【Multiple signs at the top have appeared, or may enter a mid-term downtrend】
The United States has passed the spot ETF, and the market is calling for the arrival of a new era, which I strongly agree with.
Looking at the long-term trend, BTC has entered the bull market. But from a mid-term perspective, it will experience a downtrend in the coming months.
Question 1: Reasons for the formation of the top
1) There is a lot of profit funds, which is a prerequisite, meaning that there is a relatively large selling pressure in the market. After nearly 3 and a half months of market trends, most coins in the market have experienced a general rise. For example, there are many coins with large increases, such as Mingwen, which have increased by tens of times, medium market value coins have increased by 10 times, and large market value coins have basically doubled or tripled.
2) The exhaustion of the next round of funds, and the main funds have begun to withdraw
In December, we experienced the climax of Mingwen, the big outbreak of Sol, the Depin market, Layer2, and the plate rotation of the Polkadot ecosystem. It can be clearly seen that the upward momentum will continue to decrease. And when the later plates rise, the previous rising plates will start to fall. This is because the next round of buying funds is exhausted, and most of the market is in a full position or leveraged state, so it is necessary to sell one coin to buy a new one.
These two phenomena clearly indicate that the purchasing power of funds is constantly weakening. From the perspective of funds, a market trend will go through three stages: 1) the continuous exhaustion of empty funds 2) the exhaustion of the next round of funds, and the internal funds are in a game 3) profit funds understand, and the main funds withdraw. This means that in reality, the money left at the gambling table is getting smaller and smaller.
3) Retail investors are generally bullish on the market
Now on Twitter, you can't see any KOL bearish views, the most common argument is to adjust to 42,000, and then continue to rise. In various groups, it is also generally bullish. Positions are relatively heavy. A cruel fact that everyone knows is that the last batch of leeks is the last to buy in. It also means that when the leeks who buy in are heavily invested, there is no more buying funds left.
In short, the bullish sentiment and the actual fund situation have formed a strong deviation.
Question 2: About BTC spot ETF
1) BTC's spot ETF is a substantial positive in the long run, which can bring more funds to buy BTC. In the short term, it is a positive on the news front. It will stimulate the price of BTC in the short term. However, we must be clear that the approval of the ETF does not mean that it can immediately bring a large amount of off-market funds to buy.
The spot ETF is just a buying channel, although this channel connects a large number of powerful funds. These are funds that have been in the market for a long time, and they think whether to buy or not depends on whether there is a suitable position and a suitable price. So after being able to buy in compliance, they still need to see if the position of BTC is worth entering. So, I think the ETF is a bit like the gBTC of Grayscale in 2020, they are boosters of the bull market, but they are not the reason for starting the bull market.
2) This round of market trends was initiated by the ETF. If you think back three months ago, probably no one in the market would have expected BTC to rise to the position of 48,000. This height is not much different from the highest point of the 2021 bull market. Because the expected 25-year bull market is far away, and from the perspective of the external financial market, the Federal Reserve is in a period of raising interest rates. So it is obvious that some people with insider information, as well as analysts with accurate judgments, have seen the approval of the ETF and promoted this market trend. In this case, when the ETF is approved as scheduled, it is the time for them to take profits.
Question 3: Deduction of mid-term trends and trading strategies
In this mid-term downtrend, where should we adjust to? This is not easy to say, BTC may have a correction of about 20% to 30%, and then there will be a lot of funds entering the market. However, it may not be good for altcoins, and the pullback will definitely be more severe. Especially for those with particularly large increases, a deep pullback is normal. And if the external market is not good, such as a big drop in the US stock market, then the pullback of BTC will be much higher. It is not ruled out that there may be another possibility of 31,200.
Trading strategy
In terms of position, depending on individual risk preferences, it is up to the individual to retain 2 to 6 layers, mainly for long-term holding positions. Those with a higher risk preference should retain more.
If the position is heavy, you can sell in the recent days to reduce the position. It is particularly important to note that choosing to sell at a profit and keeping losses is very incorrect. Consider:
1) For those who want to hold for the long term, they can retain more.
2) Those that have dropped significantly since the beginning of the month and rebounded on positive news, it is recommended to sell. Because the main funds have already sold, and there are many trapped positions above, it is often difficult for these coins to reach new highs.
3) Those that have been hot recently
bitcoin #ETFApproval
Feel free to join the TG group for discussion: https://t.co/LG4RzrPQjb
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