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.

Recently, the market has been quite volatile, and I have received countless private messages, clearly indicating that many investors are exhausted from this market turmoil. As seen in my article from yesterday, the index is still within a controllable range (see the attached image from my article on August 5), but the perceived range varies from person to person. If everyone is anxious about the current index, the best approach is to reduce trading activity. In such a wide-ranging volatile market, more trades can lead to more mistakes. Especially for newcomers to the market, I mentioned yesterday that the cryptocurrency space has entered a "difficulty mode." If you are feeling uncertain about the future market, I advise you to step back; after all, a good mood is more important than making money. However, I can confidently say that such a struggling market is also a precursor to making profits. As Jack Ma once said, yesterday was brutal, today is also brutal, but tomorrow will be beautiful, yet most people will perish at today's dawn. Today, I will analyze the future market from both macro and micro perspectives to see how much operational space remains.

This significant drop began at the end of July. From a macro perspective, it was entirely caused by the substantial downward revision of non-farm payroll data, leading the market to start pricing in recession expectations. Whether the U.S. is in a recession has always been a matter of debate. Different dimensions yield completely different conclusions. From the perspective of historical cycles, compared to the golden era of 2000, the U.S. has undoubtedly entered a recession. However, this narrative of cyclical dimensions is meaningless for the market. Looking only at the years following the pandemic, U.S. prices have been continuously rising, and the real economy is indeed in decline. But this recession cycle has not just emerged overnight; the U.S. stock market has been rising all along, so it seems too large for the market. If we further narrow the cycle, since Trump's presidency, we have experienced two or three significant narratives: tariffs/legislation. Most tariffs have already been implemented, and the so-called final deadline is currently set for August 7, with no significant fluctuations expected beyond 4.7. After the passage of numerous bills, the U.S. policy reserve space has actually increased, and the external environment is much better than before.

Although we have discussed multiple times since last year that a flash crash in the U.S. stock market could benefit Trump by forcing interest rate cuts, this premise must be arranged in advance within Trump's control. Clearly, the recent substantial downward revision of non-farm payroll data was not orchestrated by him; it was more a result of a lack of control from the grassroots level. Although the final outcome was attributed to the head of the statistics bureau, the entire process does not appear to be self-directed. Therefore, without Trump's preparation, the probability of a rescue is higher. Although it is not ruled out that he may create a larger crisis once he is ready, it is unlikely to happen this time.

Unlike the triple whammy of stocks, bonds, and currencies in April's decline, this time only stocks and currencies were impacted, while the U.S. Treasury market remained very stable, with only some safe-haven funds entering, causing yields to drop. Forcing funds to take over U.S. Treasuries is certainly something Trump would like to see, but as mentioned earlier, this must be under his control. So now he either goes with the flow or prepares to regain control before proceeding. From his own and his group's statements, it is clear that more preparation time is needed. However, the political struggles between the Federal Reserve and the Labor Department are actually undermining the authority of Trump's administration. Regardless of whether the successor cooperates with Trump on interest rate cuts or data releases, they will be criticized by the market. Therefore, Trump should to some extent abandon the logic of winning arguments, focus more on practical benefits, and allow the Federal Reserve and the statistics bureau to save face while privately cooperating to make up for it.

Everyone knows that the leader in the cryptocurrency space is still BTC. Although ETH was a driver during the previous rise, you must understand that the big brother will always be the big brother. Therefore, to judge the future market, do not overly reference the movements of non-leaders. From the BTC index, I believe BTC will follow a trend of falling first and then rising. During a crisis, investors prioritize cash, cutting risk assets first, creating an emotional "golden pit." Once everyone sees the overall market situation clearly, if the Federal Reserve is forced to cut interest rates or release liquidity (even if it is a passive rescue), BTC may quickly recover. Although the passive interest rate cuts due to recession are not as effective as proactive cuts during economic recovery, recessions often prompt the Federal Reserve to cut rates or inject liquidity (such as quantitative easing), which is beneficial for Bitcoin as it is seen as an inflation hedge. Even from a long-term perspective, if inflation coexists with recession (stagflation), gold and BTC may resonate and rise together. However, Bitcoin's store of value nature compared to real gold is relatively low, and it will first trigger a decline in the tech attributes of the Nasdaq before activating the safe-haven logic.

Before a true crisis arrives, technical adjustments are healthy and necessary; after all, one must squat down before jumping higher. Looking back, if the pullback lasts throughout August, by the end of the year, the market could even reach a high of 130,000 to 150,000. However, the further one chases the high, the more courage is needed, and the difficulty of operations increases. If you usually have a low risk appetite and do not use leverage in spot trading, it is actually easier to manage. Controlling your greed and overcoming human nature, using some leverage only during key market movements may be the correct way to use leverage.

Although the market started to decline right at the beginning of August, giving a bit of a "seven up, eight down" feeling, and many voices are again talking about the "August curse," every time there is a decline at the beginning of the month, people say this, and this notion lacks substantial logic. From the monthly chart, both last month and this month have not yet produced upper shadows, indicating that the upward momentum has not been fully released, and the possibility of new highs remains significant. However, whether we go for new highs first or revisit previous lows depends on the emotional adjustments after the U.S. stock market opens. If there is indeed a monthly-level pullback, the extreme positions are likely around 104,000 for BTC and 2,800 for ETH. For short-term rebounds, we should first observe the performance around 116,100 for BTC and 3,660 for ETH. Whether the current market is trending or oscillating remains uncertain; do not have a gambling mentality. It is essential to be prepared for a "last-ditch effort" while avoiding reckless bets.

Recently, the U.S. stock market has indeed risen significantly, posing a risk of bubbles, but based on the sudden nature of the non-farm data and today's reaction from the A-shares, the possibility of a temporary fake-out is quite high. However, as risks accumulate, a real drop will come sooner or later. I hope we can smoothly catch the fifth wave's tail and proceed as planned. Sudden market movements can disrupt the rhythm, so it is crucial to maintain a good mindset and keep enough ammunition; as long as we do not get liquidated, there is still a chance.

The peaks and troughs of the market can never be confirmed in the moment; it is only when prices form a new structure and move far away that you will look back and realize—ah, that was the peak and the trough.

Of course, it must be said that predicting peaks and troughs is a thrilling endeavor.

So, based on the current situation, do you think we are shaping the peak structure of the market? Or is it a temporary pullback signal for adding positions?

If you are feeling lost—unable to understand the technology, unsure how to read the market, not knowing when to enter, unable to set stop losses, not understanding take profits, randomly adding positions, getting stuck while trying to catch the bottom, unable to hold onto profits, missing out on market movements… these are common issues for retail investors. But don't worry, Lin Chao can help you establish the correct trading mindset. A single profitable trade is worth more than a thousand words; finding the right direction is better than repeatedly facing defeat. Instead of frequent trading, it is better to strike precisely, making each trade more valuable.

The success of investment depends not only on choosing good targets but also on when to buy and sell. Preserving capital and making good asset allocations are essential for steady progress in the ocean of investments. 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, and the world is a whole. Follow Lin Chao to gain a top-tier global financial perspective.

This article represents personal views and does not constitute any trading advice. The cryptocurrency market is risky; invest with caution!

For real-time consultation, feel free to follow the public account: Lin Chao on Cryptocurrency.

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