Before the drop on Tuesday, one could already feel the weak atmosphere and the end of strong resistance from the market, as it was very evident last Thursday that the third-generation AIs collectively reached a climax. The so-called peak leads to decline, nothing more.
After the U.S. employment data was released on Tuesday evening, the market fell, and everyone attributed the decline to the data. A review of the data reveals:
In November, U.S. JOLTS job openings unexpectedly increased by 259,000, reaching 8.098 million. The ISM Non-Manufacturing PMI rose from 52.1 in November to 54.1, and the price index rose from 58.2 in November to 64.4, a new high in 11 months.
From these data, we can simply conclude:
The surface data of the U.S. economy is strong, and inflation may pick up, so the expectation of interest rate cuts has weakened, and liquidity expectations have diminished, which naturally leads risk markets to respond with declines.
Does this feel familiar?
From around April to August 2024, before Trump's winning advantage becomes clear in September, isn't Powell repeatedly teasing market sentiment to play with expectations?
From Trump's confirmation of his advantage to 100,000, the cryptocurrency sector led by Bitcoin experienced a period of independent market conditions known as the U.S. policy market. However, with the breakthrough of the 100,000 barrier and a decline in dual holiday sentiment, it seems to have returned to a state where macro data dominates/follows U.S. stocks, characterized by wide fluctuations at high levels. However, this is also a broad policy market, as macro data is closely related to U.S. financial policies. As Biden said, you cannot only acknowledge the crypto market as a U.S. policy market when Bitcoin is rising.
With Trump's presidency, it is evident that the U.S. will move towards a more self-centered, more isolated model that does not take into account the interests of allies. Trump's recent astonishing remarks regarding resources/transportation routes/strategic locations in Canada, Mexico, Panama, and Greenland have sparked a global uproar, as if overnight, the relatively mild era of Spring and Autumn has transitioned into a Warring States period of mergers. We can see that Trump is intentionally appealing to MAGA voters, promoting a kind of American nationalism through rhetorical opium, allowing rednecks to immerse themselves in the fantasy that America is still the most powerful during its glory days.
As early as December, the market had already digested the expectation that the Federal Reserve would not cut interest rates in January. Tuesday's data merely kicked the already shaky market and completely eliminated the last glimmer of hope. However, this expectation had long been digested, and the market has merely returned to the old tricks of the Federal Reserve playing with expectations from last year, constantly testing the market's sensitive nerves to speculate on how much interest rates will be cut in 2025. I believe that the expected reduction in interest rates in 2025 will still be the main theme of this year's market speculation.
The small non-farm data on Wednesday came in at 12.2, slightly lower than the expected 14.6, which has also cooled inflation a bit. After the data was released, the probability of the CME's January interest rate remaining unchanged dropped from 95% to 93%.
The actual effects of Trump's inauguration and the first hundred days of his new policy will affect market expectations. We cannot accurately estimate the measures taken after Trump took office, but we know that Trump has a strong control over the MAGA faction. As long as Trump does not make any mistakes, we are likely to have nearly two years of political stability. Therefore, a broad bull market could last for two years.
Next, let's talk about the altcoin season that the retail investors are looking forward to. The arrival of the altcoin season has prerequisite conditions:
Total buy volume > Number of targets * Market value
With the diffusion of technology and the lowering of the threshold for listing coins, the number of targets in the market is approaching infinity, which means that only leading tracks that receive excessive attention at a certain time will attract excessive funds and produce a substantial increase. Under so many limiting conditions, it is destined to be very difficult to achieve astronomical returns in the range of hundreds or thousands of times, especially as the prospect of getting rich with small funds in major exchanges is becoming increasingly impossible.
The on-chain 1.5 level market seems to have become the only choice for getting rich
However, the on-chain market also has its disadvantages; the astronomical returns naturally correspond to a large number of zero-value coins. The narrative perspective is just one coin's rise of 1, after all, there are great scholars to argue for you once it succeeds, and the strength and purpose of the capital behind it is the 0 behind the 1. The number of zeros can only be gradually analyzed and researched in-depth. This is the only way to increase the probability of winning.
Let's analyze the short-term market:
The low of 91023 at 4 a.m. today may indeed be a short-term low (or second low). Recently, Bitcoin has been oscillating between 92-102, and if the upper and lower limits are widened a bit, it will be oscillating between 88-108.
Before Trump was inaugurated on January 20, there might still be time in terms of timing and sentiment, and there was a desire for a retreat above 100,000 or even touch the previous high. If no opportunity is provided before January 20, it may have to follow the metaphysical convention and wait for a small spring around mid-March.
Tonight's big non-farm payroll data may be the most important reference data to establish the tone for the market. Retail investors need to control their greed and avoid using leverage to keep cash on hand for true gains.
