusion. The real test in the second half of 2024 lies in the heart. Only by believing first can we see the dawn of the bull market and welcome the beautiful dawn.
