Yesterday, I mentioned that Bitcoin might have had a false breakout, and indeed it did not hold above 100,000. There was a significant retracement late at night, with a drop below 91,000, exceeding a 10,000-point decline. Yesterday's funding rate was indeed too high; Bitcoin surpassing 100,000 created FOMO among many investors. From liquidation data, Bitcoin liquidations exceeded 500 million, accounting for half of the total liquidation ratio, so this spike clearly targeted Bitcoin. Timing-wise, it is also quite coincidental; the last time Bitcoin bottomed was on August 5, dropping below 50,000. This breakthrough above 100,000 also happened on the 5th, with a time span of 4 months. Another coincidence is that Bitcoin bottomed on March 12, 2020, and this year it also peaked around March 12. There are still some time points that cannot be ignored. Familiar formulas and familiar tastes indicate a typical 'deleveraging market,' which is very common during a bull market due to overheated short-term sentiment and excessive leverage, leading to targeted liquidation events. Looking at BTC's market share, it has broken through several upward trend lines consecutively. The market share trend that has been increasing since June 2023 has ended. Based on recent market conditions, it can be confirmed that the upward trend is starting to spill over to the entire cryptocurrency market. BTC's market share has peaked, and the upcoming trend will be one of the rare broad-based rallies in this bull market. This long-short indicator is still relatively accurate; that is, the BTC long-short ratio on OKX is at a low level, indicating risks. Now we are in a safe zone, so the risk is temporarily alleviated.
In the coming days, it is highly probable that Ethereum will start to lead Bitcoin in a surge. After a price rebound, attention should be paid to the pumping behavior of altcoins, which may occur in the latter half of the month. Remember April 18 and May 19 in 2021; the latter half of the month is relatively risky for altcoins. There are still a few days left in the first half of the month, so make the most of it! Tonight at 9:30 PM, the non-farm payroll data will be released, and significant volatility is expected, especially for Bitcoin. A bottom within 90,000 USD should be a certain future support level for some time. The next few days may present good opportunities to capture altcoin rebounds. The AI sector mentioned yesterday, including meme tokens, has seen significant gains today, such as WLD and FET. So, continue to pay attention to meme tokens like PEPE, DOGE, WIF, ACT, and PNUT, and be careful with your orders!
Additionally, regarding tonight's non-farm payroll data, the market has already reacted last night. It is unlikely that the non-farm data will trigger any further extreme movements tonight; the main players will have to be more restrained, as the foundational indicators for small to mid-levels still need time to recover and require some K-line repair. Currently, the recovery progress is looking quite good, so it is unlikely that the non-farm data will trigger a new wave of crashes tonight, but rather it may bring some bounce in prices. Consider that if the non-farm data is bearish, it could mean that the Federal Reserve might not cut rates in December, which could inevitably lead to a rise in market risks and even trigger large-scale short positions.
Currently, the probability of this happening is extremely low. The macro data to pay attention to next are the Federal Reserve's interest rate meeting 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 one. There will also be the release of the U.S. core PPI data for November next Thursday evening. Therefore, as mentioned above, the risk increases as we approach the end of each month, especially in December, which has Christmas. We must be more cautious and consider our wallets, avoiding rollercoaster rides and locking in profits. After reviewing the macro situation, let's look at some certain positive events for the cryptocurrency circle: the first is that a large amount of capital may enter the market in January. FTX compensation has compensated 98% of retail investors in December, defined as those below 50,000 USD, totaling 1.1 billion USD. It is estimated that in the first quarter, there will be large-scale compensation totaling 13.4 to 15.2 billion USD, and the majority of compensation will likely be in USDC, which is equivalent to the backing of over 100,000 Bitcoins. Even if only a small portion of funds flows into the market, it would still represent a massive buying pressure. Many people initially believed that funds would exit the market after compensation. If you are a compensator and see the market surge to 100,000 USD, especially since most altcoins and Ethereum haven’t followed much, would you choose to leave the market? Or continue to fight?
The second point is that in January next year, Trump will be back in power, and the SEC chairman will be replaced. Even in a worst-case scenario, cryptocurrency prices won’t drop too much. Of course, we should not have overly high expectations. Yesterday, we already reduced our Bitcoin position by 20% at 100,000; we will consider reducing our positions again at 150,000 or higher, and focus on altcoin trading or long-term investments, just to accumulate more altcoins that can outperform the market.
The third point is that the Microsoft investment plan for Bitcoin, which we have discussed many times, will be announced around the 10th. Once a company like Microsoft joins the Bitcoin investment plan, the funds will not be less than 1 billion USD, and that’s putting it mildly.
So the future risks and opportunities are already very clear. The next step is to consider how to navigate and seize this round of bull market!
