The market has adjusted recently. Although different varieties peaked at different times, taking Bitcoin 717XX on June 7 as the highest point of this round, the pullbacks of Bitcoin (10%), Ethereum (13%), BNB (20%), and SOL (25%) are very normal adjustments in the bull market.
What is unusual is that a large number of altcoins generally experienced a 40-60% correction, and 30% was considered relatively strong. So what happened to altcoins, and is there still the altcoin season we are looking forward to?
First, let’s analyze the reasons for the sharp drop in the Shanzhai market:
1. The cryptocurrency market is becoming more and more like American stocks. Currently, the stock index of the US stock market continues to hit new highs, but only some large technology companies are supporting the market, especially the three giants Apple, Microsoft, and Nvidia, which continue to hit new highs. Most small-cap stocks are doing very badly, including some large companies in non-tech industries. The stock prices of these companies are also not ideal. In recent years, the participants in the cryptocurrency market have become more and more professional, and the right to speak has gradually shifted to European and American capital. Therefore, the market style is becoming more and more like American stocks, which is the core.
In the current market where global participants are playing together, it is questionable whether any past experience, such as the BTC halving rule, BTC market share, exchange rate pairs, miners' shutdown price and other indicators are still valid. Don't stick to the old ways.
2. Expectations of interest rate cuts continue to fail, and the shadow of recession looms. The market trades on expectations, and from the middle of last year to the beginning of this year, the optimistic expectation of the Fed's interest rate cut was the main line of global financial market transactions, so the market has been rising. The reality is that the Fed is still holding on to interest rates and is unwilling to relax, and the market's expectations for interest rate cuts are gradually failing.
However, with a series of data released recently, all of which show that the economy is slowing down, many participants have begun to bet on a recession, which will definitely bring about a periodic setback in the risk market. These two factors together have made the recent market trend unsatisfactory.
3. Changes in investors’ views on copycats. Some people say that this bull market is a bull market where no one takes over. To put it bluntly, everyone is playing their own game. Retail investors do not take on projects promoted by institutions, and institutions do not touch MEMEs and local dogs that are “fairly launched” by retail investors.
This trend of thought has a great impact on the market style. Retail investors do not take over the projects with low circulation and high FDV promoted by institutions. They sell them after the institutions unlock them. The main players and market makers can make profits through contracts. There is no need to hold for a long time or increase the price to sell. Some institutions and project parties even try to circumvent the lock-up restrictions in the early stage of coin issuance. Retail investors no longer have illusions about the new "narrative". They run away when they make money and do not hold on to it when they are trapped.
4. The path of capital overflow is disrupted. In the past, the path of capital was Bitcoin - Ethereum - Shanzhai - MEME. Now that the ETF has been approved, although it does bring a lot of incremental capital, making Bitcoin more resistant to declines compared to the corrections in the past bull market. However, due to compliance, the incremental capital brought by the ETF will not overflow to Shanzhai, but will only stay in Bitcoin (and possibly Ethereum in the future), and cannot form purchasing power for Shanzhai.
However, MEME is more favored by retail investors because its chips are relatively fair and have a large circulation, and there is no continuous unlocking and selling pressure. The consensus of leeks is also a consensus.
5. Extremely pessimistic sentiment. The market sentiment is like a pendulum, always swinging between extreme optimism and extreme pessimism, and there are rarely relatively stable stages. The above multiple factors have led to the fact that both institutions and project parties have the need to ship goods and cash out, and retail investors are also pessimistic and find it difficult to have faith in copycats, and dare not easily buy at the bottom.
In the current market with poor liquidity, sometimes it does not take too much chips to crash the market, because there is no buying, and a small amount can crash deeply (similar to the panic stampede when LUNA and FTX crashed). And this price drop makes market sentiment further pessimistic.
The above is what I think is the reason for the panic crash of the altcoin market. The following is my opinion on the altcoin market:
1. Currently, the altcoin market is a bit too pessimistic, which leads to a loss of liquidity. Once the market stabilizes, many altcoins will rebound quickly. Don’t think that altcoins will fall forever. The market is not short of money, at least not in the cryptocurrency circle. What is lacking is confidence and the expectation of a loose environment.
2. The copycat season will definitely come, but it will no longer be the general rise of the past bull market. Good targets may be able to run dozens or hundreds of times, while bad targets are very likely to not outperform the market. It is important to choose a good target. If you choose the wrong one, it is even more important to dare to change positions and not be dragged down by the cost of silence.
3. In the previous bull market, you just needed to know how to buy and hold on. In this bull market, the capital switching is faster. For the copycats, you need to know how to sell and lock in the profits. Selling quickly will make you profit forever. Don’t be too greedy and lose all your profits in the bear market.
Finally, the longer the Fed holds high interest rates, the faster it will cut interest rates once an economic recession occurs. The current rate hike is at the end and the economy is in a downturn. It is uncertain when the rate cut will come. This is the most painful time. Confidence is more precious than gold. We must believe that the future will return to a loose monetary environment. Don't fall before dawn. Don't hold on. Reduce leverage and survive!
