Last Friday, Bitcoin's rapid drop to 81,000 put a brake on the 11-day downtrend. The entire weekend saw a significant change from the usual dull market style, with volatility noticeably increasing, indicating frequent turnover between bulls and bears. Today, Monday, the market has already begun multiple tests of the 88,000 support-resistance conversion level.
I believe everyone has gradually calmed down from Friday's rapid decline. If last week everyone finally realized this is a bear market and was waiting for a break below 74,000, this week's rally has started to shake that conviction, especially with the resistance at 88,000 during the rebound test. Most retail investors have begun to hesitate; they fear buying in case of a downward pressure and are cautious about shorting in case of a breakout reversal. It is evident that if 88,000 is broken, the previous bear market sentiment will once again be overtaken by bullish sentiment.
Now, let me share my thoughts, hoping to dispel any panic among you.
First, let's talk about the larger cycle. As always, the daily chart's bullish trend line extending from the 15,500 bottom in 2022 has been broken. The structural bear market remains unchanged; it is just a strong rebound at the moment, combined with a V-shaped reversal that makes the short-term market appear to have greater upward potential. However, is this really a trend reversal?
I must mention a key piece of evidence. If you look at the 1-minute chart, you can see the candlestick from Friday afternoon at three o'clock. Can you see the flash crash from 83,000 to 81,200? To understand this strong spike rebound, we must analyze this flash crash.
What does the sudden flash crash indicate? It shows that long positions at 83,000 were liquidated at any cost, leading to selling pressure that exceeded market absorption, causing a rapid price collapse. This behavior can be interpreted in two ways:
- The market is in extreme panic, leading to a cascading sell-off.
- The market makers intentionally withdrew key support to clear long stop losses in preparation for a subsequent rally.
The specific situation requires specific analysis. If it is situation one, then the market will decline again, and the 81,000-80,600 level will not hold. If it is situation two, then the market will not provide a second chance for a pullback.
Based on these two scenarios, we can see that the current market rebound belongs to situation two. Following this line of thought, there will not be a second pullback opportunity; the market makers are pushing the price up.
Do you think I have turned bullish? Not at all. I can only say that this rebound is a well-executed smokescreen! This rebound is designed to mislead you into thinking that a trend reversal is upon us.
From a rational perspective, if Friday's spike is indeed the bottom, then I have already demonstrated that this spike was intentionally created by the market makers. If they need to rally, they must accumulate enough positions at the bottom, which cannot be done in just a day or two. It requires a large cyclical range to complete the accumulation, at least a week. However, looking back at the current market, is there a week-long range? There is none.
Furthermore, this rebound occurred during a phase of extreme market panic. Without this rebound, most people would have lost confidence in the market. Even if it reached 74,000, due to the atmosphere of panic, bottom-fishers would hesitate and choose to wait, which would affect the orderly selling by institutions that I have mentioned multiple times in previous articles. If no one is there to catch the falling knife (to buy the dip), how can institutions offload their positions?
This rebound may seem coincidental, but it is actually inevitable. Before reaching 74,000, it first creates the illusion of a bullish reversal to stabilize the crumbling market confidence, making the bulls believe they are back in the game. Then, it continues a new round of gradual decline, returning to 81,000, and then to 74,000. Retail investors who bought the dips at the stair-step platforms of 83,500 and 85,500 will be unable to resist entering the market again, only to be trapped step by step.
Therefore, today's market has not fundamentally changed; it is merely a repeated struggle around the 88,000 level. Once the market breaks below 83,500, we can confirm that a new downtrend has begun.
Subjectively, I still hope to see a small surge at 88,000 so that those who are out of the market can have a second chance to short at a higher point. If not, then it’s best to wait for the repeated struggle around 85,500 before opening a short position. If it breaks below 83,500, then hold long-term, adding to positions at 81,000 and taking profits at 76,500.
Follow me to stay on track; I’ll guide you on the fast lane.
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