1. Christmas market and market review

1.1 Market Overview

This week, the crypto market has experienced a major adjustment since Trump's victory. Bitcoin fell by 12%, and altcoins were even worse, with many of them halved, and some even giving back all the gains in this round. Market sentiment took a sharp turn for the worse, bullish confidence was hit hard, and investors had deep doubts about whether the bull market has ended. Today is Christmas Eve, the market is trading light, and investors are mostly on the sidelines. The overall market fluctuates within a range of shocks, showing a situation of tranquility and anxiety before the holiday.

$BTC The current price of Bitcoin is around $94,200, with resistance levels at $94,800/95,500/96,200 and support levels at $94,000/93,200/92,500. From a technical perspective, the 1-hour rebound is critical. If it can stand above $94,000, it is expected to continue to move towards target levels such as $95,485 - $96,500 - $97,310; on the contrary, if it cannot stand firm, the market may continue to decline, and attention should be paid to support levels of $93,220 - $92,476 - $91,482. Ethereum performed well, with a price of around $3,400, resistance levels at $3,450/3,520/3,600 and support levels at $3,380/3,300/3,240. It broke through the third pressure level at night and is now rebounding at the 4-hour level. As long as it does not fall below $3,392, it is still bullish at the 1-hour level, with the upper target at $3,458 - 3,490 - 3,521. If it falls below, it will pull back at the 1-hour level, paying attention to the support levels of $3,359 - 3,310 - 3,270.

1.3 The carnival and crisis of altcoins

In this round of market, altcoins have experienced great ups and downs. Some altcoins had experienced rapid growth in the early stage, but the recent decline was extremely tragic. For example, the growth of some unknown altcoins has not only been completely wiped out, but the price has even been cut in half. However, there are also some strong altcoins, such as SUI and BGB, whose decline in the adjustment is far lower than the average level, showing the characteristics of the strong getting stronger. Behind this is the differentiation of market funds in the altcoin sector. The altcoins with value, potential or hot concepts are still favored by funds, while those that lack substantial support are quickly abandoned. Investors need to be more cautious in identifying altcoin investments.

2. Market Focus

During the last bull market, Grayscale launched 14 cryptocurrency trust products through the over-the-counter market, DeFi fund DEFG and GSCPxE fund, which were opened one after another in about a year. In terms of investment return, the average maximum increase of these 14 tokens after the launch of Grayscale was 204.8%, among which LPT, LDO and BAT had particularly outstanding increases, reaching 1497.1%, 292.6% and 239.8% respectively. However, the average period for different tokens to reach new stage highs varies. BAT, MANA and LPT require a longer period, basically exceeding 250 days, but the rate of return is also relatively high; while SOL, FIL, AVAX and DOT reached new highs in a relatively short period of time, but the increase was relatively limited. In addition to being related to the time of product launch, this phenomenon also shows that the longer the investment time during the bull market, the more advantageous the holding rate of return. In addition, Grayscale's return on investment is greatly affected by market cycle fluctuations. The average increase of token funds launched in the early bull market in the first half of 2021 was 446.8%; in the middle of the bull market from April to November 2021, the increase dropped to 85.4%; by March 2022, when the crypto market was in a correction period, the increase in the launched tokens was only 40.3%.

Recently, the prices of multiple tokens have performed strongly, and Grayscale's layout may play an important role in driving market trends. In September this year, Grayscale announced that it would re-launch the first US XRP Trust Fund and officially open it to qualified investors in the near future. XRP prices continued to rise in the following months. The price of SUI has also performed very strongly in the past few months. Grayscale announced in August this year that it would launch GrayscaleSuiTrust and officially open it to qualified investors in the near future. Another token worth paying attention to is ZEN, whose price has also risen gratifyingly recently, with an increase of about 215% in the past 30 days. After increasing its holdings of ZEN tokens, Grayscale also recently announced that it had submitted Grayscale Horizen Trust (ZEN) 8-K Form to the SEC, and investors can obtain ZEN token exposure in the form of securities.

This may further affect corporate costs and economic growth. Under this dual pressure, the market has to re-examine the Fed's monetary policy path, and has generally lowered its expectations for the Fed's interest rate cuts next year. Some Wall Street institutions even boldly predicted that the Fed may start a rate hike cycle in the second half of next year. This change in expectations is directly reflected in the U.S. Treasury market. Against the backdrop of the Fed's interest rate cuts, the U.S. 10-year Treasury yield has continued to rise against the trend, exceeding the federal funds rate for the first time in nearly two years. This phenomenon has formed a strong crowding-out effect on the liquidity of risky assets, just like the tide receding, causing risky assets such as the crypto market to face the pressure of capital outflows, market activity has declined, price volatility has intensified, and investors' risk appetite has also decreased, and they are more cautious about investment decisions.

