This article is reprinted with authorization from "Hua Li Hua Wai," and the copyright belongs to the original author.
In the article on October 17, we mainly discussed the probability of a phase bear market in the crypto market in Q3/Q4 2026 from different dimensions, including macro factors, the strength of the dollar, on-chain data, and historical cyclical patterns. In the last part of the article, we also briefly supplemented some aspects that the market in 2026 may need to focus on.
Some friends might have had some thoughts after reading the article, and left messages in the background: What you said seems a bit far off; I can't wait until next year. I bought xxx altcoin at a cost of xx, can you just tell me if there's still hope to break even this year? Should I continue to hold or cut my losses and sell, waiting to buy back next year?…
In fact, I have seen similar messages and questions too many times. Everyone's capital size, risk preference, and investment goals are different. Instead of seeking an answer from someone else who may not know either, it might be better to roll the dice and gamble on how to operate. This way, if you lose the bet, you can directly find a reason, such as blaming the dice for not being lucky or your own bad luck.
Many people always like to predict short-term market fluctuations and find various reasons for the ups and downs. In fact, the rise and fall can sometimes be very simple: if it has risen too much, it needs to fall a bit; if it has fallen too much, it needs to rise a bit, and that's all. One of the main takeaways for me over the past eight years is that the long-term logic of making money in this market is actually very simple, summarized in one sentence: buy Bitcoin and hold it.
However, most people still want to make quick money, but this is also a good thing. If there were fewer such people, then the small number of those who hold would find it hard to make more money. From this perspective, we should be grateful for those who are restless inside.
The market is ruthless, and we should also participate in the market "ruthlessly." In a game that requires mutual competition, do not easily build your dreams of getting rich or becoming wealthy overnight on others (especially strangers); otherwise, the only one who will get hurt in the end (not just financially, but also psychologically) is you.
Of course, if you enjoy doing analysis rather than simply looking for reasons for price movements, then the aspects mentioned at the end of our October 17 article are worth further exploration and research. Today, let's choose one angle, analyzing the relationship between the "Dollar Index and Bitcoin," and provide a simple example for those who need it (also serving as a supplement to the October 17 article):
Generally speaking, the strength of the dollar affects the changes in global liquidity. For example, if the dollar strengthens, funds often flow back to the U.S., and some risk assets (including cryptocurrencies) may face downward pressure. The opposite is also true.
We all understand that although Bitcoin is increasingly being assigned the concept of "digital gold," compared to gold or other asset classes, Bitcoin still belongs to a higher-risk asset type and may be more sensitive to changes in liquidity.
Let's analyze while looking at the chart:
As shown in the chart above, aside from some special factors, there may be certain time periods (such as from September 2024 to January 2025) where the Dollar Index and Bitcoin prices are briefly positively correlated (we have analyzed similar issues in our July 15 article). We can clearly see that overall, each round of the crypto market's bull market is accompanied by the Dollar Index hovering in a relatively low range.
Let's narrow the time frame a bit. For example, since mid-2025, the Dollar Index has basically maintained a relatively low range (between 96-98), while Bitcoin has been in a relatively high range (between $100,000 and $120,000) consolidating sideways (with a slight pullback).
If you want to use this angle to predict Bitcoin's short-term trend, you can easily draw the following conclusions:
If the Dollar Index continues to weaken in the coming months, for example, falling below the current low of 96, then theoretically, if there are no sudden black swan events, Bitcoin will have a chance to rise again, possibly pushing up to $130,000 to $140,000.
If the Dollar Index rebounds and strengthens in the coming months, for example, returning above 100 and stabilizing, then theoretically, Bitcoin may continue to face a pullback. However, the best outcome for Bitcoin during this period would be sideways consolidation (because institutional funds will continue to support the bottom).
If the Dollar Index continues to rebound in the coming months, then theoretically, the risk appetite for funds will continue to decline. Bitcoin will not only face the issue of a pullback but may directly fall to the cost price of institutions. Currently, MicroStrategy's cost price is around $74,000, so we can guess that it might fall to around $70,000 to $80,000.
The three conclusions above correspond to different probabilities, and what we need to do is to operate in the direction of the highest probability while preparing a Plan B (i.e., what our response strategy is in case of operational failure or encountering a black swan event).
