I believe the current market adjustment is a necessary cleansing process, which not only clears excessive speculative leverage but also allows the chips in hand to flow back to the large holders, especially the retail investors who entered the market in the last two or three months, who are currently under tremendous pressure. Large holders usually employ two strategies to take advantage of the market's fear sentiment. One strategy is to increase selling pressure to create a market downturn, triggering large-scale liquidations in a thin market, further exacerbating the market's downward trend. When panic selling reaches its peak, large holders take the opportunity to acquire Bitcoin at a low price. Meanwhile, although long-term holders of Bitcoin are still selling, there are also short-term holders buying, just that compared to before, the buying power has somewhat decreased. The SOPR of short-term holders can help us observe whether they are trading at a profit or a loss. When the SOPR value is above 1, it means that short-term holders are generally selling at a profit, while when the SOPR value is below 1, it indicates they are selling at a loss. With the recent pullback in Bitcoin's price, the short-term holder SOPR indicator has dropped below the critical level of 1. When short-term holders realize that selling their chips now would lead to losses, they usually face two choices. On the one hand, they may choose to continue holding, expecting a price rebound to avoid losses. Due to the significant selling weight of this group, it relatively reduces Bitcoin's downward pressure. However, the previously mentioned area of $97,000, an important support level, was once lost but has now been regained. Short-term holders usually choose to hold in such situations instead of selling at a loss. Once Bitcoin rises near their cost line, some may quickly choose to sell at breakeven, causing Bitcoin to linger around this level.
If we want to break through $100,000 and further recover upward, we still need to wait for American investors to become active. Of course, the retail investors who entered the market in the last two or three months have another option, which is to cut losses and exit to reduce further losses. Therefore, in the absence of American investors, it is important for Bitcoin to maintain a relatively safe level. This wave of Christmas rebound has come very timely, reducing our risk of falling below the 50-day moving average.
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