Yesterday I mentioned that Bitcoin might have a false breakout, and indeed it did not stabilize at $100,000. There was a significant retracement in the middle of the night, dropping below $91,000, with a decline of over 10,000 points. The funding rate yesterday was indeed too high. Bitcoin breaking $100,000 made many investors experience FOMO emotions. According to liquidation data, Bitcoin liquidations exceeded $500 million, accounting for half of the liquidation ratio. Thus, this spike was clearly aimed at Bitcoin. Timing-wise, it is quite coincidental; the last time Bitcoin bottomed out was on August 5, when it fell below $50,000. This time, breaking $100,000 also happened on the 5th, with a four-month interval in between. Another coincidence is that Bitcoin bottomed out on March 12, 2020, and peaked around March 12 this year. There are some time nodes that we must not ignore. A familiar formula with a familiar taste signifies a typical "de-leveraging market," which is very common in a bull market. Due to overheated short-term sentiment and high leverage, we see targeted liquidation events. Furthermore, Bitcoin's market share has continuously broken through multiple upward trend lines. The increasing divergence since June 2023 has ended, and given recent market conditions, it can basically be confirmed that the upward trend has started to spill over into the entire cryptocurrency market. Bitcoin's market share has peaked, and what follows will be a rare broad rally in the entire bull market. This long-short indicator is still quite accurate, which is the OKX Bitcoin long-short position ratio. When it is at a low, it indicates risk; now we are in a safe zone, so the risk is temporarily lifted.
In the next few days, it is highly probable that Ethereum will start to rally, following Bitcoin's lead. After the catch-up, we need to pay attention to the altcoin spikes, which may occur in the second half of the month. Remember that April 18 and May 19 of 2021 were relatively risky months for altcoins in the second half. There are only a few days left in the first half of the month, so make good use of this time! The non-farm payroll data will be released tonight at 9:30 PM, and significant volatility is expected, especially for Bitcoin. The bottom should be determined below $90,000 for the next period. The next few days may provide good opportunities to catch altcoins' catch-up. The AI sector mentioned yesterday includes meme coins, and today most AI sectors have seen significant gains, such as WLD and FET. Therefore, we can still pay more attention to meme coins: PEPE, DOGE, WIF, ACT, PNUT, and be cautious with order placements!
Additionally, regarding tonight's non-farm payroll data, the market has already made a spike last night. It is unlikely that the non-farm payroll data will create another spike tonight. Even if the main forces act poorly, they must still restrain themselves, as mid-level indicators still need time to recover and must go through a period of K-line repair. Currently, the recovery progress seems decent, so tonight, it is unlikely that the non-farm data will trigger a new wave of sharp declines, but rather it may lead to some rebound increases. Everyone can think about it: if the non-farm data is bearish, it means that the Federal Reserve may not cut interest rates in December, which will inevitably lead to a resurgence of market risks and may even trigger large-scale short selling.
Currently, this probability is extremely low. Next, we need to pay attention to macroeconomic dates. The Federal Reserve's interest rate meeting is on December 18-19, and Japan has a 66% chance of raising interest rates in December. Although Japan has a chance of raising interest rates, this will be its last rate hike, so this bearish sentiment will soon turn into bullish sentiment because it is the last time. Next Thursday evening, the U.S. will also release the November core PPI data. Therefore, as mentioned above, we need to pay attention to risks as we approach the end of each month, especially in December, as there is Christmas, which requires us to be more cautious and think about our wallets. We should avoid rollercoaster rides and focus on locking in profits. After reviewing the macro situation, let’s look at some certain favorable events for the cryptocurrency market in the future: the first is that a large amount of capital may enter the market in January. FTX has compensated 98% of retail investors in December, which is defined as those below $50,000, totaling $1.1 billion. It is expected that in the first quarter, a large compensation of a total of $13.4 billion to $15.2 billion will occur, with a high probability of compensation in USDC, which is equivalent to the backing of more than 100,000 Bitcoins. Even if only a small portion of this capital flows into the market, it will constitute a massive buy order. Many people initially thought that after the compensation, this capital would exit the market. If you are a compensator and see the market surge to $100,000, and most altcoins and Ethereum have not followed suit, would you choose to leave the market? Or would you continue to fight?
The second point is that in January next year, Trump will take office again, and the SEC chairman will be replaced. Even if things go poorly, the price of cryptocurrencies won't drop too much. However, we should not have overly high expectations. Yesterday, we reduced our Bitcoin position by 20% at $100,000, and we will consider reducing positions above $150,000, starting to do altcoin swing trades or long-term holdings, just to prepare to gather more altcoins that can outperform the overall market.
The third point is the Bitcoin investment plan from Microsoft, which we have discussed many times, is about to be announced around the 10th. Once a company like Microsoft joins a Bitcoin investment plan, the funds involved will not be less than $1 billion, which is a conservative estimate.
So the risks and opportunities for the future are already very clear. The next step is to consider how to navigate and seize this round of bull market!
