U.S. stocks plummeted last night, and Bitcoin did not escape the downward trend. The altcoins generally adjusted downward by about 20 points. The reason for the decline was also due to macro data. The JOLTs job vacancy data and ISM non-manufacturing PMI data released by the United States yesterday were both very strong. The 10-year U.S. Treasury bond rate also hit a 20-year high. The increase in job vacancies means that the unemployment rate may fall and more employment opportunities will appear. The PMI data exceeded expectations, which also shows that the economy is moving up.
These data indicate that the Fed will not change the pace of interest rate cuts and may only cut interest rates twice or even less this year.
This means that market liquidity will be restricted, and there won't be as much new capital flowing into U.S. stocks and the crypto market.
This has also directly led to a significant drop in U.S. stocks, and the crypto market has experienced a spike in contract liquidations.
The market was originally developing positively, and now the probability of not cutting rates in January has risen to 95%. The market needs to wait for confirmation of the fundamentals. If there is no cut in January, a rate cut is highly likely in March, with a two-month interval. During this window, institutions and whales are willing to wait.
Although the macro environment has adjusted somewhat, the fundamentals of Bitcoin and the market have not changed. From the perspective of capital flow and sentiment, it is severely influenced by the U.S. stock market, which we refer to as 'U.S. stockization.' However, from today's ETF data, BlackRock alone has contributed nearly 600 million in capital inflow, effectively pulling Bitcoin's ETF data into positive territory. This indicates that the capital main force has not sold off due to the decline; instead, they are putting in more money to increase their positions.
The good side is that many GJs are currently considering including BTC in their strategic reserves, including listed companies following MicroStrategy to incorporate Bitcoin into their balance sheets, which includes giants like Amazon. Additionally, nearly 20 states in the U.S. have already begun to stockpile in advance, so the low holdings we currently have have not reached the point of selling in batches, and the big bull market at 25 is still far from coming.
At this stage, whether the market has a trigger point depends on two factors:
Trump's policies and expectations for interest rate cuts.
Trump's policies are not likely to be implemented in the coming months, so there is only favorable sentiment based on statements. Therefore, we need to pay attention to expectations for interest rate cuts.
After the data was released yesterday, the expectations for interest rate cuts in March were significantly reduced due to the Great Recession. If expectations drop, Bitcoin and altcoins will adjust, and vice versa. If the probability starts to blur, such as hovering between 40-60%, then the market will be in a consolidation phase. In a consolidation phase, one must be aware of it; if good profits are made, they should be taken, and one cannot be too ambitious.
Only when the probability of a March interest rate cut falls below 20% can we approach lower points, even down to 90,000. Following that, we focus on the economic data on the 10th and 15th, as well as the speeches after the FOMC meeting on the 29th to assess how the market will move.
It was previously mentioned that expectations for interest rate cuts would occur in March. I believe the Federal Reserve also wants to see how tariffs will be implemented after Trump takes office and whether they will impact inflation in the following two to three months. Trump will only take office in late January, so the earliest tariff rules will appear next month, and the actual economic data impact will only show by March.
If the Federal Reserve only cuts rates twice throughout the year, each move must be extremely cautious. For example, once during a relatively clear phase of Trump's policies, and the impact of policies on the economy should be fully reflected in the data, with minimal effect before making the second/third move.
Thus, it is important to pay attention to news regularly, which can help cultivate the ability to capture market opportunities and sensitive periods. These factors will not be displayed on the price chart; do not rely solely on candlesticks. In a bull market, candlesticks should be used to find support and resistance levels for buying and selling, rather than obsessively staring at cold candlesticks that dictate your mindset. Mastering a piece of news is sufficient to navigate a cycle of altcoin trading successfully.
The current market has reverted to the situation before and after Christmas. Moving forward, we should monitor this week's non-farm payroll data, unemployment rate, etc., including any information that could stimulate market sentiment. Ultimately, we need to determine whether buying exceeds selling or vice versa, which will trigger demand for BTC. As BTC sentiment returns, Ethereum will qualify to flow into funds and lead the rise and fall of altcoins.
If the data this week is favorable for multiple rate cuts, it will quickly revert. While we can anticipate the extent of the data, we cannot predict market sentiment, so we can only strive to develop trading strategies, including position control. Continuously remind others who might have been trapped during Christmas without stop-losses that if there was a rebound in the past two days, they should reduce positions. For example, last night the G token rose to around 0.04, which was the price we previously recommended. Those who didn't incur losses previously were advised to reduce their positions last night. Therefore, strict execution is essential to avoid being eliminated by the market.
Finally, during Trump's assumption of power on January 20, it is entirely possible to remain optimistic. In the face of such a significant event, it outweighs macro influences. Moreover, no bull market exists without a corresponding altcoin trend.
In any historical bull market in the crypto space, altcoins have significantly outperformed Bitcoin. The altcoin market may arrive late, but it will undoubtedly come.
