As we expected, the cryptocurrency market saw a pullback yesterday, with Bitcoin dropping to $85,000 and Ethereum also dropping to $3,200.
Altcoins generally saw a decline of about 10%, but the MEME sector still performed strongly, with coins like bonk, doge, and act rising against the trend.
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The rise of DOGE is due to Trump announcing that he will appoint Musk as the Minister of Government Efficiency in the U.S., a department abbreviated as DOGE.
As soon as this news came out, the price of the D.O.G.E coin on the Ethereum chain also broke through $0.34, with an increase of over 100%.
Therefore, after Trump and Musk take office, it would be good to pay attention to MEME coins related to them, as there may be good opportunities.
So why did the market drop this time?
I reminded everyone yesterday that the sentiment is a bit too FOMO, and there is a demand for market pullbacks in the short term.
Several indicators suggest that the market is a bit overheated:
1. Coinbase has returned to second place in the free app rankings of the Apple App Store, now being the 21st most popular app in the U.S. App Store.
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2. Google’s Bitcoin search popularity also reached a peak of 100.
3. The Ethereum Foundation sold some Ethereum again. Although it wasn’t much, every time they sell coins, the market tends to pull back.
4. The liquidation volume of long positions above $80,000 has exceeded $1 billion, while the liquidation volume above $70,000 is as high as $5 billion. These indicate that the market has a demand for pullbacks in the short term, and there may be price volatility.
5. Yesterday, Binance’s funding rate reached 0.04%. Meanwhile, Sun Yuchen has also turned bullish and issued a buy signal.
All of this indicates that market sentiment is a bit overheated, and there is a demand for liquidating leverage in the short-term market.
In the past 24 hours, the total liquidation across the network was $1.029 billion, with long positions liquidated at $585 million and short positions at $444 million. This is a typical example of a market clearing leverage.
But from a medium to long-term perspective, there will still be an upward trend before Trump takes office on January 20.
Yesterday, Trump also hinted that he might bypass the Senate confirmation process to appoint government members, including replacing the current SEC Chairman Gary Gensler.
He also nominated the television host Pete Hegseth, who supports Bitcoin, as the U.S. Secretary of Defense.
Pete Hegseth has stated that he insists on the value of Bitcoin's decentralization and promises not to sell Bitcoin.
At the same time, U.S. Senator Cynthia Lummis also stated that we might pass a strategic Bitcoin reserve bill within the first 100 days of Trump’s presidency.
Thus, in the next four years, most of America's core officials are staunch supporters of Bitcoin, which is a long-term positive for the cryptocurrency industry.
From the data of the spot ETF:
Yesterday, the twelve spot ETFs in the U.S. collectively increased their holdings by 12,249 Bitcoins, which is relatively high for the last two weeks.
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Among them, BlackRock increased its holdings by 8,691 BTC, while Fidelity and ARK also increased their holdings by over 1,000 BTC respectively.
And the buying volume of Ethereum is also quite good, with Ethereum setting a record for the highest net increase in spot ETF data on Friday.
By Monday, this data not only refreshed the highest single-day net increase but also greatly exceeded the previous record.
Yesterday, the nine spot ETFs in the U.S. collectively increased their holdings by 70,600 ETH.
BlackRock and Fidelity have each increased their holdings of over 30,000 ETH, especially Fidelity’s increase exceeded BlackRock by more than 10%.
Bloomberg’s ETF analyst Eric Balchunas believes that Ethereum ETFs performed very well in terms of capital inflow yesterday and this week, with performance almost above average since the beginning of the year, and the trend is looking good.
The selling pressure of ETH seems to have ended, with no capital outflow for six consecutive days. Although Ethereum still lags behind Bitcoin ETF, the future looks promising.
From the ETF data, American investors are still continuously buying. As long as the spot ETF keeps buying, the supply of Bitcoin in the market will decrease, and the prices of Bitcoin and Ethereum are likely to continue to rise.
Summary
Overall, although the market has seen some short-term pullbacks, there has been no negative information, and the trend has not changed.
Currently, we are still in the main upward wave phase, and all we need to do is remain patient and hold our coins.
I also said yesterday that even in a bull market, it is impossible for prices to only go up without any dips.
The drop is for a better rise, and the market will have demand for liquidating leverage.
Next, as long as there are no unexpected major events, the market will maintain an upward trend before Trump takes office on January 20.
If there is a large pullback, it’s just coming back to pick you up; it depends on whether you dare to get on.
