After yesterday's "Black Monday", market sentiment showed a clear differentiation, and this day was called the "805 Black Swan".
The current market is in a state of upward correction, and we need to continue to pay attention to the extent of the correction. At the same time, the recent news of the US government's transfer of Bitcoin is also worth paying attention to, which has an important impact on the decision of whether to sell assets.
Judging from the current market conditions, the market may fluctuate in the range of 54,000-57,000 in the short term, Ethereum is expected to fluctuate in the range of 2,400-2,600, and Solana is relatively strong, and may fluctuate in the range of 130-143 in the short term. There are several main reasons for the plunge: the yen rate hike and the US dollar rate cut led to the disappearance of carry, and risk assets were sold off in large quantities, which in turn triggered circuit breakers in many countries' stock markets. In addition, the rising unemployment rate in the non-agricultural data triggered the Sahm rule, as well as the ongoing geopolitical crisis. Even Buffett reduced his half of Apple holdings, and market sentiment became very pessimistic.
Although the market began to worry about a recession last week, I personally think that the actual situation is not that serious. At present, the market is just hyping the expectation of a recession, not a real economic recession. There are temporary layoffs and hurricanes in the monthly employment report, and institutions expect that the unemployment rate may fall back to 4.1% next month. At the same time, the creator of the Sahm rule pointed out that although indicators show that the economy is moving towards a recession, the United States has not really entered a recession. The ISM non-manufacturing PMI data released yesterday showed that the US service industry is still growing, and the service industry accounts for 70% of GDP. Therefore, I still believe that the US economy will remain at a level that is not too good but not too bad this year. The next trend of US stocks still needs to pay attention to the fundamentals of the United States. At present, three-quarters of the S&P 500 companies have released financial reports, and overall earnings have increased by 11.5%, the highest level since the fourth quarter of 2021. Therefore, the excessive panic plunge may actually be a rare opportunity to buy at the bottom. I also took the opportunity to buy some optimistic US stocks last night. Although US stocks are supported by performance, the cryptocurrency market has recently lacked good news, and it may take until September to see improvement.
The support levels of Bitcoin and Ethereum remain as mentioned above, and it depends on whether they can be maintained in the future. If the trend from March to August this year is regarded as a rectangle, then the worst case scenario is that Bitcoin falls to around 50,000, and may fall back to 45,000 again.
The current situation will not get worse unless the Fed fails to do its job and causes another liquidity crisis. We still need to be patient with the future market trend and consider buying the bottom in batches, although the probability of finding the lowest point is not high. Be prepared for 1-2 months of volatility. A drop to 40,000 is possible, but a rise to 100,000 is inevitable.
When analyzing the current market, we should focus on comparing the two periods of 619 and 312:
1. Both experienced a correction after a sharp rise. The adjustment in 2021 lasted for three months from April to June, while this adjustment lasted for five months from March to August.
2. Both prices fall back to the daily long-term trend line and adjust sideways. A sideways adjustment requires a positive line to shock the shorts and boost the confidence of the longs to achieve balance.
3. The possibility of a direct V-shaped reversal is small, and the market needs to be observed for a period of time. Therefore, it is a wise choice to keep a certain amount of cash.
Before deciding to buy at the bottom, you need to clarify a few issues:
1. Rebound target: Bitcoin must increase by at least 30% to return to above 64,000; Ethereum must return to above 3,000, which is at least a weekly rebound. There is also a certain probability that it will set a new historical high and start a new weekly main upward wave.
2. Is 49,000 the bottom? Even if it is not the bottom, it is not far from the bottom. The bottom of a big market is often solid, and there may be a second or even third exploration. If you bought the spot at the bottom yesterday, please hold it with confidence and maintain the big picture.
The market always moves forward in a cycle of ups and downs. There is no market that rises forever, nor a market that falls forever. If there is a continuous decline without a rebound, the crypto market may face the risk of ending, but this is obviously unlikely. We remain confident in the market outlook. The key moment of the US election has not yet arrived, and the economic recession is still in the expected stage. The actual situation remains to be seen.
In terms of time, the current adjustment has been nearly 4 months, exceeding the adjustment period in May 2021. If the bull market is still there, it is likely to be at the bottom now. Even if it follows the bear market script, it will usually bottom out within 6-7 months, and may rebound in October or November at the latest. In a period full of uncertainty, it is particularly important to remain calm and rational. We need to wait patiently, the market will eventually find a balance, and investors who wait for opportunities will often get rich returns in the future.
I sincerely hope that friends who see my heartfelt words will be healthy, have a successful career, and most importantly, make a lot of money.
