Recently, the cryptocurrency market has seen a series of event-driven declines, triggering a wait-and-see attitude and sell-offs by many institutions and traders. This event-driven market trend is unpredictable, so we should return to the essence of the K-line of the financial market, digest information and conduct analysis within the framework. This article will explore the possible reasons for the SEC's crackdown on cryptocurrencies, political games, and retaliation against the FTX incident, and remind readers how to seize opportunities and take risks in the face of the current major changes.
The cryptocurrency market is ever-changing, and the big game behind it is gradually coming to light. The SEC's crackdown on the crypto circle may involve factors such as political games and retaliation for the FTX incident. Western financial institutions usually choose to support a certain political party, but this also means taking on the consequences of standing in line. In addition, the continuation of the Russian-Ukrainian war and the game between major powers have involved cryptocurrencies in international competition at a higher level. At the same time, Hong Kong's open trading has also provided a testing ground and opportunity for the offshore RMB center, further exacerbating the complexity of the game. Cryptocurrency has become the center of the financial war storm. This game is not only limited to the financial level, but also involves changes in the fate and pattern of the country. In the face of this unprecedented major change, risks and opportunities coexist. No one can make choices for you, and no one can take risks for you. In this world of competition and survival of the fittest, we need to face challenges and seize opportunities.
Entering mid-June, we need to consider the impact of the monthly and quarterly trends on the market. At present, the trend of the large level will determine the trend of the small level. Although the current amplitude is not large, we cannot think that the market is difficult. Past experience tells us that every golden cross brings a bull market, and every dead cross brings a bear market. Although the cryptocurrency market has fallen in the past period of time, especially the decline of altcoins, we still need to pay attention to the relative range effectiveness of technical laws. At present, the golden cross of the daily 179 line and 359 line of Bitcoin and Ethereum still exists, which means that the market still has the potential to rise. Although the decline has not reached the standard of the past bear market, we can regard the current market as a relatively reasonable market similar to the period from June 2019 to March 2020. It should be noted that the next halving of Bitcoin is coming, which also brings certain benefits to the market. However, we cannot ignore the impact of the decline of altcoins on the market. Altcoins fell sharply in a very short period of time on Saturday, and some even fell below the price of Bitcoin since a certain low point. This has caused concerns and panic in the market, making people begin to wonder whether the previous bottom construction has failed and whether it will fall further. Before answering this question, we need to realize that the confirmation of the bottom takes time. Although the market has fluctuated to a certain extent, the current bottom completion has reached 75%. Therefore, I still insist that the current market is on the edge of the bottom and may break through at any time. We need to pay attention to the 3x amplitude mark of Ether to judge the further trend of the market.
So how do you view the phenomenon of altcoins hitting new lows over the weekend? Event-driven traps. Let’s take a few typical trends of recognized value-based altcoins as examples:
LINK — Oracle Leader:
As shown in the above figure, if this area cannot hold up, then the next support area is only 1.5 US dollars, then the overall monthly line will show a similar head and shoulders top effect. If it moves in this way, it will be the same as the big cake returning to 3000 US dollars to make a similar head and shoulders top effect. And it should be noted that there is no big difference in the trend of the two yellow circles. On the whole, both are yin and yang and overall oscillation, and both have a monthly line Yin line entity. Then the previous Yin line entity is followed by a Yang line entity and oscillates again. If the monthly line is still a real entity here, can it continue to go back to the Yang line next month? I doubt it. The beauty of memory awakening is that the results are often opposite. If there are consistent results, then there must be a bigger conspiracy brewing. The conspiracy of the rising graphic is to fall, and the conspiracy of the falling graphic is to rise. If it cannot take the same form, then this month must at least have a long lower shadow. As long as it is a long lower shadow, it means that the big cake ether must make a certain rebound, giving the market a window and opportunity to rebound.
Let’s look at SAND, a leader in the Metaverse concept:
It is not difficult for us to see from the form, is it different from the previous trend? No. Then can we still play the same way as LINK mentioned above, that is, the monthly Yinxian followed by Yangxian? No. Assuming that the market is at the bottom, there is only one way to play, that is, the lower shadow must be long. As for whether the entity can go out of the strongest in the figure, it is another matter. If you don’t believe it, you can observe more of such cottages. The forms are similar. Either it is a relative shock to break a new low, or it is a relative downward Yangxian reversal and then repeats the relative downward break of the previous Yangxian. No matter which one, assuming that the market bottom is established, they have only one way to play, that is, this month must be a long lower shadow (the size of the entity depends on their own ability). In order to achieve a long lower shadow this month, the big cake ether must rebound, there is no doubt about this.
Let's look back at the quarterly line of Bitcoin Ethereum, which has an amplitude of 20% and 23%. Is this a large fluctuation? So if the bottom is established, then the monthly line of Bitcoin Ethereum is very likely to be as follows:
Corresponding to this is that the quarterly lines of Bitcoin and Ethereum both ended with real positive lines. Only in this way can the market run relatively healthily, otherwise it is all nonsense, and there will be endless changes in the future. The current details are: whether it is the monthly line or the quarterly line, especially Ethereum, there is a clear gap between the moving average. The monthly lines of Bitcoin and Ethereum are shown in the upper figure, and you can compare and see the gap yourself. Only Ethereum has a gap on the quarterly line, and Bitcoin has broken the line and there is no moving average to refer to.
The position of this leg is about 1620-1680, because the digital regular range of this commodity has been like this since the rebound of 880 US dollars, and the yellow 14-day moving average is about 1620. Ethereum has been relatively weak in the past few days, which is exactly the opposite of what we said last week that Ethereum has no desire to pull back or even has the desire to pull up. The reason for this is that the SEC picks cryptocurrencies everywhere and says that they are securities. Ethereum has always had this statement since the POS mechanism. Second, V God once stated that if it were not for the development of layer2, Ethereum might fail. These two points have a greater impact on the short-term trend of Ethereum. So whether Ethereum will step on this leg next will directly affect the overall short-term strength of the market. But this area is a place where you can go or not. There is no standard answer to go or not. It is okay to leave a breathing hole or not. It cannot be judged in advance. So it is not friendly to short-term contracts at the moment, but for spot goods, as long as the direction is determined, nothing else matters. Many people can't stand the 20-30% drop over the weekend, but this is the cryptocurrency market, and the volatility of the altcoin is already very normal. Long-term small fluctuations and sideways trading are unusual. We can't have a stress reaction just because we are used to their abnormal state of no volatility and think that the normal state of large fluctuations is strange, and we should not deny the value of the altcoin (the speculative value of risking a small profit with a big investment) because of a temporary drop. Based on the uncertainty of the development of the SEC incident and the relative certainty driven by technical forms, the contract risk is relatively high, and the spot is relatively safe, so it is better to avoid it.
In terms of operation, Bitcoin can still use the parallel line low point as the stop loss to go long, and Ethereum can use $1712 as the stop loss to go long. Both are reasonable in the short term, and the safety is unknown. If it is hit, the long areas of Bitcoin and Ethereum are respectively in the $24200-24800 area and the $1626-1675 area. It is reasonable to use 23800 and 1620 as the stop loss.
