In the midst of strategizing, we decide the outcome from a thousand miles away. Hello everyone, I am Lin Chao, a global financial market observer, focusing on cryptocurrency market analysis, bringing you the most in-depth trading information analysis and technical teaching.
The crazier the bull market, the calmer we must be. Recently, Lin Chao has not been busy trading but has taken the time to summarize and organize his thoughts over the past few days: The first question is, what is the main narrative of this round in the entire cryptocurrency circle? BTC has risen from 15,000 to 120,000 in this atypical bull market that has lasted for two and a half years. Why is this considered an atypical bull market? Because it is a bull market that has erupted during a tightening cycle.
Excluding the overall rebound from the extreme overselling of cryptocurrencies at the beginning of the bull market (after the big bear in 2022) and the various narratives that were later debunked (L2, modularization, etc.), and excluding the super MEME season that emerged due to overall liquidity shortages during the bull market; from a holistic perspective, there is still nothing exciting in the internal narratives of the crypto circle. This bull market can basically be defined as a "capital bull" led by the Americans after the East-West handover in the 20-21 season. The characteristic of such a bull market is that altcoins will rebound from overselling in every small trend, while Bitcoin continues to soar.
Taking the recent performance of XRP as an example, since June 22, XRP has shown nearly a 90-degree climb, with an increase of over 90%, and has now stabilized above previous highs, forming a pillar exchange. Although overbought signals appeared early on, it did not hinder its price surge. Lin Chao previously mentioned that XRP's explosive power is far greater than that of SOL. But can anyone find a theoretical narrative for XRP's strength in the news? The answer is no. There is only one answer: the influx of excessive capital igniting market sentiment.
Following the first question, let's look at Ethereum (1300-3800); before looking at Ethereum, let's first deconstruct the various stages of Bitcoin's bull market from 15476 to 30000, which experienced a rebound after a deep bear market. But what about after 30000? To the current 120,000? Interest rate cut expectations? ETF expectations and the capital inflow after the ETF approval? If we connect the entire Bitcoin movement after breaking through 30,000 in October 2023, we will have the answer.
Is this entire range (2023.10 - now) peaceful? Were there no negative factors in between? Issues with Japanese interest rates, war issues, the favorable conditions after Trump's inauguration, trade wars… But did these delay Bitcoin's rise? Not only did they not delay it, but it also reached new highs. Lin Chao wants to say this is the top-level scheme of the Americans, building a new financial reservoir (for details, see Lin Chao's articles on July 2 and July 3). Why do we need to deconstruct Bitcoin first? Because Bitcoin is the template that Ethereum has already run through, and what we can see now is that capital is beginning to replicate Bitcoin's path on Ethereum.
Why did Ethereum rise so quickly from 1300 to 3800, not giving people a moment to react? Aside from some initial consolidation, it has basically been following small technical indicators since then? Because this path is familiar, too familiar; Bitcoin has just completed it. The third question: Following the clear line of thought, we can draw the following conclusions:
- Altcoins are merely accompanying runners; at least until there is enough exciting endogenous narrative in the crypto circle, altcoins can only rebound from overselling. Do you think it's easy to pick 3-5 coins with a 10,000% increase among tens of thousands of coins? Or is it easier to make a 100% gain on Bitcoin or Ethereum?
Most retail investors actually want to bet on an altcoin's explosion, so every time Lin Chao receives private messages, many people ask about the trends of various altcoins. But if you want to gamble on the former's returns, why not see if your position has outperformed Bitcoin and Ethereum's gains?
We need to give Ethereum enough imaginative space. This question may seem simple, but it is not easy to execute. After all, chasing highs is a tough game; our trading system and technical system naturally reject such emotion- and capital-driven rises.
In a bull market, technical indicators, especially small-level technical indicators, become ineffective; this is also why many technical traders have missed out or exited midway during this round.
Overbought? Divergence? Waiting for a pullback? The result of waiting for a pullback is that once you exit, it's hard to re-enter; because a bull market is always about emotion, not about any technicality, as bull markets are irrational. Ultimately, a bull market is a great retreat; we cannot predict the overall market top, and predicting the top of individual coins is also very difficult. What we can do is to reasonably plan our positions and strategies to cope with market trends that we cannot accurately predict; taking profits is not wrong, chasing highs is not wrong, but what is wrong is taking profits and then chasing highs, chasing highs and not cutting losses, and not cutting losses after being eroded by crazy emotions leading to repeated harvesting.
Remember what a stock market guru said a few days ago: After an offense, the first thing to think about is always defense; and defense without offense is not called defense, it's called losing money. Achieving a balance between offense and defense is a top-level skill. Lin Chao wants to say, don't overthink, and don't want too much; in a simple market, just earn what you can within your ability! If users have questions about entry intervals and position management, feel free to message Lin Chao for reference.
Lin Chao's Summary
Why are the masses always wrong in trading? If we were to condense the essence of trading over the years into one sentence, it would be: The masses are always wrong. Then someone might ask, why be so certain while standing against the people? Because regardless of bear or bull markets, no matter how the masses adjust their strategies, the investment returns of most people are always poor. From this, we can infer that most people's trading behaviors are also mostly wrong. Or it can be explained this way: your insights may not be wrong, but the only mistake is that too many people share the same insights as you. Predicting others' predictions, in the capital market, what you earn is always the blood money from others' mistakes.
This is why Lin Chao continuously emphasizes the issue of risk in the article, which may make everyone think that I am a conservative trader. However, friends with some trading experience know that beginners study how to win, while experts study how to survive. I also blew up six accounts in my early trading, so I deeply understand that trading is not about who earns more, but about who survives longer in the market. Once you survive long enough, opportunities will naturally come to you.
Finally, Lin Chao offers a little operational tip for contract users:
When the price breaks above the 20 (26) day moving average, and the trading volume increases by more than 30%, the probability of trend confirmation will significantly increase, and vice versa; this is an important signal for opening positions.
Stop losses should be as natural as breathing; hesitating for a second can be fatal.
When account equity retraces more than 80%, you must reduce your position to half and wait for the market to reconfirm the trend.
Rushing to close positions when profitable and stubbornly holding on when losing is not trading; it is using emotions to do charity. Remember, letting profits run requires you to resist the urge to secure profits.
Recently, Lin Chao is also planning to layout the next phase of short-term trading; friends interested can add me to discuss together.
Success in investing depends not only on choosing good targets but also on when to buy and sell. Preserving capital and making good asset allocation is essential for steady progress in the ocean of investment. Life is like a long river flowing into the sea; what determines victory or defeat is never the gains and losses of a single pass or a moment, but rather planning before action and knowing when to stop to gain.
The global market is ever-changing, the world is a whole; follow Lin Chao to gain a top-level financial perspective.
For real-time consultation, feel free to follow the public account: Lin Chao on Cryptocurrency
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