Good evening, brothers and sisters. Today's market drop has left people feeling somewhat numb. Yesterday's decline felt like the 3.12 event, while today's feels like the follow-up or aftershock of 3.13.
In the past 24 hours, the global liquidation amount reached $1.023 billion, with over 300,000 people liquidated. Cherish life, stay away from contracts! Yesterday, the liquidation amount of altcoins far exceeded that of Bitcoin. Although today’s decline is also significant, the liquidation amount has clearly decreased. It seems that the altcoin bulls have basically exhausted all their strength.
Now, after liquidating long positions, it seems the shorts are also not spared. The long amount is currently $1.3 billion, while the short amount is as high as $9.3 billion. Are the shorts panicking now?
I personally expect a rebound from this weekend to next week, but the chance of a reversal is still not very high; perhaps it is the darkness before dawn. Everyone stay calm and don't be misled by short-term fluctuations.
The market has always been like this; every time you think hope is coming, there will always be a heavy blow. Yesterday morning, a single word from Powell directly caused over 300,000 liquidations, and the shorts counterattacked once again. The Federal Reserve clearly stated that it would not participate in the government's cryptocurrency hoarding plan. Coupled with the Fed's downgrade of interest rate cut expectations for next year, cryptocurrencies have once again encountered a significant drop, marking the fifth sharp decline.
The recent sharp declines have almost exhausted a large amount of buying in the market. Therefore, after this sharp decline, the market did not see much new buying, but instead exhibited a downward trend after a period of sideways consolidation, burying the bottom-fishing funds.
In the long run, declines are not a big deal:
In the short term, it may be difficult to regain strength. The market was overly optimistic for a while, and with Powell's remarks, this wave of decline has cleaned out part of the market's funds. However, a greater wealth effect is about to arrive. As long as we don’t die, we can still stand on a higher stage in the future.
In terms of operations, I suggest that everyone should not blindly bottom-fish, not follow the trend for buying and selling, focus on mainstream coins, avoid using high leverage, manage positions well, watch more, act less, and go with the trend.
In the long run, the current decline is not scary. For example, Powell is bearish on Bitcoin, while Trump is bullish, and Trump's power has almost reached its peak. Even if Powell steps down, it’s not a big deal. Arthur Hayes believes that even if Powell is replaced, Trump can balance the Federal Reserve's influence through his nominated Treasury Secretary, Scott Bessent.
Future positives
In addition, $16 billion to be compensated by FTX in the first quarter of next year will enter the market, followed by strategic reserve plans from various states, which are all beyond the control of the Federal Reserve. The Federal Reserve is merely a money-printing institution; the Treasury is where the real spending happens. Therefore, the long-term upward trend of Bitcoin remains unchanged. This pullback is just a cleanup of leverage, and a bigger opportunity is coming next.
The period from late December to early January is a critical time window. With Christmas approaching, the end of the 2024 fiscal year, and the new president taking office, there may be impacts on the capital market. Industry giant Arthur Hayes predicts that the cryptocurrency market may experience a sharp drop around Trump's inauguration on January 20, 2025, followed by opportunities for low buying.
Currently, the performance of altcoins is relatively weak, with most only having a 3-5x increase. A short-term rebound is expected next week, but further adjustments may still continue after the rebound. Attention can be paid to short-term rebounds, but do not blindly chase the highs.
Next, select some mid-to-long-term potential coins, buying in batches from the end of this month to the end of January, to prepare for the market in the first half of 2025.
Before operating, clarify your strategy: whether to trade short-term or long-term. If uncertain, you can open two accounts—one focused on short-term and one focused on long-term. Profits earned from short-term can gradually be transferred to the long-term account, and then liquidate at the end of the bull market.
Can we bottom out now?
If your position is not heavy, you can adopt a strategy of buying more on big drops, small buying on small drops, and not buying when it doesn't drop. Currently, in the market, Bitcoin and Ethereum have relatively solid support due to spot ETFs and large capital backing. However, most altcoins lack large capital support and have no support levels when they drop, primarily affected by market sentiment.
Therefore, at this stage, it is essential to control positions well, and to be cautious in executing strategies. The top 100 altcoins with a market cap over $1 billion can basically be considered for purchase, which is not a big problem. If choosing altcoins ranked in the top 500 (with a market cap exceeding $100 million), one must be very careful; choosing wrong may miss the entire altcoin bull market, while choosing right can yield good profits.
Most importantly, do not open contracts, do not use leverage, always buy spot. Even in a frenzied bull market, 3x leverage can lead to liquidation.
If you are optimistic about the future, hold on; if not, it's a correct choice to leave. The only wrong operation is to chase highs and sell lows. Each of us needs to be responsible for our own accounts.
