In the previous article, the hunter and everyone deeply analyzed the causes and consequences of the Fed’s interest rate cut. The core point is to tell everyone that any event is the result of the combined effect of various previous decision-making orientations. The interest rate cut is a signal that the bull market is starting. The hunter fully agrees with this statement, but everyone can say the right things, but we can’t just rely on one right thing and rush into the market. The interest rate cut does not mean that we have entered the bull market at this moment.

In this article, I will further refine the analysis and judgment based on the framework system of the previous article to seek more solid arguments for bottom fishing.

From the underlying logic of the currency circle——

The bull market in the cryptocurrency circle is not caused by a certain news, but by various policy news stimulating capital to flow into the cryptocurrency circle. Only when money flows into the cryptocurrency circle will the price rise. The essential logic is: policy news stimulates capital—capital flows into the cryptocurrency circle—prices in the cryptocurrency circle rise—the rise attracts more capital and triggers a bull market.

The core reason why everyone is so enthusiastic about this rate cut is that the rate cut will release a large amount of US dollars. With more money in the market, the prices of assets including Bitcoin will be passively increased. However, many people, including the big V analysts in the market, did not mention where this US dollar came from, whether it has been released to the market now, or will be released at a certain node in the future.

Now I can tell you clearly that this money is the US dollars printed by Trump and Biden during their respective terms, totaling about 10 trillion US dollars. Why is this money not circulated in the market? Because the Federal Reserve temporarily controlled this money in the bank by raising the interest rate to 5.5%. For reference, domestic banks, including funds, rarely have returns exceeding 3%. In this case, capital chooses to lie flat at the Federal Reserve for higher returns.

Even though the Federal Reserve has started to cut interest rates, we can see that the first cut was 50 basis points, and the interest rate still remains at 5%, which is still more attractive than other parts of the world. So just from the interest rate cut, we can infer that the bull market is not yet ready to start. For example, now we are just telling all the athletes to be ready. The referee hasn't given the order to start running yet, but you start jumping the gun as soon as he raises it. The rules will penalize you.

The real sprint comes when the Federal Reserve lowers the interest rate to a level where there is no interest rate difference for capital, that is, the 3% threshold. When the interest rate is lower than 3%, the money lying at the Federal Reserve will not earn enough income and will naturally rush to the market. This is not something that can be determined by personal emotions; it is just the nature of capital to pursue profits.

According to the current Fed rate cut path and the Fed’s official statements, there will be two more rate cuts this year, each of 25 basis points. The latest rate cut to 3% will be in June next year. If there is another 50 basis point rate cut in the middle, the earliest will be March next year. So our bottom-fishing time window is concentrated in March-June, and the latest time to get in is before the June rate cut is announced, otherwise it will be too late.

From the perspective of historical similarities——

This interest rate cut has created a bull market, and the market is benchmarking it against the bull market in 2021. Both involve interest rate cuts, and both are 50 basis points cuts for the first time. However, what the hunter wants to tell you is that this interest rate cut and the one in 2021 are actually two completely different things.

What was the environment like for the 2021 cryptocurrency bull market? The epidemic caused three circuit breakers in the U.S. stock market in a single day, liquidity was exhausted, and the Federal Reserve had to rescue the market urgently. Therefore, while lowering interest rates that year, it also started a massive money printing, and the printing presses were smoking.

What is the external environment this time? The U.S. stock market is hitting a record high, and it is still at a high level. The U.S. economy is experiencing high inflation. The reason for high inflation is that interest rates are too high. The reason for high interest rates is that the debt is too large. With a debt of 35 trillion U.S. dollars, the interest to be paid is 1.8 trillion a year. So now the blood pressure in the United States is so high that it explodes. Cutting interest rates is like lowering blood pressure. If you understand this, you will not have persecution delusions or various conspiracy theories.

Summary: This bull market will never replicate the bull market in 2021. The situation is completely different. You should not expect the interest rate cut to have a miraculous effect and immediately start the bull market rhythm.

From a technical point of view——

Currently, Bitcoin is still in a large-cycle downward channel at the daily level. If a bull market is to begin, the necessary condition is that the Bitcoin price breaks through the 69,000-70,000 area. This area is the top of the downward channel. Technically, only by breaking the downward channel can a reversal trend appear, which is a violent bull market.

