In the previous post, I presented the most optimistic and the worst-case scenarios for the market in the near future. It is quite concerning that the market is following the bad scenario I outlined (you can read the previous post on this page).
Currently, BTC.D is gradually rising, and USDT.D is also rising. These two indices are both increasing, while the price of BTC and the entire market is declining. What does this indicate?
Investors are starting to take profits on BTC, taking profits on altcoins after information released by the FED. Altcoins are not yet attractive enough to investors and have not drawn enough capital to create an Altcoin Season.
The market's cash flow is mainly in stable coins, and investors are hesitant about reinvesting in altcoins. The hesitant investors are primarily retail investors, while large players and whales rarely buy or sell based on price movements or news; they wait to buy and take profits based on timing (on-chain data shows that short-term holders are selling strongly at the moment, while long-term holders remain calm and only sell lightly, with a large number of wallets holding BTC remaining inactive and almost no actions taken since last night).
Is this a bear trap for the market, or will it always be a downtrend?
To answer this question, I will go through a bit of technical analysis of the 1d candle model (temporarily analyzing in the short term first). Before the strong bearish candle on December 18, the candles from the previous days showed that BTC was rising in an unsustainable state. BTC has gradually increased from the end of November until now in a context of low supply but low buying power, with small trading volume. And the news last night was just to legitimize the downward price movement, mainly because BTC had reached the expected price level and there was no additional momentum to increase.
The recent push above ATH was actually a bull trap by market makers, and a liquidity sweep. BTC continues to revert back to the parallel channel that has been running since mid-November. Therefore, whenever BTC goes below the price of 95,000, closes the candle, and does not wick up, then the risk of a new downtrend will truly exist because the price breaks through the parallel channel.
Another indicator that few people notice is that when downtrends occur, if the price of BTC decreases, the price of USDT p2p also decreases. Currently, the price of USDT is still increasing. This is partly related to the strengthening of the USDT, but also because there is money flowing in to catch the bottom. Therefore, in my opinion, the market has not entered a downtrend.
This will be a critical time for Altcoins when cash flows out of BTC, and whether altcoins are attractive enough to attract this cash flow or not; if not, the money will continue to flow back into BTC or worse, flow out of the market entirely.
However, even though this is not a downtrend phase, the market will still have a slight short-term adjustment from now until the end of the year. This is because the end of the year is a time when investors gradually take profits and close positions from the beginning of the year (this is why people often say there is always a Christmas tree that points down). Additionally, from now until Trump officially takes office, the market will have almost no important information strong enough to legitimize the upward price movement.
Finally, to conclude, yesterday's drop was a bear trap, and the market still has opportunities to rise. The trap caused cash flow to start shifting, and even if altcoins can take advantage of this moment, there might be an early altcoin season or at least a mini altcoin season, but there will still be slight adjustments, and you should play carefully, set lower profit levels, and take profits. Even if you return to break-even and have a slight profit, you should at least take 20-30% of the total capital to secure a better position for future adjustments. If BTC.D rises above 60%, then definitely cut losses; this is the safest advice for you right now.
In addition, at this time, I see that memecoins are no longer attracting cash flow, and even newly listed coins should be cautious. In any case, do not let your account run out of capital; the market is not short of opportunities to enter, so do not rush.
