Must-Read for Trading

1. Bull markets often experience sharp declines, but these fluctuations do not affect the trend. Bitcoin is still in a stage of digesting profit-taking in the effective fluctuation range of 88000-105000.

2. Although altcoin markets still have significant room for growth, the indiscriminate buying of funds and the end of the general rise that eliminates low prices are basically over. In an environment of strong bullish sentiment, the market usually experiences a major shake-up before entering a differentiation phase. It is expected that in the differentiation phase, fundamental narratives will take over.

3. David Sacks becoming the cryptocurrency director at the White House will have a positive impact on cryptocurrency. Currently, the area with the greatest gains appears to be asset tokenization.

4. During the adjustment process, sudden declines still present opportunities for bottom-fishing. The cryptocurrencies that strengthen first in a crisis are likely to become the leaders in the next phase.

If this signal appears, adjustments may be necessary.

Although the gains of some altcoins are quite impressive, the bullish sentiment remains mild and controllable. Recently, the cryptocurrencies that have performed well are mostly from previously neglected sectors, such as Old King, Old DEFI, and domestic concepts. In contrast, cryptocurrencies that previously showed strong performance, such as SOL, SUI, and DOGE, have entered a consolidation period. The funding approach still remains indiscriminate buying, eliminating low prices. If, at a certain point in time, all sectors, including Bitcoin, experience a resonant increase, and the trading volume exceeds the peak of November 14 (554 billion), then the bullish sentiment will also peak.

It's time to buy some DeFi and the old kings!

Although the large-cap old altcoins have shown a strong profit effect, every time these coins double, they often increase the circulating market value by hundreds or even thousands of billions of dollars, which also means their ceiling is ultimately not high. Therefore, the rise of old altcoins more serves to elevate the overall valuation level of altcoins and ignite market sentiment. The projects that can truly gain high valuation premiums in each bull market are often closely related to the narrative logic of growth.

In a market that is very averse to high FDV new coins, the newly issued altcoins from 2020-2021 are likely to become a new breakthrough for funds, mainly for the following reasons:

1. Complete bear market cycle baptism: All these coins have experienced a complete bear market cycle, and the valuation has been sufficiently deflated. Meanwhile, the circulation rate of most coins is above 80%, and the VC shares have mostly been fully unlocked within three years, making the market relatively clean.

2. Capital accumulation effect: Historically, every round of large-scale capital investment usually produces an accumulation effect. For example, after the burst of the internet bubble in 2000, the industry experienced a three-year bear market, but ultimately 12% of companies rose from the ashes and entered a long-term bull market. 2020 to 2021 was a peak level for crypto investments, but currently only the SOL project has completed its transformation, which is far from enough. In addition, the second bull market has not been accompanied by the arrival of a technological revolution, and many new projects still follow the technological improvement route, which means that projects from the previous cycle still have a first-mover advantage.

Historically, the most significant characteristic of the first phase of the altcoin market starting is indiscriminate buying, eliminating low prices. Subsequently, the market will enter a full reshuffle phase, and coins with good fundamentals will welcome aerial refueling in the second phase. In terms of selection, I still recommend allocating to the old kings and DeFi leaders.

In the next 6 weeks, Bitcoin will fluctuate between 88,000 and 105,000.

After continuously setting price ATHs, Bitcoin encountered a significant profit divergence point in November during this round of bull market: on one hand, Wall Street's MSTR has been aggressively buying, accumulating a total of 12 billion USD worth of Bitcoin; on the other hand, long-term investors holding Bitcoin for more than 6 months have been selling at a rate of 25,600 Bitcoin per day. The last time a divergence point occurred, Bitcoin entered a 5-month consolidation period, with the price retracing from a high of 73,700 USD to 49,000 USD. Therefore, the reduction in holdings by long-term investors has also raised market concerns about adjustments.

