In last night's market turmoil, Federal Reserve Chairman Powell's speech again became a key catalyst. Nonetheless, Bitcoin (BTC) still performed relatively strongly. Powell's speech did not change market expectations for the rate hike cycle, but it did significantly impact overall sentiment, particularly in the response of global risk assets. However, despite BTC's temporary pullback under such news shock, it did not show a clear downward trend and instead appeared relatively resilient.
Currently, BTC's performance can be summarized as 'strong consolidation, weak rebound'. We see that after BTC retraced to above 100,000, the short-term rebound has been relatively weak, showing a high-level oscillation trend. This 'weakness' in oscillation is reflected in the small price fluctuation range, and it continues to oscillate within the 100,000 to 110,000 range, lacking clear breakout signals. Therefore, for short-term operations, a slightly bearish outlook can be maintained, and it is advisable to attempt short positions around the resistance range of 102,000 to 103,200, with a focus on 'quick in and out', without holding positions for too long, especially in the current context of complex market sentiment.
From a short-term perspective, if BTC breaks through the resistance area of 103,200, it may bring a wave of rebound, but it does not mean that the trend will reverse. The magnitude of the rebound may be limited, more of a market sentiment correction rather than a large-scale trend change. Overall, it is advisable to remain cautious and closely monitor further changes in market sentiment.
Many people may wonder what the relationship is between the Nasdaq Index and BTC. The market turbulence last night, especially the panic decline of the Nasdaq, actually had a direct impact on BTC. On the surface, BTC seems to have little direct correlation with the dollar index, but from the perspective of market interconnectivity, BTC is, after all, priced in dollars, and all risk assets priced in dollars globally will be affected by changes in the strength of the dollar.
When the risk sentiment in the global market heats up, the sharp decline of the Nasdaq often affects the performance of other assets, especially high-risk asset classes like cryptocurrencies. Therefore, while Powell's speech directly impacts the Federal Reserve's policy expectations, from a technical perspective, the pullback of BTC is actually triggered by the linkage effect of global risk assets, rather than solely a direct consequence of Powell's remarks. This mindset needs to be maintained with vigilance in subsequent operations, especially in cases of significant volatility in the macroeconomy and stock market, where the trend of BTC may exhibit more complexity.
From a macroeconomic perspective, I have previously mentioned that the Federal Reserve has relatively limited room to cut interest rates in 2024, and it may even pause rate cuts. Against this backdrop, the strong return of the dollar is a high-probability event. Powell's speech last night further confirmed this, implying expectations that the Federal Reserve may pause interest rate cuts, undoubtedly providing support for the dollar's rise.
Expectations for the dollar are gradually becoming clear. I have emphasized before that the market is always centered around expectations. When expectations are met, the market often reverses. For the dollar, although it may experience some fluctuations in the short term, in the long run, the dollar still has significant upside potential, especially as it heads toward the target near 105, and it may even exceed that point.
In the investment market, especially in the cryptocurrency field, we need to have a mindset that is 'counterintuitive'. Market trends often deviate from public expectations, and once expectations are fully realized, trends often reverse as well. For market assets like Bitcoin and the dollar, all price movements are driven by changes in expectations. Therefore, we need to remain alert and observe subtle changes in market sentiment to determine whether the underlying expectations have been fully reflected.
