I. Macroeconomic Environment: Increasing Certainty of Fed Rate Cuts, Rising Expectations for Market Liquidity Easing

U.S. stocks showed a mixed performance on Wednesday, with the Dow slightly down, while the S&P 500 and Nasdaq rose by 0.4% and 0.66%, respectively, reflecting a cautiously optimistic attitude in traditional financial markets towards monetary policy easing. According to the latest data from CME's "FedWatch," the probability of a 25 basis point rate cut in October has reached 97.3%, and the probability of a cumulative 50 basis point cut by December has climbed to 94.2%, marking a peak in expectations for the year. Recently, Fed Chairman Powell clearly signaled that "the balance sheet reduction may stop in the coming months," indicating the end of a three-year monetary tightening policy and injecting expectations for liquidity easing into the market. However, he also reiterated the potential pressure of tariffs on inflation, adding uncertainty to the policy pace.

It is noteworthy that the cryptocurrency market has shown a significant divergence from traditional safe-haven assets. Under the expectation of Fed rate cuts, gold prices have continued to rise and hit historical highs, while cryptocurrencies have remained weak, highlighting investors' lack of confidence in digital assets, with funds preferring to flow into traditional safe-haven areas. This divergence phenomenon further exacerbates the volatility risk in the cryptocurrency market and reflects a subtle change in the current market's pricing logic for crypto assets.

II. Mainstream Cryptocurrency Trend Analysis: Bitcoin Shows Mild Bullish Fluctuations, Ethereum Weakens and Diverges

(A) Bitcoin: Tug-of-war Between Bulls and Bears at Key Levels, Upward Trend Unchanged

Bitcoin has recently exhibited a wide range of fluctuations, retreating from a high of 113,578 to a low of 111,660, experiencing repeated volatility with rebounds under pressure and late-night dips before rebounding, ultimately consolidating around 111,500. From a technical perspective, bears have repeatedly tested the 110,000 level without achieving effective breakthroughs, indicating strong support at this position; the daily chart remains in an upward trend, and short-term pullbacks lack continuity, not damaging the core trend structure, with the main shape still leaning bullish.

The 4-hour chart shows that prices are forming a back-and-forth tugging pattern at high levels, with both bullish and bearish momentum struggling to sustain. However, the rebound after the early morning dip shows some continuity, making 111,500 a key observation point for rebounds in the short term. Analysts point out that if Bitcoin can stabilize above 115,000 and maintain stability, it is expected to alleviate downward pressure on the market; otherwise, it may face deeper adjustment risks. Additionally, the amount of Bitcoin purchased by listed companies has significantly decreased compared to previous periods, and the slowdown in institutional fund inflows is also putting pressure on prices. Data showing over 200,000 liquidations globally in the past 24 hours further reflects the high leverage risk in the market.

(B) Ethereum: Breaks Below 4,000, Faces Technical Weakness, Insufficient Rebound Momentum

Ethereum's performance has diverged significantly from the broader market, starting a deep correction from a high of 4,215, reaching a low of 3,924, and currently weakly consolidating at low levels. Technically, the middle band of the Bollinger Bands has become an important resistance level, with bullish momentum weak during the price rebound, failing to reach this key boundary before quickly retreating, confirming the dense selling pressure above. The current small bullish candle at low levels is merely a slight correction within a downtrend and has not formed a reversal signal. The 4,020 level has become an important short-term resistance platform; only by stabilizing at this position can the rebound trend be expected to continue.

From a fundamental perspective, the core reason for Ethereum's price drop is the cooling of institutional fund inflows. The outflow of funds from U.S.-listed Ethereum ETFs has approached $300 million in recent days, with a cumulative net inflow of only $110 million since September, a significant drop from $3.8 billion in August. At the same time, the increase in selling behavior among long-term holders and the rising activity indicators have offset the positive impact of exchange supply dropping to a nine-year low, leading Ethereum into a prolonged tug-of-war between bulls and bears. If the price breaks below the key support of $3,800, it may trigger a new wave of liquidations, further intensifying downward pressure.

III. Investment Strategy Recommendations: Focus on Key Levels, Strictly Control Risk Exposure

The current cryptocurrency market is caught in a contradictory pattern of favorable macro policies and weak fundamentals, with uncertainty continuing to rise. Investors need to adopt a more cautious strategy:

• Track Policy Dynamics: Closely monitor the results of the Fed's October meeting and the progress of balance sheet reduction; the market reaction after the rate cut will become an important barometer. Historical data shows that the early stages of a rate cut cycle are often accompanied by increased market volatility, so be wary of the "buy the expectation, sell the fact" market dynamics.

• Identify Key Levels: For Bitcoin, focus on the effectiveness of support at the 110,000 level and the breakthrough of resistance at 115,000; for Ethereum, closely watch the fluctuations in the 3,900-4,020 range and adjust positions promptly after a breakout. Avoid blindly chasing highs near key levels; wait for a clear trend before entering the market.

• Strictly Control Position Risk: With frequent liquidation events in the current market and increased leverage trading risks, it is recommended that investors reduce leverage ratios and keep positions within manageable limits. Additionally, implement risk hedging measures, using options and other tools to hedge against price volatility risks, avoiding excessive concentration in a single asset.

• Beware of Liquidity Risks: The cryptocurrency market's market capitalization has recently evaporated significantly, and trading volumes have dropped sharply, making it prone to liquidity crises. Investors should choose trading pairs with sufficient liquidity and avoid making large trades during periods of high market volatility to prevent slippage losses from widening.

IV. Conclusion

In the short term, the cryptocurrency market will continue to be influenced by a combination of Fed policies, institutional fund flows, and breakthroughs at key technical levels, making it difficult to change the volatility pattern. While Bitcoin maintains a long-term upward trend, short-term fluctuation pressures still exist; Ethereum faces dual pressures from fundamentals and technicals, with insufficient rebound momentum. Investors need to maintain rational judgment, avoid blindly following trends, and prioritize risk control while seizing market opportunities to achieve stable investments in a complex market environment.

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