In the early morning of January 19, Bitcoin broke through the short-term oscillation box and fell to around 40,600, and altcoins fell collectively.
ETFs have also been approved, and expectations of a US interest rate cut are also there. It has been halved in less than 100 days, so why is it still falling? New strategies can help you analyze.
1. Direct cause: The US dollar index has rebounded for many consecutive days. It is known that the US dollar index is negatively correlated with the global financial market, and Grayscale's market crash is just a superficial phenomenon. Since November 2023, the Federal Reserve has gradually released its expectations of interest rate cuts, and the US dollar index has dropped from 107 to around 100, ushering in a wave of respite for the global financial market and its derivatives; but since January, the US dollar index has continued to rebound and has now entered the key pressure level of 103. If it breaks through the pressure, it will continue to be bearish for other markets, otherwise there will still be opportunities in the short term. In particular, after the Bitcoin ETF, the biggest impact is that the correlation between Bitcoin and the global index is getting higher and higher.
2. Deep reasons: The expectation of a US dollar interest rate cut does not mean that the liquidity of funds has been released. The deposit rate of 5.25-5.5 is still the best investment target in the global financial market. In particular, the economic recovery of various countries is not as obvious as imagined, and the US gold absorption index is still at a high level. Without opening the floodgates, digital currency will not show a big bull performance in the short term. The interest rate cut process gradually releases water, but this is not quantitative easing. Quantitative easing is a negative interest rate, which is the heyday of digital currency.
3. Short-term technical advice: The price of Bitcoin dropped to around 40600, approaching the previous lows of 40500 and 40200. There is support at the box level. It is possible to continue to step back to this position in the short term, but if it does not fall below, it will usher in a wave of technical rebounds, with upward pressure levels of 42, 43, 46, and 48. At the same time, if we make the worst plan for the market volatility in the future, it is expected that Bitcoin will step on the 99-day moving average, around 39600; if it falls below, it will look at the chip concentration area around 38300. In short, buy more when the price drops sharply and buy less when the price drops slightly.
IV. Investment advice for the whole year: In the early stage of the bull market, we always recommend that we stick to spot trading as the main, gold trading as the long-term, and swing trading as the auxiliary. We recommend 90% to 95% spot trading and 0.5-10% contract trading. For the long-term coin selection strategy, we recommend to pay attention to the entire second-layer network expansion narrative. Recently, Binance has issued coins intensively, and EURITA has also invested. All major ecosystems are laying out the L2 track, which are the engines of the bull market. In addition, last year, inscriptions once stimulated market enthusiasm. Inscriptions represent the Bitcoin ecological chain, which is also worth paying attention to.
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