The quality of decisions depends on the information you have and your ability to process that information. — Ray Dalio, Founder of Bridgewater Associates — (Principles)
This week, the price of Bitcoin fell below $100,000, and I believe this decline is a healthy and effective correction, which is common in bull markets. In past cycles, the crypto market often experiences significant pullbacks, which help to digest the risks of excessive speculation and lay the groundwork for future increases.
The structure of Bitcoin price trends remains intact, with no substantial changes, still above the trend line, so the previous viewpoint is maintained!
The actual cost basis of short-term holders (STH-RP) has risen to about $85,357, providing some support for the market. Short-term holders usually take profits when prices rise, which could lead to selling pressure, but with more institutional investors entering, market behavior may change.
----During bull markets, traders like to buy when the Bitcoin price reaches the actual cost basis of short-term holders, as this is a good time to increase positions.
Long-term Bitcoin holders typically expect to achieve at least tenfold returns before selling a significant amount of Bitcoin into the market. In contrast, short-term holders lack this patience and usually choose to take profits after achieving 20% to 40% gains.
Since reaching a peak a few weeks ago, the US stock market has seen the S&P 500 index decline by more than 4%, which is considered a slight sell-off. This pullback can be viewed as a 'healthy correction' as the index successfully tested the 50-day moving average, although it briefly dipped below it, it is currently in a rebound state. Meanwhile, the width of the 50-day moving average has dropped to oversold levels, indicating normal market adjustments.
The US dollar index has reached a new high for the year; a stronger dollar will have a negative impact on global net liquidity, thereby suppressing risk assets. When the dollar strengthened at the beginning of 2022, the stock market was under pressure, while during the stock market bull run in 2023, the dollar weakened. Entering 2024, the dollar remains positively correlated with risk assets, but this week the dollar reached its highest level since 2022, leading to a market crash.
Moreover, the U.S. Securities and Exchange Commission (SEC) has approved the first Bitcoin-Ethereum mixed spot ETF, expected to launch in January 2025. This marks an important milestone for crypto assets entering the mainstream investment arena.
With the Trump administration set to take office, the market may see more favorable regulatory policies for cryptocurrencies. More positive policies are expected to emerge, potentially bringing new growth opportunities to the market. However, we must not be complacent and should pay attention to future changes in the Federal Reserve's interest rate cut strategy and the potential impact of the macro environment (global political environment and inflation employment environment) on the crypto market.
Note: All content represents the author's personal views only, not investment advice, and should not be interpreted in any way as tax, accounting, legal, business, financial, or regulatory advice. Before making any investment decisions, you should seek independent legal and financial advice, including advice regarding tax consequences.