Today there was news that the U.S. Department of Justice has been approved to prepare to sell $6.5 billion worth of Bitcoin. This caused the market to drop significantly, bringing Bitcoin's price down to around 92,500. Many people began to panic, wondering whether to sell at a loss. But I want to say that the expectation of a bull market still exists, and such short-term K-line fluctuations will not affect the long-term trend!
First, let's take a look at the ETF data.
Yesterday, Bitcoin-related ETFs saw outflows of $418 million, slightly increasing from the previous day. Ethereum ETFs also experienced outflows, amounting to $151.4 million, which is a significant increase from the previous day. These outflows indicate that market sentiment is somewhat unstable, but it does not mean that there are no rebound opportunities in the market.
The trading volume of Bitcoin's decline is gradually decreasing, indicating that selling pressure is weakening and the downward momentum is insufficient. In the short term, there is little room for a significant decline, while the possibility of a rebound is higher.
Current bearish news in the market:
1. There are many trapped positions for Bitcoin between 97,000 and 100,000, making it difficult to break through in the short term.
2. Expectations for a rate cut by the Federal Reserve have weakened.
3. The liquidity of the crypto market has not improved.
4. Bitcoin ETFs are still experiencing continuous outflows.
Therefore, after the rebound, Bitcoin may experience a period of low-level fluctuations.
Next, we need to pay special attention to the non-farm employment data released by the U.S. on Friday. If the data is poor and the unemployment rate rises, it may lead the Federal Reserve to consider cutting rates, which could have a certain impact on the market. The current decline may be the market's reaction to expectations before the release of non-farm data.
Views on the $6.5 billion Bitcoin sale plan:
The U.S. Department of Justice has obtained approval to sell $6.5 billion worth of Bitcoin from the Silk Road platform, but it is still uncertain when these Bitcoins will be sold. After taking office on January 20, Trump stated that he would not sell these Bitcoins. Although the sale plan has not been confirmed, even if these Bitcoins are sold, the market should be able to digest it.
The most critical factor in the market now: Non-farm data
Today, the U.S. stock market is closed, and the non-farm employment data to be released on Friday may affect the Federal Reserve's interest rate decisions. Previously, everyone expected the Federal Reserve might cut rates several times this year, but now it seems that there is more discussion on whether the Federal Reserve will cut rates at all.
The market believes there is basically no possibility of an interest rate cut in January, and some institutions predict there will be no cuts until July. Many believe the Federal Reserve may maintain the status quo, and if there is a rate cut, it would only be once.
The previous value of non-farm employment was 227,000, and the market expects this time to be 160,000. From the data, a reduction in employment growth is highly likely, while the unemployment rate should remain unchanged or slightly increase. These changes are theoretically somewhat favorable for the market. If the unemployment rate rises but employment still increases, it would be even more favorable. However, if the unemployment rate rises and employment decreases, it indicates that the U.S. economy may be experiencing a downturn.
This data is exactly the opposite of the job vacancy data released on Tuesday. Job vacancy data means that employers need more employees, which should theoretically lower the unemployment rate and improve employment data. Therefore, the market originally expected the economy to be very strong, and the Federal Reserve might reduce the frequency of interest rate cuts. But if Friday's non-farm data shows an increase in unemployment and a decrease in employment, it may trigger more expectations for rate cuts.
Will there be a continued significant drop?
I don't think so. The impact of the macro economy has temporarily left Bitcoin without upward momentum. It should have been a time for speculation, as the two economic data points released by the U.S. exceeded expectations, leading to a collective adjustment in U.S. stocks and the crypto market. Moreover, the non-farm data expected this Friday may also exceed expectations, affecting market trends. This drop has actually responded in advance to these factors.
Currently, Bitcoin is in a stagnant state, with an overall weak trend, and may experience wide fluctuations. It is expected to fluctuate between 92,800 and 100,500. The prices of altcoins are also affected, and many altcoins have experienced significant declines.
Where are the opportunities for altcoins?
From my perspective, this is indeed an opportunity for altcoins, especially Ethereum. The weakness of the market has highlighted Ethereum's performance, and the inflow of funds into altcoins will gradually increase. Therefore, don't be frightened by short-term price fluctuations; the overall market trend is still upward.
Is it possible to buy the dip now?
Although the market may adjust, there is still the possibility of a rebound. It's a good time to consider buying in batches, with Bitcoin prices between 93,300 and 92,000 being a good short-term buying opportunity. However, it should be noted that there will be non-farm data and unemployment rate releases this week, and the specific trend will depend on the impact of the data.
How to choose quality altcoins?
When selecting altcoins, it's best to choose larger market cap coins like ETH, BNB, SOL, etc. These coins have relatively small fluctuations and lower risks. Other low market cap altcoins can be highly volatile and carry higher risks, so remember to set strict profit-taking and stop-loss limits to control risks.