Since there are different conclusions, the next step is to further analyze a new question: how might the Dollar Index move in the coming months?
First, you need to know what factors influence the strength of the dollar, meaning what macro factors (variables) might drive the strength of the dollar.
There are actually many factors that influence the strength of the dollar, but we believe the most important variable is: the Federal Reserve's interest rate policy.
Currently, from the market's general expectations, a rate cut this month (October) is almost a certainty, as shown in the chart below. In addition, it is estimated that there will be another rate cut this year.
So, is this good or bad for the dollar?
It's simple: theoretically, if the Federal Reserve accelerates its rate cuts, it will lead to a narrowing of the dollar's interest rate differential, which will decrease the dollar's attractiveness. Therefore, in the short to medium term, this is bearish for the dollar.
In other words, if the Federal Reserve's rate cut plan is implemented as expected by the market, and if new rate cut expectations continue to emerge early next year (2026), then it cannot be ruled out that the Dollar Index may continue to fluctuate at low levels and fall below 96 before the end of the year or in the first quarter of next year.
At this point, if you correlate with the three conclusions above, you should have a rough result (guess): Bitcoin (including gold) may still have a chance for a rebound before the end of the year or in the first quarter of next year.
Of course, the above is just a relatively simple single-chain dimension deduction process.
Strictly speaking, the Federal Reserve's rate cuts do not necessarily lead to an immediate weakening of the dollar, and a weakening dollar does not necessarily lead to an immediate rise in Bitcoin. There may also be an issue of anticipatory expectations; perhaps the expectations of 2-3 rate cuts in the fourth quarter of this year have already been partially reflected in the recent rising prices. Additionally, as we mentioned in our articles on August 8 and August 27, if the Federal Reserve's future rate cuts are based on concerns about a potential recession in the U.S. economy, then it may not necessarily be beneficial for risk assets (especially high-risk assets like cryptocurrencies).
Therefore, if you want your results (guesses) to be more meaningful, you can continue to expand based on the above ideas. For example, you can further analyze the yield trends of U.S. Treasuries, U.S. employment data, U.S. government fiscal spending and deficits, and even the monetary policies of countries like Japan and Europe… Interested partners can conduct their own research and draw inferences, and we will not elaborate further here.
In summary, different people will have different preferences and corresponding different analytical approaches. Some prefer to analyze from a macro perspective, some like to use on-chain data for analysis, some prefer to combine news analysis, and some like to find opportunities directly in candlestick charts… There is no good or bad in the methods or ideas of analysis itself; the key is that each of us should form or establish a set of methods or strategies that suit ourselves, conduct necessary DYOR, and then make corresponding choices based on probabilities and our own risk preferences (position management) to increase our winning rate.
At the end of the article, let's talk a bit about the topic of time:
We often see descriptions like "short-term," "medium-term," "long-term," "short to medium-term," and "medium to long-term" in articles by bloggers or on the internet. For example, we mentioned the term "short to medium-term" earlier. So, how long do we specifically mean by short to medium-term?
Personally, because I am more of a Position Trader, I generally refer to short-term as 1-3 months, medium-term as 3-6 months, and holding an asset for several years is what I would call long-term.
However, different people may have different definitions for this. For example, a Day Trader might define short-term as a few minutes or hours, medium-term as a few days, and anything over a week would be considered long-term for them. Similarly, for a Swing Trader, short-term might be a few days to a few weeks, medium-term might be a few weeks to a few months, and anything over six months would be considered long-term.
For some institutional investors, short-term might mean 1-2 years, while long-term could mean several years or even decades. For Buffett, holding Apple stock since ten years ago might be considered long-term.
Therefore, it is not the case that if you see a blogger say Bitcoin might rise in the short term, you should obediently buy Bitcoin, only to find out that it has actually fallen by the afternoon or the next day, prompting you to quickly cut your losses and leave a comment on the blogger's page calling them trash.
A more correct approach is: first, you need to think about what type of trader you are. Secondly, when looking for and reading certain bloggers' articles, you need to understand what type of trader the blogger is. This way, your learning or communication can be more meaningful.
Related: Bitcoin (BTC) price surges to $114,000, highlighting increased confidence among futures traders.
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