3.2 Non-US currency pressure and yen rate hike expectations

As U.S. bond yields soared, global financial markets were shaken, with non-U.S. currencies bearing the brunt and facing huge depreciation pressure. As the world's main reserve currency, the rising yield of the U.S. dollar has made other currencies less attractive. The profit-seeking nature of capital has prompted funds to flow from non-U.S. currencies to U.S. dollar assets in pursuit of higher returns. This trend of capital outflows not only affects the exchange rate stability of various countries, but also poses a threat to their economic growth and financial market stability. In Asia, expectations of a yen rate hike are gradually heating up. Although the Bank of Japan currently denies the possibility of a rate hike in the near future, institutions such as Nomura expect the Bank of Japan to raise its benchmark interest rate in March 2025 and subsequently raise it to 1% through two rate hikes. The risk of a reversal of the yen carry trade has once again become the focus of market attention. The yen carry trade was once a common investment strategy in which investors borrowed low-interest yen and invested in other high-yield assets. However, once the yen raises interest rates, the cost of this trading model will increase significantly, which may cause a large amount of funds to flow back to Japan, triggering a chain reaction in the global financial market, further exacerbating market uncertainty and volatility. The crypto market will also be difficult to remain immune and will face more challenges and opportunities in this change in the global macroeconomic landscape.

IV. Discussion on investment strategy

In the current market environment, investors do not need to rush to buy at the bottom. The market is still in a stage of shock adjustment, and the macro risks have not yet dissipated. It takes more time to digest the negative factors. The funds for buying at the bottom can be divided into two parts. One is for left-side trading, and the more it falls, the more it buys. However, you should pay attention to controlling the rhythm until you reach the limit of your psychological tolerance. The other is for right-side trading, and you need to wait until the market pushes upward, or forms a higher top and a higher bottom and buys when it pulls back. For example, if Bitcoin can stabilize at a certain price and start to rebound in the subsequent trend, and the rebound strength and trading volume show positive signals, the funds for right-side trading can enter the market in time. At the same time, avoid excessive fear when the market falls and dare not buy, and rush into the market when it rises only a few points, so as not to fall into the trap of chasing ups and downs and be ruthlessly harvested by the market.

Leaders in the sub-sectors are still investment options worth paying attention to at present. For example, Usual, due to the news stimulus of Binance Labs, the price has risen from around 1 to around 1.4. Although it has not reached the previous target delivery price, it can still be considered after the correction. Behind it is the potential support of the Binance ecosystem, and its future development is worth looking forward to. Zen has recently been a star in the counter-trend. Grayscale has been continuously supporting it, and the spot price has reached nearly 40, achieving a more than doubling of the market. The current market value is 600 million US dollars. With Grayscale's continued optimism, it is expected to move towards the first goal of 1 billion US dollars. Lpt has also performed well. It is recommended to build a position from around 13u. As of now, the highest price on the market is 19u, the spot profit is about 40%, and the market value is 680 million US dollars. It also has the potential to sprint to a market value of 1 billion US dollars. In addition, you can also pay attention to the callback opportunities of Steem (near 0.23), Bat (0.24), Lumia (1.46) and other currencies. They have also shown relatively strong resistance to declines in market adjustments, and the project team and technical strength behind them provide certain support for their prices. Finally, share a wealth code LUCE coin. This coin is the leader of the Christmas theme. As the Catholic mascot MEME, it has special commemorative significance at the arrival of Christmas! Operation suggestion: The entry point is 0.076-0.088, the stop profit point is 0.11-0.15 for short-term 2 weeks, 0.2-0.26 for medium-term 8 weeks, and 0.3-0.5 for long-term 24 weeks. The stop loss point is 0.07, the holding period is 24 weeks, and the exchange is BITGET and GATE. Investors can reasonably allocate funds according to their own risk preferences and investment goals and choose investment targets that suit them.

5.2 Tough nut to crack

However, the outlook for crypto policy in terms of anti-money laundering, tax reporting and sanctions is still unclear, and there are some tough nuts to crack. Among them, 6050I requires mandatory reporting of personal information of recipients of more than $10,000 in cryptocurrency. There are currently related lawsuits because it may violate the constitutional provisions for information disclosure without a warrant; in terms of Tornado Cash sanctions, there are also lawsuits claiming that the sanctions law does not give the Treasury Department the power to prohibit Americans from using immutable smart contracts; in addition, the Southern District of New York Court's prosecution of unauthorized fund transmission against non-custodial software tool developers is shocking. Although the Department of Justice may change under the Trump administration, these prosecutions may not be easily abandoned due to its political independence. These issues have brought huge uncertainty and potential risks to the cryptocurrency industry.

5.3 Reasons for Optimism and Expectations

From an institutional perspective, Trump’s generally supportive attitude toward cryptocurrencies and his choice of SEC and Treasury appointees could mean that some controversial rulemaking will be frozen or even abandoned, which is a positive sign for the crypto market. For example, the SEC’s exchange redefinition rules and the IRS’s broker rules for non-custodial developers have been concerns for the industry, and if they can be changed, it will relieve pressure on developers and investors. At the congressional level, a lot of work has been done, with lawmakers sending critical letters on 6050I implementation, Tornado Cash sanctions, and unlicensed funds transmission prosecutions, and bills like the Blockchain Regulatory Certainty Act will provide a legislative solution to unlicensed funds transmission prosecutions, which is expected to be promoted through bipartisan cooperation. We look forward to working with the new administration on crypto policy issues, hoping to secure a more favorable policy environment for the cryptocurrency industry and ensure national security and financial stability.



#加密市场反弹 #圣诞行情分析