It is worth noting that the long-term investor selling since September has a distinct difference compared to March-May. First, the main sellers in September were investors holding Bitcoin for 6 months to 1 year, accounting for 35% of sales; while the main sellers from March to May were those holding for 1 to 3 years, accounting for 53%. The former reflects more of a realization of profits from short-term trading (the market has risen too quickly), while the latter resembles a wavering of belief. Therefore, the consolidation period for the former will be significantly shorter than that of the latter. Secondly, the scale of reduction since September has been 507,000 Bitcoin, far lower than the 934,000 Bitcoin sold from March to May. The weakening momentum of selling means the range of fluctuations will also be narrower. In other words, although a phase adjustment in Bitcoin is inevitable, compared to the last round of adjustments, the new round of adjustments will be more gentle.

If we are to predict the adjustment price range and cycle, I personally believe that in the next six weeks, the likelihood of Bitcoin fluctuating between 88,000 and 105,000 is the highest. The lower limit of 88,000 USD is based on the average purchase price of 88,627 USD after MSTR's announcement of a 42 billion USD increase plan; the upper limit is based on the pricing of the BlackRock Bitcoin ETF options: institutions generally expect Bitcoin will not likely break through 105,000 USD before January 17 (before Trump takes office).

Bitcoin does not rise, altcoins are active, which is the retail investors' bull market!

Although the current altcoin market is more vibrant than on November 13, the daily trading volume remains around $300 billion, far below the peak of $556 billion set on November 13. The main reason for this phenomenon is that Bitcoin has entered a consolidation phase during the rise of altcoins, alleviating the pressure of liquidity competition in the market.

Historically, the phase where Bitcoin does not rise and altcoins are active is often the stage with the most significant profit effect in a bull market. For example, in March 2021, Bitcoin entered a range-bound fluctuation, and many coins in sectors such as distributed storage, the metaverse, and Layer 2 saw monthly increases exceeding 10 times.

If the fermentation of FOMO sentiment in each sector follows the path of 'doubt - hesitation - indecision - fear - buying', then the current funds missing out on altcoins are merely in the stage of hesitation.

The Bull Market is Here, Just Weld the Car Doors Shut

According to past experience, during a bull market, long-term holding and high position management are considered the two key principles for minimizing mistakes and maximizing returns.

First, the gains in each round of a bull market usually far exceed expectations, especially during the main rising wave phase, where the gains in three days can often match the gains of the past year. This is the principle of "infinite scenery at the dangerous peak." Therefore, as long as the cryptocurrencies you hold do not show signs of a rapid peak, do not easily change positions or exit the market. Past bull market experiences indicate that the biggest taboo in a bull market is frequent position changes, as stepping out of rhythm can easily lead to falling into the trap of chasing highs and cutting losses.

Secondly, in a market where everything is rising, every move made by investors has a high margin of error. During the window of high win rates and high odds, the correct approach for investors is to make full use of every bit of capital they have, allowing it to generate as much return as possible. Therefore, maintaining a high position for the long term is particularly important. Of course, to respond to market changes, investors can use a portion of their high positions as flexible positions, adjusting their holdings as needed.

The old mountain stronghold, you might think it's over, but in reality, it has just begun

Currently, the cleanest coins are those old mountain coins issued between 2020-2021. The circulation rate of these coins has generally exceeded 80%, and most of the VC's shares have been unlocked within three years after listing, with coin prices generally dropping by over 90%. Even if they rise two to three times, they will hardly face significant selling pressure. Many powerful speculators have already noticed this opportunity; they have begun to indiscriminately scoop up coins within a one-fold range, and then draw trends and craft narratives between two to five times, waiting for the peak of sentiment to distribute. If the daily trading volume can maintain above 600 billion for a period of time, selling out will not be a problem at all.

The Federal Reserve is very likely to continue cutting interest rates in December!

