We also said in the previous article (July 4) that the probability of Bitcoin falling below $57,000 in a short period of time is low. As a result, in less than a day, Bitcoin fell below $54,000. As shown in the figure below.

The market conditions in the past two days have indeed exceeded our expectations. In more extreme market conditions, technical indicators seem to fail temporarily. In the past week, Bitcoin fell directly from around $640 million to around $540 million, a drop of about 16%, which is also relatively rare.

Moreover, according to the Fear & Greed Index, the current value of the Fear & Greed Index is 26. It seems that the market conditions in the past two days have indeed caused panic among many people. As shown in the figure below.

So, what happened in the past two days? Let's first briefly review some of the negative news in the past few days:

- Regarding the compensation of Mt. Gox: Mt. Gox plans to distribute 142,000 BTC to its customers. We have already discussed this in detail in our previous article (July 4).

- Bitcoin ETF: The inflow/outflow of ETF funds also represents the sentiment of large investment institutions to some extent. Currently, Bitcoin ETF holds 5% of the total supply of Bitcoin. At the beginning of this month (July), ETFs saw capital outflows again. These changes also brought some pressure to the market and indirectly affected people's sentiment. As shown in the figure below.

- Government sells off Bitcoin: At the beginning of this year, German police seized more than 50,000 Bitcoins, and these Bitcoins finally began to be transferred and sold in June this year. According to Arkham data, the German government has sold almost 10,000 Bitcoins recently, and now has more than 40,000 Bitcoins left. As shown in the figure below.

According to on-chain data, many governments around the world currently hold a large amount of Bitcoin, including 213,246 Bitcoins held by the United States, 61,000 Bitcoins held by the United Kingdom, and 46,351 Bitcoins held by Ukraine. The Bitcoins held by these governments are not purchased (except El Salvador), but are confiscated from criminals. As shown in the figure below.

Here is a little history. In 2017, the Bulgarian government held 213,519 bitcoins, which were also confiscated from criminals. However, the Bulgarian government sold these bitcoins in 2018. It is said that these bitcoins were sold in a secret auction at that time.

- Mining: According to F2Pool data, as long as the price of Bitcoin is above $53,100, four Antminer mining machine models and one Avalon mining machine model can be profitable. In other words, once Bitcoin falls below this price, only these five mining machine models can maintain profitability, and the operating costs of other mining machines may be higher than the returns obtained by the operators. This will result in some Kuang unions being forced to sell their Bitcoins. As shown in the figure below.

- Macroeconomics: This mainly depends on the interest rates in the US, because the lower the interest rates, the more attractive high-risk investments (such as cryptocurrencies) will be. But the minutes of the July 4 Fed meeting showed that those who set the policy seemed reluctant to lower interest rates anytime soon until there was more data showing that inflation was moving toward the 2% target. As shown in the figure below.

Therefore, combining the above-mentioned negative factors and people's panic, we have seen the market situation in the past two days. However, any post-analysis and summary is hindsight, but from a certain perspective, negative factors are not necessarily bad things, and the market situation in the past two days has only exceeded our expectations, which is not enough to make us panic and hand over the chips in our hands.

Whether it was US$57,000 the day before yesterday, US$54,000 yesterday, or US$56,000 today, if you still believe that this round of bull market is still there and you have plans to continue building positions, then these positions are actually one of the best ranges for building positions in batches at this stage. Don’t try to buy the so-called lowest price at one time (no one knows what the lowest price is).

To exaggerate a little, even if the market sees another short-term extreme situation, such as a direct drop to around $47,000, so what? I will continue to remain optimistic in the long term (one of the reasons is that my holding cost is relatively low). Only when most people fall into despair, perhaps the opportunity for a few people will really come.

Therefore, when others have been paying attention to the negative news and have handed over their chips out of fear, we can start to make arrangements. Of course, the specific layout should be carried out according to your own established plan (position management). Take me as an example, because I basically do not do short-term transactions, my fixed investment (big cake) has been carried out monthly since May 2022, and it has been completed in January 2024, so I have not made any operations in the past six months. If you still have a position, or you entered the market late and still want to participate in the original bull market, then you can consider it as we said above (not investment advice).