The characteristic of a bull market is large-scale cyclical bottoming, which is accompanied by a long period of sideways trading during the bottoming stage, causing the market to lose confidence before starting to rise. However, on the technical side, there are neither effective multiple bottoms nor cyclical sideways trading. On the contrary, daily fluctuations are still very active, indicating that market participation enthusiasm is very high. None of the characteristics meet the characteristics of a bull market.


From the perspective of market chip distribution and market participants——

In March 2024, the market of Bitcoin showed periodic box fluctuations at the daily level, concentrated in 50,000-53,000. March was the node for Bitcoin ETF to be listed. The box fluctuations at the listing node were definitely not accidental, but the performance of concentrated entry of retail investors in the U.S. stock market. We can also determine that 50,000-53,000 is the gathering place for retail investors in the U.S. stock market, and ETF can be simply understood as a spot product.

The characteristic of retail investors in U.S. stocks is that they regard ETF as one of the products of U.S. stocks, and their attitude towards U.S. stocks is similar to that of pension insurance, holding them for a long time to earn dividend income, which is completely different from our domestic speculation. We buy low and sell high when the market goes up and down. Both the amount of funds and the attitude towards investment are completely different. This means that these people are destined not to get off the bus easily. If the bull market starts now, these retail investors in U.S. stocks will not only be the vested interests, but will also hinder the main institutions from entering the market to share the cake.

As the whales of the market, the main institutions do not want anyone to divide the cake, and they cannot tolerate retail investors sitting at the same table with them, so they must try their best to drive them off the bus. Here, the hunter simulates the possible subsequent fluctuations through the needs and pain points of various market participants.


The effect of the current market display: It is known that 69000-70000 is the top of the daily descending channel. Breaking this position means the end of the downward trend and the start of a unilateral rise

It is known that 53000-50000 is the concentrated entry point for retail investors in the US stock market

It is known that 48000 is the highest point of the rise in January this year. The August pin of 48000 completed the top and bottom conversion support, confirming the strongest technical support point

Ordinary retail investors’ perspective: interest rate cut is good news, the bull market is coming, the price is currently in the middle position and it is not easy to enter the market. We need to wait for a correction to see if the market can pull back to 53,000-48,000. If there is no correction, break through the 70,000 downward trend channel and then chase more.

From the perspective of retail investors in U.S. stocks: I did not sell out when the stock hit 70,000 several times in the first half of the year. In August, it plummeted to 48,000, but fortunately it held up and confirmed the strongest support point. The interest rate cut is already here, and as long as the stock does not fall below 48,000, the price will only get higher and higher in the future.

At this point, we understand the needs and pain points of retail investors. As the main force, it is meaningless to continue to push up the market without breaking 70,000. If it breaks 70,000, then the interest rate cut BUFF will be added, and the trend has been completed. Preparations for the bull market sprint, even if you smash the market later, you can't shake the spot party. After all, everyone knows that next year will be a big bull market. If you break through 70,000 at the end of the year and then smash the market, the spot will not care about you except for some retail investors who eat contracts. Smashing the market is an opportunity for people to increase their positions.

Since the price goes up to 70,000, it is the main force that is causing trouble for itself, so the possibility of rising is ruled out. Now there are only two options left: consolidation and decline. If the price continues to consolidate, the spot is in a profitable state. As time goes by, the interest rate cuts are getting stronger and stronger, and the bull market is getting closer, it is even more impossible for the spot to get off the train. Now there is only one option left - decline.

Having determined the downward trend, let’s consider where it can fall. U.S. retail investors have identified 48,000 as the top-bottom conversion support, and ordinary retail investors have identified 53,000-50,000 as the bullish gathering place. There is also a strong support of 480,000 below. So when the market falls to the 50,000-53,000 area, it will gradually attract people to buy the bottom. The more it goes down, the more people will buy the bottom. When the market falls below 48,000 again and accelerates downward, it is the stage of concentrated market panic. At this point, all retail investors will be forced to choose to cut their losses or get off the bus. Even if the diehards resist the panic decline, in the subsequent rise, because the bottom structure is broken, the position becomes precarious, and they may run away early at any time due to a sharp correction or a sudden decline caused by news.