In the past three months, the U.S. government's debt has increased by one trillion dollars, while the last time this increase was reached, it took seven months. As low-interest bonds are gradually replaced by high-interest bonds, the U.S. government's interest burden will become heavier and the risk of uncontrolled debt is increasing. Especially after the Federal Reserve's continuous interest rate cuts, the yields on both long and short-term U.S. Treasury bonds have continued to rise. At the same time, the volatility of U.S. Treasury bonds has also significantly increased recently, indicating that there is growing unease in the financial markets. However, debt is rigid, but inflation is elastic; data can be manipulated. Compared to the severe consequences of extreme volatility in government bonds, a frozen repurchase market, and a financial market collapse, the struggling common people remain a better choice.

The style of the market is undergoing a dramatic change!

1. After countless roller coaster market conditions, many long-term altcoin investors have developed a deeply rooted bear market mentality, leading them to cash out at every altcoin rally. However, unlike in the past, this time the altcoin market has two obvious characteristics; first, funds are indiscriminately scooping up purchases; second, there are clear signs of new capital entering the market. Once they hand over their chips, they may sell off immediately.

2. Historically, when Bitcoin does not rise, active altcoin markets often represent the most significant profit-making phase of a bull market. For example, in March 2021, Bitcoin entered a range-bound phase, and many coins in sectors such as distributed storage, the metaverse, and Layer 2 saw monthly increases of over 10 times. If the FOMO sentiment in each sector follows the path of "doubt - hesitation - indecision - fear - buying," then the funds currently missing out on altcoins are merely in the hesitation phase.

3. Bitcoin bulls are currently in a strong position, well-armed, and with plenty of ammunition; a significant short-term adjustment is almost impossible.

4. After daily trading volumes of $300 billion become the norm, the direct beneficiaries of the market are undoubtedly DEX and CEX. Currently, platform tokens like UNI, DYDX, and BNB have not yet shown significant performance, making them a good defensive strategy to prevent missing out.

Mstr's $12 Billion Shopping Spree, Who is Selling?

Mstr has purchased $12 billion worth of Bitcoin in the past 30 days, but long-term investors are fleeing in large numbers, with the current monthly sell-off reaching 366,000 Bitcoins, a new high since April 2024.

From the holding period perspective, most of the sellers are individuals who have held their coins for 6 to 12 months, averaging a daily sale of 25,600 BTC. Rather than long-term investors, they can be seen as longer-term swing traders.

In terms of holding distribution, these sellers' costs are mainly concentrated between $50,000 and $65,000, and they are currently making substantial profits, making their exit completely understandable.

However, a frozen lake does not form in a single day; the formation of a trend is a process from quantitative change to qualitative change, and the same goes for trend breakdowns. Only when the number of 'traitors' in the holding team accumulates to a certain extent will a fundamental change in the trend occur. Currently, this is merely the first divergence within the holding team, and there is no need for concern about the fluctuations; the turnover is just to facilitate a better rise.

Operation strategy:

1. The collapse of the trend usually requires 2-3 emotional climaxes. The trading volume on November 13 did reach the standard for shipment, but the departure of the first batch of "traitors" was not enough to shake the trend.

2. The trading congestion of the MEME coin track has reached its limit. There are two important signal meanings behind it: First, the awakening power begins to challenge the pricing power and discourse power of institutions, which will be conducive to establishing a fairer issuance system; second, the funds with the highest risk preference in the market begin to return, and they are very optimistic about the height of this round of market.

3. Institutions are accelerating the layout of asset tokenization tracks, and this field may become the driving force of a new round of bull market.

4. When the bull market signal has gradually become clear, if you have missed the front row (BTC+MEME) and the back row (XRP+ADA), then the old kings who are still at the bottom (such as DOT, ATOM, ICP, FIL, etc.) are undoubtedly a good choice for betting on the rise.

Trump is elected, Bitcoin will be at least 7 figures

From the trading level, Bitcoin's current rise is largely due to the increased probability of Trump being elected as the new US president. PredictIt data shows that Harris's lead has been narrowing since late September, and was overtaken by Trump on October 14, with the latter's winning rate reaching 54%. This time point is highly consistent with the start time of Bitcoin's rise.