Over the past long period of time, you must have heard many people say: Bitcoin will reach $100,000 this year!

This seems to have become a "consensus" among many old investors in this bull market, but it is not easy for many retail investors (especially new investors) to hold on. Regarding this issue, we still maintain the previous view that it is possible for Bitcoin to reach $80,000-10,0000 this year.

Let’s calculate based on the goal of $100,000. Regardless of whether this goal can be achieved this year or in 2025, it is currently 100% away from this goal. So, will you choose to continue buying, exit, or wait and see?

In fact, the final decision is still up to you and your own position management plan. Here we only use a few dimensions to help you think about it:

First, from the technical indicators, although it has fallen below the support level of $57,000 in the past two days, the $52,000 level is still a relatively strong support, and we should pay more attention to this level in the short term. If you think it will fall below this level next, or even if you think it will fall directly below $46,000, then it is understandable that you choose to exit now.

Second, from the perspective of past corrections, if we look back at past cycles, we can find that 30-40% corrections are often seen. If we do a simple calculation based on this, the price of Bitcoin may be as low as $44,400-51,800. As shown in the figure below.

So, from this perspective, the current performance of Bitcoin is still better than the past two cycles. A few days ago, Benjamin Cowen also released a comparison data. If we compare this cycle with the past two cycles, we can see that we are still some distance away from a new bull market. As shown in the figure below.

Moreover, the market has risen a lot since September last year (23 years). Sometimes a pullback also lays the foundation for a larger rise in the future.

Third, from the perspective of holding costs, based on on-chain data, the current price of Bitcoin has reached the holding cost price of STH (short-term Bitcoin holders, i.e. Bitcoin wallet addresses that hold Bitcoin for less than 155 days), as shown in the figure below.

When the book profits of newcomers to the market are zero or even negative, the real pain will begin. Moreover, this process will also be accompanied by the liquidation of various leverages. From the liquidation data, when the price of Bitcoin falls below 52,000, there will be large liquidations. As shown in the figure below.

But when others begin to suffer and choose to give up, it precisely means that it is time for you to consider entering the market. If you still believe that this round of bull market is still there, then the 47,000-56,000 range may be the last entry opportunity left for you in this cycle.

In short, judging from the overall situation, this volatility may continue until the end of the third quarter of this year, and the market may usher in a new direction in September and October. Therefore, patience is the key, continue to ignore short-term fluctuations, and learn to make friends with cycles.

Different people may have different views on the bull market. If you think that the bull market is over and the bear market is coming (or it may only be a short-term bear market) because Bitcoin has fallen below the MA200 line (which is considered by many people to be the dividing line between bull and bear markets) in the past few days, then I will not refute you. You just need to exit according to your personal plan. But if you consider it based on the underlying logic of liquidity, then the real bull market seems to have not yet arrived. This is why some other people are more concerned about the expected interest rate cuts in the United States.

According to incomplete statistics, global liquidity is a pool of $170 trillion. Some researchers measure global liquidity through a standardized index (GLI, which ranges from 0 to 100) and find that this liquidity rises and falls regularly in a cycle lasting about 65 months (5 to 6 years). At present, we are in the rising period of this cycle. The last bottom of global liquidity occurred in December 2022, and the next peak is expected to occur in late 2025. As shown in the figure below.

As global liquidity increases, it will push all kinds of asset markets higher again (part of the funds will definitely spill over into the crypto market, which currently has a total market value of $2.1 trillion). Of course, the market never rises or falls in a straight line, but is accompanied by various fluctuations. At the same time, this change process will also be accompanied by changes in various regulatory policies, the impact of market sentiment, and the advancement of various technologies.

Having said so much, I still cannot tell you when the big bull market will come, nor can I tell you exactly how high Bitcoin will rise in this bull market. But there is no doubt that the third and fourth quarters of this year and the first quarter of next year will all be important moments. There are challenges and opportunities here. We are entering the critical stage of the latest cycle, so continue to be patient!