On October 15, the results of opinion polls in various states in the United States showed that Trump's support rate in seven key swing states, including Michigan, Pennsylvania, Nevada, North Carolina, Georgia and Arizona, has surpassed Harris. If the election situation is consistent with the polls, Trump will eventually get 302 electoral votes, more than the 270 votes required to win. Affected by this, Bitcoin continued to rise during the session, breaking through the key pressure level of $66,500.

Although Harris has also frequently sent friendly signals to the crypto market recently, these empty words seem pale compared to Trump's heart-touching promises and deep interest binding.

First, Trump promised to take measures to ensure the United States' leadership in the field of cryptocurrency, planned to include Bitcoin in the national reserve, and fired SEC Chairman Gary Gensler, who was called the "crypto killer".

Second, Trump himself is deeply involved in the crypto market. Not only has he issued NFTs many times, but he has also frequently promoted the WLFI token issued by his family on social media recently.

In addition, Musk, Trump's largest funder and advisory member, is also a supporter of Bitcoin and Dogecoin. After the media disclosed that Musk spent $75 million to support Trump, Dogecoin soared by more than 12%. Therefore, it can be foreseen that whether it is to fulfill his campaign promises, expand family income, or give back to supporters, Trump has enough motivation to introduce policies to boost the crypto market after his election.

Revealing the secret of why USDT is deeply discounted

On the first trading day after the National Day holiday, A-shares once again set off a daily limit surge, with a full-day turnover of nearly 3.5 trillion yuan, breaking the historical record. During the continuous surge of A-shares, the US, Japanese, Indian and crypto markets have all suffered varying degrees of bloodsucking. In order to ease the pressure of capital outflow, some markets have successively introduced boosting measures. First, the US Department of Labor released extremely stunning non-farm employment data for September, and significantly revised up the number of jobs in July and August, trying to suppress the rapidly rising recession expectations. Secondly, Japanese media hyped that "stock god" Buffett plans to issue yen bonds for the second time this year, and plans to use the funds raised to invest in Japanese financial and shipping stocks. It is intended to convey Buffett's confidence in Japan's economic recovery to the outside world. Only the crypto market is in a state of "no milk supply", so the discount rate of USDT fell from -0.56% to -3% in the past week due to the continuous outflow of funds.

It is worth noting that although the USDT discount rate has continued to expand in the past week, the adjustment of the crypto market has been very mild, with Bitcoin's cumulative decline of only 1.5%. In addition, during the period when funds flowed out of USDT significantly, the Bitcoin perpetual contract funding rate on Binance and OKEX platforms remained at a positive premium for most of the time, which shows that the most sensitive funds in the market are completely insensitive to this type of negative news. This also reflects that most of the funds flowing out of USDT do not belong to the active purchasing power of the market.

According to some U merchants, the main reasons for the recent outflow of funds from USDT are as follows: First, affected by the sharp depreciation of the US dollar, foreign funds began to flow back, and some funds quickly completed the exchange of US dollars to RMB through USDT, avoiding the cumbersome settlement process and review. Second, under the influence of the continued fermentation of the A-share money-making effect, funds that used to be used in the form of USDT for financial management and arbitrage in the crypto market gradually turned to the A-share market. However, as the US dollar-RMB exchange rate stabilized and the A-share market fell into volatility, the discount rate of USDT began to narrow, and the pressure of capital outflow was alleviated. As long as Tether's repayment is not a problem, the state of USDT's sharp discount will not last too long.

I had a salon with my former colleagues during the holiday. The most obvious feeling was that everyone in the A-share market made money. Everyone sighed that they had never seen such a rise in the market since they started working. An old man born in the 1970s said that there may only be such a fierce market on 519 in history, but the positive line was not so thick. I specifically asked if anyone present had participated in cryptocurrency trading. Unfortunately, only one of the 13 people had ever bought Bitcoin. This also shows that cryptocurrency still has a lot of room for expansion in the East.